IT DEPARTMENT

ASSIGNMENT OF IT AND ECONOMIC DEVELOPMENT

Submitted to: submitted by:

Aron Kumar 1. ayayu Geletaw TER/238/02

2. Gebremariam Negash TER/281/02

3. Muhammed Ali TER/373/02

4. Hadush Mesfin TER/301/02

5. Suleiman Mohammed TER/400/02

Date:28/11/2012 G.C

1

There is a bidirectional relationship between real

gross domestic product (GDP) and

telecommunications development (as measured by

teledensity) for high-income countries.

However, when the impact of mobile

telecommunications development on economic

growth is measured separately, the bi-directional

relationship is no longer restricted to high-income

countries. 2

The countries in the upper-middle income group

have achieved a higher average total factor

productivity (TFP) growth than other countries.

Countries with competition and privatization in

telecommunications have achieved a higher TFP

growth than those without competition and

privatization.

3

The diffusion of mobile telecommunications services

is found to be a significant factor that has improved

the TFP growth of the telecommunications sector in

developed countries.

Telecommunications is an enabler for economic

development

4

The primary economic benefit of improved telecommunications is

improved efficiencies in other productive sectors.

reduced transport costs

reduced transaction costs

improved marketing information

increased efficiency of industrial production.

A positive relationship exists between economic development and

infrastructure investment, including telecommunications in

particular.

5

Investment in telecommunications infrastructure can not only increase

general business efficiency but increase the impact of other

infrastructure investments.

Investments in new types of telecommunications infrastructure can

result in greater benefits than marginal improvements to existing

infrastructure.

Maintenance of the telecommunications infrastructure is necessary to

obtain the full economic development benefits.

Even with a strong positive correlation between telecommunications

investment, it alone is not sufficient to ensure economic growth.

However, lack of telecommunication investment can prohibit or

significantly constrain economic development .

6

CONT…

The Importance of Telecommunication In Economic

Growth Humans need communication, and from early

history, various means have been used to provide

communication at a distance, with radio, telephone,

television and computer links (Networks).

Now an integrated part of the society, it now looks like

our need for information is almost as great as our need

for energy.

7

Information has been found to be one of the most important

elements for the efficient growth of an economy.

The electronic transfer mode, which includes broadcasting

and telecommunication, plays a very important role in

information management.

With telecommunication, some of the physical constraints

of an organization can be removed in all sectors of the

economy. This will allow increased productivity through

better management and administration.

8

In a system, the function of telecommunications may

be likened to that of the nervous system in a living

organism.

We all know that without rapid and reliable exchange

of information between all parts, effective control and

co-ordination of such systems would not be possible.

Therefore, optimum use could not be made of the

resources available for the development of the system.

9

Telecommunication has greater role in different sectors:

Health

Agriculture

Education

Transportation

Administration

10

Health

Primary health care delivery is known all over the world

as a program that is community oriented but operated by

large number of semi skilled workers and supervised by

highly skilled personnel who, to be effective require

telecommunication facilities for monitoring the

performance on field.

The term "Telecommunication medicine" which is the

use of electronic equipment to link physically separated

health facilities is now commonplace in developing

countries.11

Agriculture

This is one of the most important sectors in the economy.

Using mother tongue with the aid of telecommunication

(Radio, Television).

Farmers in rural areas can be informed future events of

natural disasters like thunderstorms, possible earthquakes,

flood and destructive pests through the aid of simple

meteorological information.

They can also be informed on how to avert the dangerous

consequences of such natural disasters in the shortest time

possible.12

Education

There is hardly any other area in human endeavor in which

telecommunication can have an impact on its citizenry, than in

education.

In addition to the program of formal education of the citizens

by television, radio, and computer networking (Distant

learning), they have now been made more effective both in

scope and in quality by use of telecommunication satellite.

This is very relevant now that the country has started the

distant learning program.

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Transportation Telecommunication has always played a vital role in the

transport sector all over the world.

It is being used in: Hotels/ Airline reservation tickets

and management of courier services.

It is also used to land and Fly airplanes, it is also effectively used in the management of fleet of vehicles in freight and passenger transport.

With telecommunication, it has become possible to programmed the movement of human traffic including that of business executives through mobile phones.

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Administration

It is a known fact that all machinery of government depended

to a large extent, on information dissemination provided by

telecommunication infrastructure and system for greater

performance.

For example, in these days of electronic welfare, the police

require telecommunication to be able to maintain, command

and control on land, air, and sea. We all know the great role

telecommunication played during the gulf war, which brought

general awareness of cable network used in the country.

15

Telecommunications must compete for budget allocations from the state along with all other bureaucracies.

1. the externalities associated with an expanded telecommunications infrastructure are not recognized;

2. the government may view the telephone as a "toy for the rich,“ and believe that it has better things to do with its money;

3. the government, with more sinister purposes, believes

that better communications will undermine its own position;

4. the government has many other social/political motives, objectives or goals with little or no economic foundation.

• Helping businesses be more competitive

• Creating opportunities for new jobs

• Attracting telecommunications intensive businesses

• Enhancing excellence in education, government, and

health care

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Telecommunication From the Government

Perspective Provides enhanced & affordable digital telecom infrastructure for

crime prevention functions, emergency management, homeland

security operations & public information programs.

Provides enhanced & affordable digital telecom infrastructure

needed to deliver more services with less resources.

– Eliminates duplication of effort & increases responsiveness to

community needs.

19

Competition promotes economic efficiency,

assuring that costs are minimized and resources

are directed to their highest value uses.

Firms are compelled to innovate to lower costs

and to improve quality and product choice in a

continuing quest to attract consumers and

improve efficiency.

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the absence of competition, means that prices

exceed economic costs. These higher prices result in

a deadweight loss.

Capacity and investment are limited because prices

are too high. Moreover, the absence of competition

reduces pressure on the firm to improve quality or

eliminate cost inefficiencies.

21

Competition will deliver benefits to consumers through

lower prices, increased consumer choice and service

quality, and improved incentives to invest and innovate.

Prices will be lower because competition will eliminate

monopoly profits and because the "survival of the

fittest" law of competitive markets will force firms to

minimize costs.

22

The estimates the loss in GDP,

consumer welfare, and

economic efficiency because of the lack of effective competition in telecommunications, a key infrastructure industry.

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Conclusion:

Information has shown that telecommunication is a vital

tool for economic growth in the society.

the economic impact on mobile telecommunications across

the world and in particular the relevance for developing

countries.

The contribution of mobile telecommunications

infrastructure to economic growth is significantly smaller

for low mobile penetration countries (or in fact low income

countries) than for high penetration countries.

26

A positive relationship exists between economic development and

infrastructure investment, including telecommunications in particular.

Even with a strong positive correlation between telecommunications

investment, it alone is not sufficient to ensure economic growth. However,

lack of telecommunication investment can prohibit or significantly

constrain economic development .

Investment in telecommunications infrastructure can not only increase

general business efficiency but increase the impact of other infrastructure

investments.

Investments in new types of telecommunications infrastructure can result

in greater benefits than marginal improvements to existing infrastructure.

Maintenance of the telecommunications infrastructure is necessary to

obtain the full economic development benefits.27

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