For people living on $1 a day, as Bill Gates recently noted, Internet access is the least pressing of concerns. But information technology will make an important difference in peoples’ lives if it can be used to create real jobs in new IT-based industries or to enhance the ability to deliver food, healthcare, or other vital services through IT-assisted development.
IT-based development involves building sustainable IT industries in developing countries where that kind of growth is at present a realistic possibility. A good example of this mode of development is the strong market for technology outsourcing from developed countries to developing countries. India’s nearly $4 billion software industry claims a substantial fraction of that market, and the Philippines and China are also significant non-OECD players.
Persistent demand for IT skills drives the market for IT outsourcing. That demand should continue to create development opportunities, even in the context of slower growth in large US and European client markets, because Europe and the US still are not producing enough IT professionals to meet industry needs.
Skills shortages and the ability to reduce production costs make outsourcing a very attractive model, not just for software development or electronics manufacturing, but also for IT-intensive remote services such as insurance claims processing, credit card data processing, and technical support.
For the countries fortunate enough to have adequate educational and technological infrastructures, IT-based development can actually be better than sustainable. Knowledge is, in a sense, the ultimate renewable resource – it grows with exploitation. As the knowledge resource grows, opportunities expand.
While IT-based development can provide an attractive model for some countries, or particular regions within countries, we all recognise that a development model based on the IT sector simply is not realistic in many instances. For areas locked in cycles of poverty, disease, illiteracy and economic despair, the key role of information technology may be to assist ongoing efforts to address basic issues of education, health, and poverty.
In a good example of such IT-assisted development, the World Food Programme has recently started looking to information technology to enhance its work in famine-stricken areas.
With help and support from Microsoft, WFP is developing a handheld device to enable its teams to gather data directly in the field and transmit the data to a central computer using wireless technology. The new system, which undergoes its first field tests in Kenya next month, will allow faster and more efficient deliveries of relief and food – literally saving lives, and giving new meaning to the term “just in time” delivery.
There are many, many similar cases involving complex challenges in the areas of health, education, and the management of resources like crops, water, forests, and fisheries, to name a few. Through such efforts, experience is proving that information technology can play a vital role in understanding development problems and implementing better solutions.
What can policymakers do to facilitate these forms of IT-related development? Discussions like those at OECD Forum 2001 are an excellent start. In terms of broader policy initiatives, at least four constraints presently limit the spread of IT-related benefits to all parts of the world.
• Communications infrastructure: The empirical link between the level of a country’s investment in telecoms infrastructure and its level of development is well known. Despite some progress, more than a third of developing countries still have fewer than five phone lines for every 100 inhabitants.
• Skills: The IT skills shortage in Europe and the US opens a door to growth for developing countries capable of providing highly-skilled IT workers. Experience here in Europe shows that IT skills training is feasible outside of traditional educational settings, and even within disadvantaged communities, suggesting that more could be done worldwide.
• Regulatory infrastructure: The regulatory problems that can constrain IT-related development span everything from regulation of financial services and online transactions to issues of intellectual property enforcement, cybercrime, privacy, censorship and taxation. Developing countries need to deal with these issues in a credible way that is consistent with international norms for transparency, neutrality and the least possible restriction of trade.
• Trade barriers: One of the lessons of IT-related development is that much of it comes in the form of services and electronic deliveries. For that reason, more work is needed to lower trade barriers in the areas of services and e-commerce in both developed and developing countries.
The more we can do to eliminate these constraints, the greater the potential digital dividends. By using technology as a platform and a tool, we can better address our basic economic and social maladies, and thus increase the chances that the symptoms, including the digital divide, will gradually begin to disappear.
©OECD Observer No 226/227, Summer 2001