2.3.2 ICT as Enabler of Development

Recently some developing countries have begun to stress the role of ICT as an enabler of broad-based social and economic development. Two non-mutually exclusive approaches can be pursued to carry out this strategy. The first is deploying ICT to improve positioning in the global economy. The second is using ICT to directly target the full range of development objectives.

In more detail, the following case studies illustrate these two different approaches to using ICT as an enabler of development—focusing on improving global positioning (Malaysia) and leveraging ICT to directly address social and economic development goals (South Africa and Estonia).

3. Malaysia: Positioning as a Competitive Economy
The intent behind Malaysia's Multimedia Super Corridor (MSC) has been to create a high-tech environment and infrastructure that can attract national and international investors and create spillover effects in the rest of the Malaysian economy—allowing it to leapfrog its neighbors to become Southeast Asia's leader in information technology. Its aim has been to replicate the conditions that underpinned the economic success of Silicon Valley, and also to use this as a starting point to develop spin-off applications intended to transform major sectors of the society through the use of ICT: education (smart schools, distant university), healthcare (telemedicine), government (paperless administration), commerce (electronic commerce) and manufacturing (electronic processes).

The Malaysian government was one of the first to attempt to replicate the Silicon Valley model in a developing country. In its attempt to move to the technology sector to attract domestic and foreign private investment, the Malaysian government invested in creating what was expected to be a world class physical and information infrastructure. This US$40 billion initiative, called the Multimedia Super Corridor, serves as the backbone for the country’s information superhighway. The network is supported by a high-speed link (10Gb/s network), which connects the MSC to Japan, ASEAN, the US and Europe. The network is also capable of supporting extensive public, education and business applications.

A strong emphasis has been put on the expansion of telecommunications infrastructure and the telephone penetration rate as a measurement of the ICT readiness of the country. The telephone penetration rate rose from 16.6 percent to 23.2 percent between 1995 and 1999, while fixed lines in the rural areas rose from 5.2 percent in 1994 to 11 percent in 1999. The country aims to establish an infrastructure with 25 Internet access points, 25 mobile phones and 50 fixed lines for every 100 people within the next 5 years. In addition, other supporting infrastructure such as power, transportation, airports, office buildings and extended business areas are being developed to enhance the primary infrastructure of the country.

Beyond infrastructure, the Malaysian government provides attractive tax incentives for world-class technology-led companies to participate in the MSC initiative. And most importantly, it has launched actions to provide a well-educated work force with relevant skill levels ranging from technical to research—since the MSC implies an enormous demand for IT skills that the Malaysian society is currently unable to provide.

To address skilled labor shortages in all industries, education institutions such as the National Institute of Public Administration (NIPA) and the Multimedia University are developing curricula to better prepare the Malaysian workforce for the e-economy. In addition, to meet demands for knowledge workers, Malaysia offers unrestricted and user-friendly work permit policies for foreign knowledge workers. At the same time, the country has made several efforts to increase ICT literacy because widespread computer illiteracy among the general population is viewed as inhibiting the diffusion of ICT.

Achievements and Limitations. Malaysia has provided attractive inducements to global and local capital through the creation of strong ICT infrastructure in major enterprise zones, by improving business processes, and by providing business incentives. Its development strategy has already stimulated growth in investment and trade. In 1999, GNP rose by 5.4 percent, much faster than initially forecasted. This increase was led by manufacturing, particularly the export of ICT-related electronics—positioning the ICT sector as the economic driver of Malaysia. ICT's contribution to GNP was approximately 36.5 percent primarily from semiconductor and electronic equipment.

Nevertheless, it is too early to draw definitive lessons from the implementation of the MSC and other related programs. Observers already point to some issues that need to be faced with regard to achieving the ambitious goal of transforming the Malaysian society from a developing third-world economy into a knowledge/informational economy. The first relates to doubts about the shortage of skilled labor and ability to generate sufficient numbers of knowledge workers. Second, it is not clear that the goal of entering the knowledge society is best served by a capital intensive focus on multimedia applications, as opposed to a strategy which is more focused on extending infrastructure, increasing ICT and general literacy, and focusing on SME and government usage of ICT so as to improve Malaysia's positioning through more widespread productivity gains and deeper access to global markets for local businesses. Another concern is the possibility of an emerging gap between the information-rich and those who do not have access to technology, notably because of the high cost of computers compared to average incomes.

Despite real determination to make Malaysia an ICT-centric economy, with the MSC being the catalyst for ICT development, there is still much opportunity for progress in bringing the real benefits of this policy to 22.7 million Malaysians.

4. South Africa: Using ICT for Economic and Social Development
South Africa's challenge after the first democratic transition was to balance sustainable economic growth with social empowerment. This is the challenge addressed by several related ICT initiatives including the South Africa IT strategy Project—how to make South Africa regionally and globally competitive and, at the same time, use ICT as an enabler of social equity.

The South Africa IT Strategy Project (SAITIS) was developed by the Department of Trade and Industry and the Department of Communication, in consultation with the private sector and other stakeholders. SAITIS has four fundamental objectives: (1) to create a robust, growing and sustainable ICT sector; (2) to increase use of ICT as an enabler for socio-economic development; (3) to create a knowledgeable and growing ICT workforce; and (4) to create a world-class culture of ICT innovation. Specific initiatives sponsored by SAITIS include: providing Internet access in schools; creating an academy for software development training; providing community Internet access points; and installing public information terminals for access to government services.

In the design of the SAITIS strategy, it was recognized that the development of the local market could act as a powerful stimulus to the ICT sector and, at the same time, could have substantial socio-economic benefits for other sectors. To achieve this, the extension of ICT usage is viewed as needing to take place in four areas—local market development, applications development, information infrastructure development, and achieving ubiquity of access.

Until now, access has been heavily concentrated in the urban commercial areas and among higher socio-economic groups. While some rich suburbs have 70 phones per 100 people, in parts of the country this statistic falls as low as 0.1 per 1,000 people—the same is true for access to PCs. An important objective of the 1996 Telecommunications Act was the promotion of universal service and affordable provision of telecommunication services.

To leverage the cross-sector benefits of ICT, the government has organized a number of ministerial clusters: Efficient Governance, Investment and Employment, Human Resource Development, Poverty Eradication and International Affairs. Each of these areas is to be addressed at the national level through the development of prioritized policies. The aim is to try to reduce the potential waste of resources and to create reinforcing strategies through coordinated deployment of resources, visible sponsorship and wider stakeholder involvement. In addition, the government has created International and National Task Forces for ICT, as well as a Local Content and Production National Task Force within the media and broadcasting industry which will focus on the implementation of the ICT strategies generated by the taskforces.

Private and public sector firms have been involved in training and development of IT skills. For example, Telkom, has been awarded funds to build ICT skills at its training centers across the country and the Howteq training center has had funds earmarked to build capacity in software development skills. The department of education has also started emphasizing ICT in secondary schools where connectivity is available. Education curricula are being reworked to include ICT courses from early stages of learning.

Achievements and Limitations. The South African ICT sector has been able to build on a relatively good infrastructure and a small, but highly skilled, IT professional base. Software development production grew by approximately 20 percent in 1999–2000. However, most of the development has been limited to small scale local projects or within foreign-owned companies. Packaged software is 100 percent imported. R&D spending has thus far been low and there is scope for expansion, both in terms of the range of products available and the number of domestic markets which are served.

South Africa has been able to extend its base of ICT usage with the development of infrastructure and applications made available through government community initiatives, as well as by the private sector, which extended both usage as well as training to its employees. South Africa has the largest GSM market outside Europe and is ranked in the top 20 globally in terms of Internet users (despite the uneven access). The government has also increased the degree of computerization of its own operations: it has become the standard for every government official to have access to a computer and to use email to communicate with other departments. However, not every citizen is enabled to use ICT because access and technology are only available in primary and secondary towns and not in remote and rural areas. ICT education is improving in some instances but not all schools have infrastructure and computers, and even when they do, they fall into disrepair without maintenance. There is a shortage of IT-literate staff to use and maintain them.

It is not clear whether the development focus of the South African strategy has been fully translated into action on the ground. Slow progress may be due to skills, access and regulatory constraints. Approximately 25 percent of ICT-skilled workers leave the country each year; meanwhile demand is growing at 40 percent per annum. The cost of access is still high by international standards and many areas are without access at all. There is not yet a transparent regulatory regime which could facilitate the development of the telecommunications sector.

Potentially differing priorities among stakeholders also present a challenge. The multi-stakeholder taskforces are an important step in this regard, but consultation also needs to be extended to the implementation stage to ensure that initiatives are demand-driven and sustainable.

5. Estonia: Using ICT for Economic and Social Development
Estonia's focus on ICT goes beyond an attempt to position itself to take advantage of the global information economy, although that too appears to be a major determinant of its policy.35 Given its limited natural resources and the declining competitiveness of labor-intensive exports, Estonia is attempting to leverage people and knowledge capital as key assets in its pursuit of economic development. Estonia also has a strong focus on using ICT to address equity—equity in access to opportunities to acquire ICT related skills, equity in addressing the needs and challenges faced by people in rural areas, and equity in terms of ensuring the right to access information.36

An important element of Estonia's approach has been the heavy emphasis on building infrastructure. Connectivity was extended throughout the nation, including the remote island Hiiumaa, starting in the early 1990s. In addition, 300 public Internet access points providing free email and Internet access are expected to be in place by 2002. These will also provide places where citizens can conduct most of their transactions with the public administration. A concession agreement between foreign telecommunications suppliers and the Estonian Telephone Company37 helped to ensure that connectivity in rural and scarcely-populated areas was addressed. Compared with just 7 percent in 1997, 36 percent of the population now has Internet access, either at home or at work.

The telecommunications market in Estonia was fully liberalized from January 1 2001. Increased competition in the telecommunications market since 1991 has resulted in a 50–80 percent reduction in the price of international long-distance calls, lower prices on national long-distance calls and price reductions of 50 percent for Internet connections.

Connectivity and net access have helped to contribute to economic development. Rural telecottages38 supported by local and state governments help to promote economic development, education and scientific research in rural areas. Farmers from the remote island of Hiiumaa are expanding their access to markets by offering their produce on local versions of eBay. Web design firms, some in remote locations, work for clients all over the world and other national technology firms fulfill orders outsourced by Estonia's neighboring hi-tech giants in Finland, Norway and Sweden.

Estonia has become a country where mobile phones are manufactured, not just used. Local entrepreneurship has produced some major new companies including Microlink, the largest IT company in the Baltic states. To gain access to relevant regional and global markets, Estonia has leveraged its location at the crossroads of Eastern and Western Europe and its strong historical ties to the Nordic countries, which are leaders in the use and manufacture of ICT products.39

To meet the growing demand for ICT workers, university curricula are being adapted to adequately prepare students with relevant and practical skills. A new IT college was established in September 2000. Two universities, a number of polytechnics and many training companies also provide basic and specialized education in information technology. The Estonian government has also initiated a number of programs, including the innovative Tiger Leap Program,40 to increase computer literacy in schools. As a result of Tiger Leap, the generation of Estonians currently in school is 100 percent computer literate—every school in Estonia is now connected to the Internet. The Tiger Leap Program also trained school teachers in computer skills and sponsored the design of special educational software packages, especially in the sciences. Associated with Tiger Leap is the annual "Tiger Roadshow" which is aimed at spreading the reach of Internet access and computer literacy, especially among people who have not had a chance to use computers in school or at work and older Estonians.41

ICT has also been used to make government more transparent and efficient.42 From late 2000, cabinet ministers were able to read proposed laws, make comments and suggestions, and carry out votes online. Real audio broadcasts and full-text transcripts of parliament sessions are posted instantly and almost all government documents can be accessed online by ordinary citizens. In May 2000, the government approved the "Estonian Healthcare Project 2015," a key component of which is the use of ICT to achieve efficiency gains.

Achievements and Limitations. When Estonia started its ICT program in the early 1990s, the infrastructure was old and inadequate. Ten years later, Estonia boasts a modern telecommunications network and a computer literacy rate higher than many of its Western European neighbors. Toomas Hendrik Ilves, the Estonian Minister of Foreign Affairs, points to "a combination of well-designed concession agreements with foreign telecommunications operators, clear government support for a broad e-readiness program, aggressive public awareness-raising, and governmental commitment to the digital revolution (particularly in education and e-government) as being the factors making for Estonia's successful adoption of ICT to both position the economy, but also to address selected development goals."

Estonia's approach is not without its constraints. Despite the investment in human capability, educated Estonians are continuing to leave the country to pursue employment abroad. Until this is reversed, skilled labor shortages threaten to become a bottleneck in the development process. In addition, there has been some discord between Estonia's emphasis on both global positioning and addressing specific development goals. The focus on competitiveness and the associated adoption of liberalization policies is having a social cost (reflected in a declining human development index) that ICT alone has not been able to abate. Additional attention should be given to using ICT to ensure vulnerable and disadvantaged communities are not further marginalized by liberalization policies.


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