ICT will ultimately bridge the digital and poverty divides

Adam Rogers
Head of Communications and Public Information, UNCDF
November 2006

Introduction

Information and communications technology (ICT) has proven to be an important development of the past decade. The social and economic impacts of the ICT era have been compared to the industrial revolution, providing nations and individuals alike with unprecedented opportunities to accelerate economic growth, accomplish unprecedented levels of global communication and collaboration and produce an exceptional number of dollar millionaires.

Benefits from the era, however, have been concentrated in developed countries, and among small segments of developing countries. This discrepancy has created what many call a “digital divide,” a new term to describe the disparity between those who have access to ICT and the skills to use it and those who, for a variety of reasons, have limited or no access.

Many people worry that the digital divide is unbridgeable. They point out that rich countries are growing richer from their advanced high-tech industries. The high-tech boom has enabled them to invest in the next generation of high-tech products, which contributes to higher profits, and more available capital to invest in R&D, and so on. The high salaries in the West's technology centers are causing a brain drain from the countries that need them most.

This paper attempts to point out that the digital divide is not as wide as some portray it to be. It may, in fact, be narrowing. Furthermore, even where there is a gap, there are still benefits to developing countries – benefits that would otherwise make them worse off were it not for ICT.

Growing divide between rich and poor

It is clear that the benefits of the ICT era have not been evenly shared. Uneven economic growth during the internet boom is particularly evident when comparing the GDP per capita in the poorest countries to the richest from the early 1960s to the early part of this Century (see Figure 1).

Figure 1: GDP per capita in the poorest and richest countries , 1960-62 and 2000-02

(in constant 1995 US$, simple averages)

Source: ILO (2004)

Obviously, the stark divide between the rich and the poor on the planet predates the ICT era. Half the world — nearly three billion people — live on less than two dollars a day; the Gross Domestic Product of the poorest 48 countries is less than the wealth of the world's three richest people combined; nearly a billion people entered the 21st century unable to read a book or sign their names; more than a billion children live in poverty, while 640 million live without adequate shelter, 400 million with no access to safe water, and 270 million with no access to health services. Around the world, 10.6 million children died in 2003 before they reached their fifth birthday (Shaw, 2006).

Making progress

Despite these dim statistics, the world is making progress. In 1990, 28% of the world's population lived in extreme poverty; by 2002 this percentage had fallen to only 19% (United Nations, 2006). Granted, most of the improvement was in China and India, but there is good news even in Africa, where real GDP grew by 4.6 per cent in 2004, the highest in almost a decade, up from 4.3 per cent in 2003 (ECA, 2006).

The contribution from ICT

Some people argue that increased Official Development Assistance (ODA) would be wasted on supporting ICT in developing countries, when the basic needs of so many are not being met. More than two billion people, for example, do not have access to electricity, or even to low cost essential medicines such as penicillin (UNDP, 2001).

However, developing countries would be worse off today if not for ICT. For example, ICTs are delivering vital knowledge to schools and hospitals; they are improving public and private services, and increasing transparency, productivity and participation in government. In the area of medicine, ICTs are improving the dissemination of public health information and facilitating public discourse and they are enabling remote consultation, diagnosis and treatment through tele-medicine (Chetley, 2006)

Many hitherto poor countries in the developing world, now among the so-called “emerging market economies” have harnessed ICT and in the process lifted millions of their people out of poverty. The impact of ICT on economic growth in five new EU member countries (Czech Republic, Hungary, Poland, Slovakia and Slovenia) was higher than the average for the former EU-15. Hence, ICT - through both capital deepening and Total Factor Productivity (TFP) growth in the ICT-producing sector - contributed to convergence of the level of income between those countries and the EU-15 (Piatkowski, 2004).

A recent World Bank study (2006) found that ICT is contributing to the advancement of economic growth and poverty reduction throughout the developing world. Firms in developing countries that use ICT grow faster, invest more, and are more productive and profitable than those that do not. The UN Development Programme (2001) reported that new ICTs are providing opportunities for political empowerment (such as the global e-mail campaign that helped topple Philippine President Estrada), health networks, long distance learning, and job creation.

China recently overtook the United States as the world's leading ICT exporter and is also the sixth largest ICT market. It now imports electronic components while exporting computer and related equipment. The country is the world's largest mobile phone market, and the second largest PC market, with penetration in urban households roughly doubling every two years between 1997 and 2003 (OECD, 2006).

Considerable progress also has been made to bridge the digital divide in the world's poorest countries. Teledensity targets set by the Brussels Programme of Action for the Least Developed Countries have been met by 25 of the 50 LDCs (ITU, 2006). Access to telephones has more than doubled in the majority of LDCs since 2000 with some of them boosting connectivity by as much as 20 times. In many rural areas, over 80% of households make regular use of the telephone, whereas five years ago, the figure was less than 5% (Greenberg, 2005).

Regarding internet connectivity, access has increased and more interest is on deployment of broadband services in rural areas. By 2005, internet user penetration in LDCs caught up with fixed line penetration. A number of countries have reached penetration rates of around 5%, including Maldives (5.8%), Cape Verde and Togo (both 4.9%), and Senegal (4.6%) (OECD, 2006).

Challenges and opportunities

Worldwide, the ICT sector is expected to grow at 6% in 2006 (OECD, 2006). Though most of this growth will be in developed countries, enormous opportunities are available for developing countries.

However, the challenges are daunting. Though prices have been dropping, the cost of international bandwidth remains beyond the reach of many. There is a scarcity of relevant local content for many countries. The lack of ICT infrastructure remains a problem, and there is insufficient cooperation among development partners in the area (ITU, 2006). More than 80% of the world's internet users are in OECD countries, which have about 20% of the planet's population. Only 8% of the Chinese population is online (OECD, 2006).

Another challenge facing many developing countries as they seek to leapfrog the ICT revolution and harness new opportunities is their ability to produce new technology that can compete in the global technology marketplace. The 29 industrial nations that make up the Organization for Economic Co-operation and Development (OECD), with 19% of the world's population, accounted for 91% of the patents issued in 1998 (UNDP, 2001). That year, those countries spent $520 billion on research and development—more than the combined economic output of 30 of the world's poorest countries (OECD, 2006).

Policy Predicaments

Many existing policies and regulations in developing countries have become obsolete, leading to barriers to the development and dissemination of the benefits of ICT. Policy makers throughout the developing world are becoming aware of these restrictions, but progress has been slow in doing something about them. In sub-Saharan Africa, policymakers through the New Partnership for African Development (NEPAD) are addressing these challenges through a common vision and a shared responsibility to promote sustainable growth and development. They have identified key strategic goals in areas of enhancing telecommunications infrastructure and telephone penetration rates, improving accessibility, reliability and affordability of connectivity services, and increasing cross border interconnection of networks (UNDP, 2006).

To further address policy constraints, 200 participants from 18 African countries met in May 2006 at the ICT Africa Investment Summit in Rwanda. The delegates came up with a 15-point action plan[1], which noted the growing need for increased investment in ICT infrastructure to be developed as a “coordinated continent-wide network based on well-articulated National Infrastructure Master Plans.”

The United Nations organized a series of conferences between 2002 and 2005 (involving both preparatory conferences and two global summits in Geneva and Tunis) to try to bridge the digital divide. Among the goals of the World Summit on the Information Society was increased government action, both to spread access to the internet in the developing world and to spur growth in the ICT sector as a way to accelerate development and reduce poverty.

In its 122-point proposed agenda for further action, Governments at the summit acknowledged that more needs to be done to fund ICT development as an overall part of development assistance efforts . Much of the discussion at the Summit, however, got sidetracked on internet governance issues, and on trying to forge a commitment to basic human rights as a framework for further action.

Governments did, however, agree on an important set of principals (albeit non-binding), such as a commitment to “removing barriers to bridging the digital divide, particularly those that hinder the full achievement of the economic, social and cultural development of countries and the welfare of their people, in particular, in developing countries.” (ITU, 2005).

The Governments also said they would:

strive unremittingly, therefore, to promote universal, ubiquitous, equitable and affordable access to ICTs, including universal design and assistive technologies… to ensure that the benefits are more evenly distributed between and within societies, and to bridge the digital divide in order to create digital opportunities for all and benefit from the potential offered by ICTs for development (ITU, 2005).

Conclusion

Pessimists who claim ICT will increase still further the divergence between rich and poor countries are misinformed. While ICT should not be seen as a panacea for all the world's development challenges, there is clear evidence that support for this sector produces tangible dividends. ICT has actually improved the livelihoods of millions of poor people in India and China and is contributing to solutions throughout the developing world.

Critics of ICT for development often point to the abundance of technology that was dumped on poor countries in the 1970s, evidenced today by broken-down tractors and dilapidated factories that no longer function. If the new focus on technology is to succeed, it should learn from these lessons. The most effective ICTs are typically the most basic ones, such as television and telephones. When ICTs are employed, recent studies have shown (Greenberg, 2005; Chetley, 2006) that the opportunities presented by them are most effectively leveraged when:

the focus is on poverty alleviation and not on ICT itself (the task, not the tool);

• ICT components are kept simple, relevant, practical and local;
• ICT practitioners are involved in the design of ICT strategies;
• there is significant community involvement;
• new solutions are built on what is already in place;
• there is a focus on training to ensure success and sustainability; and
• there is a plan in place to replicate and scale up the project if it is successful.

There is no other option. The ICT sector is a growing segment of the global economy and developing countries need to harness the opportunities if they are to lift their people out of poverty. Furthermore, development assistance organizations should concentrate more of their efforts into supporting the ICT sector, keeping in mind the caveats mentioned above.

References

CHETLEY, A. et al. 2006. Connecting people, improving health: the role of ICTs in the health sector of developing countries . InfoDev Framework paper. February 2006.

GREENBERG, A. 2005. ICTs for Poverty Alleviation: Basic Tool and Enabling Sector. Stockholm: Swedish International Development Cooperation Agency. [WWW]. http://www.eldis.org (22 October 2006).

INTERNATIONAL LABOUR ORGANIZATION. 2004. A Fair Globalisation: Creating Opportunities for All . World Commission on the Social Dimension of Globalization. [WWW]. www.ilo.org/public/english/wcsdg/docs/report.pdf ( 21 October 2006 ).

INTERNATIONAL TELECOMMUNICION UNION . 2005. World Summit on the Information Society: Tunis Commitment and Tunis Agenda for an Information Society. Tunis. [WWW]. Available from http://www.itu.int/wsis/index.html. (22 October 2006).

INTERNATIONAL TELECOMMUNICION UNION . 2006. ICT/Telecommunication development in least developed countries. Geneva: ITU.

OECD. 2004. The Economic Impact of ICT: Measurement, Evidence and Implications. Paris: OECD.

OECD. 2006. OECD Information Technology Outlook 2006 . Paris: OECD.

PIATKOWSKI, M. 2004. The Impact of ICT on Growth in Transition Economies. Working Paper No. 59. Transformation, Integration and Globalization Economic Research. Warsaw: Leon Kozminski Acadamy of Entrepreneurship and Management.

SHAW, A. 2006. Causes of Poverty. [Online Journal] http://www.globalissues.org/TradeRelated/Poverty.asp.

UNITED NATIONS DEVELOPMENT PROGRAMME. 2001. Human Development Report 2001: Making new technologies work for human development . New York: Oxford University Press.

UNITED NATIONS ECONOMIC COMMISSION FOR AFRICA . 2005. Survey of Economic and Social Conditions In Africa 2004-2005 . [WWW] http://www.uneca.org/conferenceofministers/2005/documents.htm.

UNITED NATIONS. 2006. The Millennium Development Goals Report 2006 . UN Department of Economic and Social Affairs. New York, August 2006. [WWW] http://www.un.org/esa/desa/. (20 October 2006).

WORLD BANK. 2006. Information and Communications for Development 2006: Global Trends and Policies . New York: The World Bank Group.

---

Footnotes