ICT for Development

Carlos A. Primo BragaSenior Adviser, International Trade Department

The World Bank

WITSA Public Policy Meeting

AthensMay 18, 2004

Outline

• ICT and Development

• The Regulatory Environment

• Reality check

• Concluding remarks

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2

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6

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10

12

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1960 1965 1970 1975 1980 1985 1990 1995 2000

Rep. of Korea

Ghana

Thousands of constant 1995 US dollars

Difference attributed to knowledge

Difference due to physical and human capital

Knowledge makes the difference between poverty and wealth

Source: World Development Report, 98/99

Knowledge Changes the Development Process

Creation and effective use of knowledge are key to rapid economic growth

ICT is changing the terms under which knowledge can be created and disseminated:

- ICT facilitates the process of codification and transmission of knowledge about technology;

- ICT enhances the positive learning externalities of knowledge generation by magnifying the possibilities for recombination of ideas and information;

- ICT dilutes the “tyranny” of geography by providing new ways for researchers to escape national boundaries. The rate of international co-authorship of scientific and technical papers, for example, has increased significantly over the last decade;

- ICT increases the “distribution power” of innovation systems, diminishing the time to market of new products and services, while enhancing the dissemination, application, and use of “mature” technologies.

But can ICT be of any help in LDCs?

ICT and development

ICT and Economic Growth - enhanced competitiveness- increased business opportunities - access to market for rural communities

ICT and Improved Delivery of Social Services- health/education/environmental/microfinance services - reducing vulnerability to natural disasters

ICT for Greater Transparency - improved efficiency on government procurement

- reduced corruption

- increased civil society participation

ICT for Empowerment of the Poor

- allowing the poor to better communicate their concerns

The concept of sustainable development

Economic Sustainability

(productivity)

Social Sustainability

(equity)

EnvironmentalSustainability

(protect/enhance natural resources)

IntergenerationConcerns

ICT and sustainable development

Direct Impact

• Production - Toxic components such as

lithium and cadmium (batteries), lead (cathode ray tubes)...;

• Operation- Energy use …;

• Disposal- Short lifetime cycle, growing challenge of managing electronic waste…

• Production - Toxic components such as

lithium and cadmium (batteries), lead (cathode ray tubes)...;

• Operation- Energy use …;

• Disposal- Short lifetime cycle, growing challenge of managing electronic waste…

Indirect Impact

• Effects on transportation of e-commerce and telework- Growth vs. more efficient logistics vs. leisure choices;

• Dematerialization - e-books; MP3 files vs. CDs; email vs. “snail mail”…;

• Acceleration of life-cycle of products- Incentives for agglomeration vs. dispersion

• Effects on transportation of e-commerce and telework- Growth vs. more efficient logistics vs. leisure choices;

• Dematerialization - e-books; MP3 files vs. CDs; email vs. “snail mail”…;

• Acceleration of life-cycle of products- Incentives for agglomeration vs. dispersion

Network Effects

Opportunities for more knowledge sharing, improved coordination, transparency and monitoring

Opportunities for more knowledge sharing, improved coordination, transparency and monitoring

Virtualization of material products: myths and reality

Digital divide

• Infrastructure (income levels, rural vs. urban)

• Digital literacy (barriers to absorption of IT)

• Content

• Gender

• Large companies vs SMEs…

• E-business practices

The network explosion

Income Divide

Digital divide/infrastructure

Source: ITU World Telecommunication Indicators Database

User distribution, by income group, 2001

High Income

Upper-mid Income

Lower-mid Income

Low Income

6.1billion

986million

741million

361million

PopulationTelephone

linesMobile users

Internet users

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Telecoms and Internet: the cost of being connected

278%

191%

80% 60%1.20% 0.135%

0%

50%

100%

150%

200%

250%

300%

Sri Lanka

Monthly internet access charge as a percent of monthly average income

Sri Lanka

Nepal

Bangladesh

Bhutan

United States Denmark

Source: Human Development Report Office calculations based on data ITU 2000 and World Bank 2001

Secure servers and e-commerce

OECD 95%

Non-OECD 5%

Secure Servers, OECD and non OECD (October 2000)

Share of Secure Servers in non OECD countries(October 2000)

14%

43%

34%

0% 9%

Central and South America

Non-OECD Asia

Non-OECDEurope0.4 %

Oceania

Africa

Source: OECD, 2001

Facilitating trade in less efficient countries would bring significant gains: services/e-business are key in promoting trade facilitation

Source: Calculations based on table 4 in Wilson, Mann, Source: Calculations based on table 4 in Wilson, Mann, and Otsuki, “Trade Facilitation and Capacity Building: Global Perspective,” 2003, mimeo.and Otsuki, “Trade Facilitation and Capacity Building: Global Perspective,” 2003, mimeo.

The regulation maze

Layers of communication systems

Layer characteristics

Relevant regulations and policies

Relevant fora for international negotiation/coordination/debate

Content layer Services, images, and applications transmitted by the network

Cyberlaws, taxation, IPRs, consumer, privacy and data protection, competition law, content regulation, trade policies

WTO, OECD, WIPO…

Code layer Protocols and software that make the network run

Internet governance, competition policy, IPRs, standards

ICANN, ISOC, ITU, WIPO…

Physical infrastructure layer

Wires, cables, computers, satellites… across which bits of information travel

Telecom regulation, competition policy, IPRs, trade policies, standards

WTO (BTA, ITA), ITU, WIPO…

Reality check: implications for developing countries

• Infrastructure: rapid improvement but major gaps in coverage/affordability

• Regulatory environment: progress + complexity (cyberlaws, security, PKI, IPRs, content regulation, e-payment infrastructure, privacy…)

• Digital literacy: institutional constraints in the educational sector + IT HR development at firm level

• Content: localization/relevance/IPRs

Concluding remarks

• E-business and ICT use will continue to expand on a global basis and their benefits can be substantial not only at firm level, but also in promoting trade and enhancing productivity at a macro level;

• Convergence in e-business practices can happen (developing countries and industrialized countries, SMEs and large enterprises), but …

• Unless governments provide the proper regulatory environment for private action and support efforts to expand digital literacy, with special attention to the needs of SMEs, the digital divide between the developed and the developing world, at the level of business practices, will widen.

Concluding remarks (cont.)

• More evolution than revolution, but potential for significant distribution impacts (within nations and internationally), particularly, as e-commerce practices spread.

• Importance of keeping in focus the implications of the regulatory environment for innovation

• Cross-border disputes will also expand in the absence of regulatory convergence (no hope for advancing this agenda in a significant manner in the WTO in the near future ).

More information

The World Bank

www.worldbank.org

Development Gateway Portal

www.developmentgateway.org