6/13/01

THERE IS BUSINESS IN CLOSING THE DIGITAL DIVIDE

Geoffrey Kirkman is director of the Information Technologies
Group at the Center for International Development at Harvard University and a visiting fellow at the MIT Media Lab. Jeffrey Sachs is director of the Harvard Center for International Development.

By Geoffrey Kirkman and Jeffrey Sachs

CAMBRIDGE, Mass. -- Globally, the quantity of goods and services that are already sold -- or whose sale is mediated -- through electronic means is staggering. Virtual consulting teams work 24 hours a day in many firms, passing off project work to the team in the next convenient time zone as the workday ends. Just-in-time Internet-based order systems alert textile suppliers in the Indian Ocean when their shipments are needed to arrive in the ports of northern Europe. Growing numbers of government tenders are migrating to online platforms worldwide. It is estimated that by 2005 more
than 10 percent of global economic activity will take place online, a figure that could reach $3 trillion each year.

Readers may scoff, especially with the bloom off Internet market values. But there is a big difference between believing in the new economy and believing in the unrealistic stock prices that were attached to firms in the new economy. Many of the core gains in productivity due to information technology will be captured by consumers, or by hospital patients, or by
students, and not by the providers of the IT services. Thus, the stock price declines, and even the slowdown in IT sales in the United States are no cause for doubting the potential for information and communication technologies to reshape economies and benefit those who need growth the
most -- the poor countries of the world.

The Internet has been shown to be a powerful tool for dealing with grave social issues as well. E-mail has played an essential role in rallying health-care interventions in response to Ebola outbreaks in Uganda and in organizing humanitarian responses to refugee crises in the Balkans and in Africa. It has an even larger role to play in the future, in helping to get the primary health centers and district hospitals of the poor countries
online so that they can better share in the remarkable boom in global knowledge about treating disease, controlling epidemics and mobilizing novel technologies to solve urgent health problems.

Yet in spite of the revolution that has been sparked by the new technologies, there are still tremendous obstacles to the success of these sweeping changes in the developing world. Without a national strategy harnessed to political will and business-sector leadership, regulatory impediments will remain in place, educational systems will continue to turn out woefully untrained workers, and access to and use of IT will remain
only in the hands of the developed world and some pockets of success in developing nations.

What needs to be done?

FREE UP THE PHONE LINES

If there is one element that we can point to with certainty as a key strategic priority for developing nations, it is the liberalization of telecommunications. Where telecoms regimes remain dominated by monopolies, either state or private, the result is almost everywhere a dismally underperforming IT sector, one with few participants, high prices, low quality of service and backward technology. The key is open competition,
easy entry of new participants in the IT sector and thereby ample room for start-ups, foreign companies and domestic firms from outside the traditional IT sector.

The liberalization of telecoms should include not only long-distance and local telephony, but also Internet service provision, cellular telephony and the opening of the local loop. These steps have consistently had incredibly powerful effects upon an economy. When competition is introduced, prices of IT services fall sharply, the quality of the infrastructure rises, and customer service becomes a priority of IT providers. Suddenly, telecommunications become more accessible to a wide
spectrum of individuals, firms and institutions that had previously been shut out. This access to information and communication leads to an empowerment of the business community and social networks that enhance economic competitiveness.

In many places, this question of liberalization comes down to the basic question of political will. Political leaders have to look at telecoms monopolies as more than just a major source of revenue, perhaps for the ruling party, derived from a limited market. Liberalized telecoms regimes can and should become the major drivers for growth for national economies, fueling innovation and business activity in all areas of the economy.

Shortsightedness and the fear of letting go of the "cash cow" continue to stand in the way of vital reform. Beyond the liberalization of telecoms, there are other clear priorities that should be dealt with to promote investment in technology related enterprises. Low tariff barriers for IT products and services, serious consideration of online privacy and security, legal certainty for digital transactions and more fundamental issues -- such as access to credit, predictability of the legal system and openness to foreign direct investment -- are among the essential policy issues to consider when creating an environment in which IT can thrive.

Within the private sector, business leaders should also reexamine their priorities. One important step, which would not only unlock the potential for IT to catalyze economic growth in the developing world, but would also certainly lead to innumerable profit-making opportunities, is for corporate
leaders in the developed world to stop discounting the long term market potential of the 5 billion people living in the developing world whose economies have a combined annual income of more than $6 trillion. There is a deep hunger in developing economies for information -- information for business, commerce, health, education, entertainment. It is trite to say that information is key in making markets function, but it is also true that information is in short supply and available only at exorbitant prices in most developing-country contexts.

It does not require too much imagination to link this information
scarcity with an untapped market potential. But creativity will be needed to promote viable business models. In poorer countries, IT facilities will need to be multi-functional, so that community access to Internet outlets is used to maximum advantage -- to empower local businesses, local schools,
local health clinics and the like. Software and hardware must be adjusted to local conditions, in terms of language, suitability and functionality in stressful conditions and easy maintenance.
What is certain is that once the first major IT companies successfully tap the markets of the global poor, the rest of the competition will be left playing catch-up and asking, "Why didn't we do that?"

EDUCATION, EDUCATION, EDUCATION

Without a cadre of workers who have the necessary IT skills, it is impossible to build a thriving industry around the new technologies. It is also impossible to attract the investment and create the employment opportunities that can flow from the global information and communication technology sectors. In much of the developing world, few workers graduate
each year with the relevant skills needed to be competitive in the new economy.

It is no secret that educational systems in most of the developing world are desperately short on funds and are often not a priority in national planning. Curricula are out of date and not attuned to the IT revolution.

This does not have to continue to be the norm. As is illustrated by showpieces of educational excellence -- such as the Indian Institutes of Technology and Mexico's Tec de Monterrey -- a dedicated vision and strategic long-term investment can build world-class institutions of higher learning that produce some of the world's finest IT workers. National universities should partner with universities in the developed world to foster technology transfer and improvements in curricula and staff expertise. Close working relationships with the local business community and multinational firms allow the skills in institutions of higher education to become more relevant to the marketplace.

Partnership between the public and private sectors has been a successful avenue for projects in the developing world outside the university. At the primary and secondary school level, there are shining examples such as the World Links for Development (WorLD) program. This World Bank-sponsored
project, with the support of private firms and other agencies hooks up secondary schools to the Internet, trains teachers to incorporate computers into their daily curriculum and develops learning programs for their students to collaborate over the Internet with students in other countries.

To date, WorLD has trained more than 5,000 teachers in 20 developing countries and, using IT, has created pockets of excellence in secondary education throughout the developing world. Leaders in the developing world should also consider the possibilities of imparting IT skills to their citizens outside the formal educational system. The Cisco Networking Academies -- now active with almost 6,000 academics in 96 countries -- currently have more than 154,000 students enrolled in network administration training courses worldwide. The network
of Computer Clubhouses, begun in Boston, Mass., recently received a grant from Intel to create a global network of 100 after-school learning centers that is expected to attract more than 50,000 under-served youth to technology-based programs. These examples of private companies getting
involved in the learning process show the possibilities of working around the difficulties of the formal education system. They also demonstrate the importance of leadership from the business community in promoting knowledge and skills that are desperately needed.

If we are truly living through an IT revolution, then we need nothing less than a revolution in global learning systems. Only then will every country be able to participate fully in the global new economy. The leaders of the developing world should view this period as a time of great opportunity. Powerful tools, in the form of information and communication technologies, are available to enhance economic development and to lessen the socioeconomic and geographical divides that have characterized international relations for decades. But to take advantage of this tremendous opportunity, leaders must show leadership. Difficult decisions need to be made by both the public and private sectors in order to harness the new technologies. The rewards for making those decisions are clear and important. The early movers will surely reap the greatest benefits.

(c) 2001, World Link. Distributed by the Los Angeles Times Syndicate International

For immediate release (Distributed 6/13/01)

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