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Positioning of ICTs in Economic Models in Developing

Countries

ITU-D Workshop on New Trends for building and Financing Broadband: Policies & Economies

Manama, Bahrain, 24 - 25 September 2013

Slaheddine Maaref Senior Advisor, ITU Regional Office for the Arab States


ICT & Economic growth in developing countries

Analysts say. . . . . « detailed analysis of experience around the world reveals

ample evidence that, used in the right way and for the right purposes, ICT can have a dramatic impact on achieving specific social and economic development goals as well as play a key role in broader national development strategies »

An extract from :

The Business Model Handbook for Developing Countries

Alexander Osterwalder, Mathias Rossi, Minyue Dong; Ecole des HEC, University of Lausanne.

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ICTs offer every day new opportunities of development and market expansion

for companies products and services

« Adopting ICTs properly in their process of production and sales, SMEs in Developing Countries may have a substantial competitive advantage by providing customized services at significantly lower prices. »

Example : «The Internet makes it possible for a tailor in Shanghai to hand-make a suit for a lawyer in Boston, FedEx taking care of the expedition » [The Economist]

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ICTs offer every day new opportunities of development and market expansion

for companies products and services

ICTs allow to reduce transaction costs within the companies themselves (more efficiency) and with their suppliers and partners (more agility)

In most cases, thanks to ICTs, Companies are able to sell directly to their end customers, thereby saving the costs of intermediaries

Example : By using the web portal

http://www.peoplink.org, craftsmen can now receive up to 95% of the selling price of their products, while they previously received only 10%. [Digital Opportunity Initiative]

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http://www.peoplink.org/


ICT = Multisectoral Infrastructure

« ICT and related applications are increasingly important in the delivery of services such as health and education, in the creation of economic opportunities for poor people, and in amplifying their voices. »

In economic models « It is not a matter of choosing

between ICT and health or ICT and education, but instead that of choosing the most effective way for ICT to help in the delivery of health, education, and small business development services. » [World Bank, 2002]

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Correlation between the development of ICT and that of GDP is well

established

Fairly strong correlation (0.71 in 2008) between the growth of ICT Development Index and that of GDP per capita observed in 153 countries

Source : 2011 International Conference on Sociality and Economics Development, IPEDR vol.10 (2011) © (2011) IACSIT Press, Singapore

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Relationship between IDI index and GNI per capita

in each region of the world

Areas where the ratio between these two variables is the lowest are CEI and Africa

Source : ITU (2011a)

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Growth effects of various ICTs on GDP

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Broadband impact on GDP worldwide is more important than other ICTs


Correlation between Broadband increase & GDP

Broadband impact on GDP increase is particularly interesting

Source : The Impact of Broadband on the Economy: ITU / 2012

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Correlation between Broadband increase & GDP (some country cases)

Relationship between broadband penetration and contribution to GDP growth

Source : The Impact of Broadband on the Economy: ITU / 2012

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The more access to ICT is easy the more development opportunities arise

Source : Les TIC et la pauvreté, Charles Kenny, Juan Navas-Sabater, Christine Z. Qiang1

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Investing in ICT is the best way for developing countries to get out of crises

«… Indeed, investing in high quality, affordable information infrastructure, education, and knowledge may be the best way to innovate out of this crisis, especially for developing countries. Investing in broader access to knowledge becomes even more important during times of crisis, rather than less so. »

Source : Confronting the Crisis: Its Impact on the ICT Industry,

ITU, February 2009, pg. 71

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ICT: a way to get out of poverty ICT can contribute in eradicating poverty and hanger

(which is one of the UN MDG) Poor people are aware of that: if ICT are available to

them, they are ready to spend more than 2% of their income

Source : Les TIC et la pauvreté, Charles Kenny, Juan Navas-Sabater, Christine Z. Qiang1

Example : Percentage of income spent on telecommunications, water and electricity in Chile:

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Practical Uses of Mobile Communications in Low-income Countries

Obtain better-paid job with more stable and/or increased income

Help farmers in agriculture and food chain intermediaries

Financial inclusion via m-payment and m-banking services

Survive emergencies and natural disasters

Help create a low-carbon economy

Improve health outcomes

14 Source : THE STATE OF BROADBAND 2012:ACHIEVING DIGITAL INCLUSION FOR ALL , ITU


But to achieve that, ICT prices in developing

countries should be lower!

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Mobile Broadband prices Fixed Broadband prices

Fixed and mobile Broadband prices in developing countries are still much higher than those in developed countries


Sectorial analysis of ICT impact on economy

Case study of Tunisia Observation of the 90s: Tunisien economy historically

based on traditional services (trade, tourism, transport) and manufacturing outsourcing (Textile-Clothing-Leather and Automotive Components) has reached its limits

insufficient growth rate to improve the population living standards and the resorption of unemployment, especially among graduate

Solution: Structural Readjustment Program: Orientation of the economy towards activities with high technology and intensive skills: ICTs


ICT impact on GDP in Tunisia The contribution of traditional sectors in GDP declines,

while that of ICT sector grows

2005-2010: Average annual GDP growth - 4.7%

GDP structure was evolving in the direction of a weight regression of traditional sectors versus an increase in the weight of sectors with high added value

Source : Commerce extérieur, INS et compilations ITCEQ.


ICT impact on GDP in Tunisia ICT to boost exports

2001-2011: the share of high-tech industries in Tunisian exports increased from 2.6% to 12%


Decline of the share of industries with low technological integration in exports (62,1 % in 2001 versus 41,2% in 2011)


ICT impact on GFCF in Tunisia

2005-2010: Fluctuation of ICT contribution in GFCF

Traditional sectors contribution in GFCF is more consistent than that of ICT

GFCF: Gross Fixed capital Formation


Need to accelerate investment in ICT


Some fundamentals to be included in the government strategies

to promote ICT-based growth

Supporting Companies in structural mutations that occur on the production process thanks to and because of ICT

Promote broadband infrastructure development (Regulation, Frequencies, Rural Areas ...)

Ensure human resources adaptation

Encourage the development of local content and applications

Promote a culture of security and upgrade regulations on data protection


National Broadband Plan World map

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At the beginning of 2013, 134 countries adopts National Broadband Plan to


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NBP Goals and Means of Financing

Source : ITU/ICT Regulatory Database

Goals of the national broadband plans, 2012 Means of financingbroadband plans, 2012


Impact of National Broadband Plan on BB penetration

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Fixed and mobile Broadband penetrations are higher in countries adopting national broadband plan


Characteristics of a good BNP (1)

Make the case for broadband, specific to the needs and economic structure of the country, based on thorough market analysis and benchmarking

Be developed in consultation and based on consensus with a broad range of stakeholders

Consider the vital issue of enforceability/execution

Consider both demand and supply side considerations

Be forward-looking over a timescale of maximum 3-5 years

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Source: ITU “Trends in Telecommunication Reform 2012”, ITU


Characteristics of a good BNP (2)

Be broadly technology-neutral and can include technology-specific measures

Contain detailed, measurable goals and strategies to allow evaluation of progress

Address related legislation to ensure that e-government systems all work together

Balance between high-level strategic direction and detail

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Source: ITU “Trends in Telecommunication Reform 2012”, ITU, Geneva


National Broadband Strategies in Arab Region (1)

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“eMisr” : National broadband plan in Egypt with the objective of reaching 98% 3G/UMTS coverage by 2015 and 90% 4G/LTE coverage by 2021 [source : GSMA, Arab States Mobile Observatory 2013]


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By 2015, all countries should have a national Broadband plan or strategy or include Broadband in universal access /service definitions

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Conclusion The positive impact of ICT and Internet on economic

growth is confirmed by several studies and field experiences Obvious correlation between the maturity of Internet

ecosystem and Companies productivity improvement

Economic models having favored investment in broadband achieve better growth rate

Contribution of traditional sectors in GDP declines while that of ICT sector grows

Necessity for well-structured National strategies and plans to promote ICT and Broadband especially in developing countries


Thank you for your Attention

Slaheddine Maaref [email protected]

ITU-D Workshop on New Trends for building and Financing Broadband: Policies & Economies

Manama, Bahrain, 24 - 25 September 2013

Positioning of ICTs in Economic Models in Developing · PDF filein Economic Models in...

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