Impacts of ICT on Economies

Impacts of ICT on Economies Introduction Information and Communication Technology (ICT) has gone a long way in impacting the lives of many throughout the entire world. The changes associated with it stems from the fundamental changes that ICT impacts to a multitude of the world’s population. The range of its effects in the various forms are felt from lives of individuals, to businesses and to government as they serve to connect and ensure interaction between these important sectors of the society (UNCTAD, 1 – 3). Thus there is really no question as to whether or not ICT has had an impact in the lives of different societies but rather how important these influences are to a world that is increasingly becoming more and more dependent on these technologies.

This research paper will be examining the major impacts of the various Internet and Communication Technologies throughout the world. These impacts will be divided into various regions among them Africa, Caribbean, Continental Europe, Latin America and Asia with particular insight to the Indian subcontinent. In this outline, the paper shall be able to give a very clear and descriptive explanation as to how sustained development in the ICT sector has coincided with exponential economic growth in the Indian subcontinent (Badnjevic and Lena 8), to how it has had an impact on gender emancipation in Africa and Latin America.

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One thing that will come out clearly is that despite the significant impacts gained the sector still continues to face very significant challenges which the ICT sector is yet to conquer.

Another main aim will be to see how ICT services have gone into uplifting the lives of marginalized communities especially the socially disenfranchised members of the society like women and the disabled. It is a well known fact that to expand entrepreneurship in the society women must be encouraged to use ICT methods so as to accelerate their business ventures by the reduction of money transfer charges especially to the micro-sized businesses which are the main drivers of many economies of developing countries. It is very important to also note that these ICT systems also have the same effect on macro and large sized businesses in the developed countries and just a preserve of the small and medium sized enterprises of third world and developing countries.

What are these technologies?

To best understand exactly how ICT has made its impact felt worldwide, the research paper checks out the several gadgets that have really ended up transforming the way communication is conducted. Many gadgets are mentioned, but those with the greatest influence such as mobile phones and personal computers are examined in detail. This helps in showing how small and gradual transformation has been able to achieve remarkable results.

Mobile Phones The penetration of mobile phone telephony has without doubt been the focal point of tremendous ICT development worldwide. This has gone a long way in enhancing business activities in different parts of the planet. It is in the ease of use and handling together with their portability that have made cell phones the latest craze in spreading ICT services to the most remote and inaccessible corners of the world. In India for example, these tiny devices have been

known to become a friendly tool in the growth of small business firms. However, nowhere is the effect of the impact of the mobile phone felt more than in the Sub-Saharan Africa. Unlike in the Western world where the onset of ICT development was preceded by massive developments and urbanization through inventions and innovations of the last century that took place during the Industrial Revolution, Africa’s path towards development stemmed primarily as a result of colonization. The result of this was that Africa typically lagged behind in terms of adopting towards new technology. However, the simplicity of the usage of mobile phones and their relative low costs of operation has ensured that they have rapidly been absorbed into these societies albeit at a much later period than the rest of the world.

Computers The invention of the personal computer was truly the one thing that propelled the world into the age of Information and Communication Technology. It is in the ability of computers to completely revolutionize the pace at which information was transmitted and received. Whereas telegraphs back in the 19th century were seen as having utterly upstaged the postal services in the delivery of information by their much more rapid delivery of the same information, it was in the invention of the computer based services such as the e-mails and websites that have in a way all but brought the very existence and survival of the postal services into question. But it was not just the mail sector that computers affected; they also all but guaranteed the death of typewriters which before the advent of personal computers were the thing for use in offices for typing and by extension the publishing of all the written works up until to the most parts the 1980s in the developed world and 1990s to the early years of the new millennium in developing countries.

Offices ended up adopting and preferring the use of printers which could be interfaced with computer screens which made them more presentable and easy to use as opposed to the

somewhat bulky and messy inked typewriters. The evolution of computers has been such that their sizes have reduced over the decades from bulky equipment into small sized easy to handle laptops and palm tops.

Automated Systems ICT has seen the automation of various systems that have gone a long way in cutting down the cost of doing business by greatly enhancing productivity. A stand out example was in the mass production of motor vehicles where the introduction of robotics technology has gone a long way in increasing the rate of production of the motor vehicles. Robotics use has greatly enhanced the quality of their products by more or less guaranteeing the uniformity and consistence of the cars rolling out of the production line. Automated systems have also enhanced the security of financial transactions particularly by avoiding long queues in banking halls just to withdraw money; now ATM cards can be used more conveniently to access people’s money from their most convenient outlet and not just the banks. The need to carry large wards of money or even some relatively heavy check books around was greatly reduced with the use of credit cards and other forms of plastic money. The advantage of these ATM cards and credit cards was that the electronic trail of transactions was helpful even to the banks when it came to preparing bank statements; all they now had to do was download the records and e-mail them to their customers at a moment’s notice, greatly enhancing time efficiency in the process.

Satellites and Undersea Cables The presence of the satellites orbiting the earth and undersea data cables have greatly enhanced the volumes and quality of the data transmitted between continents. Further developments in internet technologies were necessitated by the sheer amounts of multimedia data that was being shared coupled with the increased use of voice data via the Voice over Internet

Protocol (VoIP) necessitated the need to come up with new and appropriate technologies to deal with the resulting increased data broadband demands. The continued launching of satellites by countries like China that traditionally did not have the technology goes a long way in outlining just how the increased data demand has attracted new players into the previously exclusive market of space satellites. Nations in Africa in an effort to enhance their connectivity have connected to the Arabian Gulf and the sub-continent of India through massive undersea data cables. These connections by undersea cables have been sighted as one of the key reasons why countries in Eastern and Southern Africa have had exponential growth in mobile phone penetration over the past few years. Also these same broadband innovations have boosted the viewing of live television worldwide whereby even persons in remote areas can access live events as long as they have a connection to satellite dishes or stream via the internet using fiber optic cables and wireless internet connection.

Infrastructure Necessary for these Technologies to Develop The challenge that countries in the third world and those within emerging economies continue to face has been the little, poor or completely non existent infrastructure for necessary ICT sector developments. Sure, it can be argued that it is basically in the poor countries of Latin America and Sub-Saharan Africa that the greatest penetration of technology and particularly mobile telephony is occurring. Taking a clearer look, however, the harsh reality that becomes evident is that most of these developments are not accompanied by corresponding capacity building in their economies. This problem of lack of capacity building is not entirely of their making but rather a combination of poor policy on the part of their leadership together with shrewd business politics of the foreign investors who all but ensure that they maintain a stranglehold control of their investments (The World Bank Group 38). The effect of this has been

that the host countries have been enjoying the latest in ICT benefits while the foreign investors get the most out of the deal.

Another significant challenge has been the low rates of returns that are associated with infrastructural investments in some of the remotest places on earth. Typically investments in high quality equipment that optimizes the latest and best of ICT are very capital intensive ventures requiring very heavy investment amounts. Some countries such as those situated within the Sahara desert are very sparsely populated and located in some of the harshest climatic conditions on earth. As such, it is very difficult to even ensure mobile phone service reception in the areas because the idea of erecting several cell phone towers just to reach a handful of people is simply not worth the hustle to begin with (Remenyi 13).

Effect on various countries Despite the methodology that is applied is the measurement of the different levels of development in the ICT sector, the result is that there is a very wide gap in existence, call it the “digital divide” between developing and developed regions and countries of the world (UNCTAD 13). In this particular paper, by observing the different regions of the world, this gap becomes ever clearer. Statistical evidence shows that in developed countries individuals are more likely to have internet access by a whopping 22 than people of developing countries. The gap on cell phone usage also lies in more or less the same figures, at 21 times access likelihood to that in developing countries (UNCTAD 13). The reason for the startling figures and differences all comes down to access to these ICT services of the majority rural and poor populations of these countries due to infrastructural challenges.

South America

Apart from the few major cities in the Latin American continent, all indications show that majority of the continent is made up of very poor citizens. This effectively means that most of their economies are classified as being third world. A closer look at Chile shows that its stand to liberate and privatize its telecommunications sector was the beginning of it enviable ICT transformation. When in 1988 the government privatized national telephone company to companies from Spain and Italy, the sector became very competitive with teledensity figures of 6.7/100 individuals in 1990 going up to 44.4/100 individuals in 2000 and improving their ranking from 93rd to 61st world wide. The major reason for these positive changes was the insistence of government via policy that operators must extend their coverage to rural areas before licensing is done. The results are that Chile is among the top two nations in South America in almost all telecommunication indicators on per capita usage (UNCTAD 14 – 18).

Africa In the African continent and the sub-Saharan region to be exact, the ICT development has been greatly driven by the dramatic growth in the mobile telephony platform. The growth in the mobile phone sector was ushered in primarily by the privatization of government controlled entities that used to provide telecommunication services ever since they acquired independence from the European colonialists. The governments-run service providers were plagued in the most part with high corruption rates and poor management which resulted in them providing very poor services and completely lacking in resources and innovation to be able to invest in new technologies. The only way out of this quagmire lied in the privatization of these state corporations and opening up of the previously monopolized market to other competitors. The act of opening up the market ensured that the competition that resulted gave way for the use of the latest in ICT technology available.

In 2001 the International Telecommunication Union, ITU chose Botswana for a case study on how an effective and independent regulation has been affecting ICT penetration in one of the remotest places on earth. Botswana has really been a revelation of what good governance can achieve. Adoption of relevant economic policies ensured that its GDP has risen over the years in sub-Saharan Africa to become the third largest. The scrapping of telecommunication monopoly back in 1995 by its independent state regulator ensured a meteoritic rise in ICT penetration and by 2004 they had licensed 35 providers of private communication and internet data networks.

Asia Asia is a very unique continent as on one hand it can be considered as a leader in ICT with the likes of the Japanese and Koreans at the top of the list. On the other hand, it also has countries that have not really made it in terms of top achievements in the sector, such as Afghanistan. However, it is the sheer scale of the effects on the world’s 2nd most populous nation, India, that the ICT miracle has greatly been achieved. Here ICT has proved to be a key employer to the masses. What has set India apart from its neighbor China is the levels of participation of its private sector. In India there do not exist very strict governmental control towards the sector such that market forces that are leveraged towards India’s greatest strength of its very large labor force are in essence the chief drivers of the sector and not just government policy (UNCTAD 33 – 34).

Caribbean In the Caribbean, the use of ICT has been on the forefront of their regional organization of Organization of Eastern Caribbean States, OESC such that ICT has been labeled as a major target to be met by its unit on Educational Reforms from way back in 1996 (Mason 5). The target

by OESC was to rapidly transform its young population of high school graduates into a competitive workforce that can effectively fit in the ever changing dynamics of an ICT driven global economy. OESC emphasized that the schools within its membership must strive to achieve high turnover rates for students who eventually end up going to college. This approach has worked because of OESC realizing early enough that for any notion to be competitive and embrace the use of ICT it must first and foremost eradicate or at the very least minimize its illiteracy level.

Impact on the various economies The major impact of ICT on economies can be seen in the four distinct areas of ecommerce, e-government, education and general communication. The advent of e-commerce has resulted in improved feedback and customer service. A perfect example has been how the Indian economy has benefited from the establishment of call centers that cater to customer relations and advertisements of various European and American companies. This in effect has made India a huge player and a leader in the global telemarketing trade. The reason that India has managed to dominate this segment has been due to a combination of many factors. Chief among them is the presence of a very large pool of a qualified workforce who work comfortably with relatively low wage demands as compared to if the same service was to be provided in say, Western Europe.

The use of e-government in various countries especially in the developed nations has gone a long way in cutting down on the red tape associated with bureaucracy that has traditionally caused delays to business due to the time wasted in acquisition of government services such as legal documents and licenses. ICT operated technologies have made the screening of individuals before permitting them to conduct any business in their countries relatively easy. An example is the use of computer software by the State department in red

flagging individuals during the application stage of the green card lottery and effectively removing the unwanted people from the lottery. This process in the past could take weeks on end to go through different files from different agencies both within and without America just to be sure.

It is however in the area of ICT improving general communication that has really had a great impact especially in the developing countries of Africa, Asia and Latin America (Dewan and Kraemer 553). The use of mobile phones has greatly opened up communication by improving interaction between individuals to virtually nearly up to 24 hours. People in Africa for instance can now easily keep in touch with relatives living abroad via the use of social media sites such as facebook, twitter and yahoo messenger. These means of ‘new’ communication have gone a long way in opening up opportunities to those who are left back in their home countries by them virtually having access and exposure to the same things that their relatives have.

ICT has gone a long way in enhancing the access by a multitude of individuals to quality education. The use of software such as power point presentation has made learning to be more user-friendly to the students. With simply a good internet connection a student in Africa or Latin America can have access to a host of online libraries and other educational materials at the touch of a button, essentially they get to use the same materials that student in America and Europe get to have (OECD 54). Thus ICT has been a major means of improving literacy levels especially in third world countries and this has by extension helped their economies by increasing their skilled labor force.

Whether or not technology can bring wide spread economic change?

The answer to the above question is a simple yes. A good illustration that captures this is entry of previously marginalized individuals into the formal and semi formal sectors of the

economy ((Malhotra, Kanesathasan and Patel 48). In Africa there are populations that previously did not have access to banking services. Now such populations are using the revolutionary mobile money transfer services. The meaning of this is that even those at the bottom of the economic ladder now have access to very affordable and secure custom made banking. In India ICT has ensured that the effect of women is felt in the economy by making business operations by women very flexible by these technologies opening up families and communities to emerging markets (Badnjevic and Padukova 70).

Conclusion Technologies such as mobile phones and computers have without doubt had a very big impact on the way countries interact. They have eased the bottle necks pertaining to the carrying out of trans-continental commerce. Sure, the developing countries still have a long way in terms of capacity building to improve on the necessary infrastructure in order to bridge the gap between them and the developed countries. But if the progress made in the sector in the past decade is anything to go by, then it is just a matter of time before full ICT benefits are reaped.

The benefits in terms of e-commerce and e-governance can only go a long way in improving economies of developing nations. Also the use of ICT on education could indeed be the long awaited solution to finally eradicate illiteracy in the world.

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