From the "Digital Divide" to the "Digital
Dividend"
Recent information and communication technology developments,
particularly the growing use of Internet, have affected almost
every facet of modern life. Technology has brought both new
challenges and new opportunities, leading to digital "haves" and
"have-nots". Experts and analysts describe this phenomenon as a
"Digital Divide". It has been argued that this divide is often
congruent with others such as the economic divide, the education
divide or the health divide. But nowhere has the impact of
technology been more pronounced than in the area of international
business.
In an effort to bridge this divide, many institutions have
conducted extensive studies, discussions and dialogue. The aim of
this research and dialogue is to harness technology so that it
makes a positive impact on development and poverty reduction.
For our purposes here, we will leave aside the analysis of the
root causes of this divide or the measures to bridge it. Rather,
ITC has focused on what developing countries, especially small and
medium-sized enterprises (SMEs), can do to gain the "Digital
Dividend" - by exploiting "Digital Opportunities" that have now
become available.
Business views in developing countries
ITC's starting point was in-depth consultation with business
communities in developing countries. We began by talking to
business representatives and their public-sector counterparts to
obtain the view from the playing field and from the sidelines. We
held a year-long running dialogue with the key players over the
course of 2000. We undertook surveys, consultations, analyses and
practical research, posing such questions as: "Do you know about
the digital developments under way? Do you know how they will
affect you and your business? Do you know what you need to do?"
This dialogue helped shape the Executive Forum 2000 on "Export
Development in the Digital Economy", held in Montreux in September
2000. At the event, 45 national export strategy-makers and business
leaders from 24 developing countries and transition economies and
20 e-commerce specialists met for three days to deliberate over
identified issues of major concern. E-mail discussions enabled a
further 600 e-trade specialists and businesses from 86 countries to
join the debate and share their views. This was further supported
by the Executive Forum web site
(http://www.intracen.org/execforum), which hosted ongoing
consultations prior to and during the event.
A new game, defined by e-competency
The newly introduced "Digital Game", despite its apparent
mysteries, dark secrets and technical complications, has
nevertheless provided many interesting opportunities for exporting
SMEs in developing and transition economies. These enterprises are
concerned about being left behind due to technological and
infrastructural weaknesses, as well as insufficient knowledge of
recent technology developments and their implications for
developing countries. At the same time, they are energized by
evidence that governments and businesses in developing countries
have managed to turn these developments to their advantage.
Let us take a closer look at some of these issues.
Technology has altered relationships between producers and
consumers of goods and services; redefined the roles of
intermediaries in the global supply chain; and generated both new
opportunities and new players. New business models are emerging and
there is pressure on existing business approaches to adjust to the
new definition of competitiveness. The emerging key factor is
e-competency. It is an entirely new ball game. And as with all
games, only those with the full knowledge of the rules and who have
been trained in the appropriate skills will be able to excel in the
playing field.
Game rules: the law-maker's dilemmas
The rules of the game are developing in response to these and
other considerations - not all of which are fully compatible.
Developing country governments face competing resource demands
between traditional priorities such as food security, health and
education, on the one hand, and emerging priorities such as
technology infrastructure and human resource development, on the
other. Technology proponents advocate speedy establishment of
telecommunication networks with affordable access; development of
standards and protocols; as well as software, hardware and
"brainware" (an e-savvy workforce). There are also competing
considerations related to societal values - equity and social
justice, preservation of cultural values, freedom of information
and others. Governments can either stand back or intervene to
create an enabling environment for their own companies and
citizens.
This brings us to the law-maker's dilemmas. Among them:
Innovation vs control. Innovation occurs through ruptures in a
stable structure. It prospers when demand characteristics are
strong, infrastructure exists and there is a stable investment
climate. Once an innovative concept prospers, or even shows promise
of doing so, it brings with it the accompanying turbulence, it
attracts the attention of regulators... and the tax man cometh. But
then, new technologies are developing at such a rapid rate today
that innovation is clearly one jump ahead of the regulators. The
challenge is to develop regulation which is technology neutral and
development supportive.
Entrepreneurial vs social benefits. Entrepreneurial activity may
be good for individual business interests, but it has to be
reconciled with issues of right to privacy, social justice,
security and public good.
Bricks vs clicks. The traditional econo-my ("bricks") has great
potential to be e-enabled, especially in key sectors where the
physical product and the market structure lend themselves to
e-trade migration. It has an even-greater potential to be
e-facilitated. The new economy ("clicks") requires a different
business development focus, as the products are e-based,
e-facilitated and digitally deliverable.
Balancing options
It is all a question of striking the proper balance. The balance
between unfettered innovation and total regulation will depend,
among other considerations, on the state of e-development or
e-readiness of the country. An experienced e-player country might
favour a tilt towards regulation, while a country in e-training
will prefer a tilt towards facilitation.
The essential point to remember is that technology does not
impose an either/or situation. E-commerce or e-facilitated trade
should not be viewed as an alternative to traditional trade.
Technology is but a tool, and it is up to the user to employ this
tool to his or her advantage. As B.M. Vyas, head of the Gujarat
Cooperative Milk Federation (AMUL), noted during the Executive
Forum, "The Internet or new communications technol-ogies are new
ways of doing my business. You may call it e-commerce or you may
call it by any other name. For me it is a means of expanding my
business and improving my competence and competitiveness in the
market."
Roles in a knowledge economy
Whatever the rules of the game, it is necessary to be well
informed about them. More importantly, it is necessary to develop
the skills to play the game effectively and competently.
In the knowledge economy, it is essential both to acquire
knowledge and to be able to apply it to increase competence and
competitiveness. It is for this reason that different people
acquiring the same knowledge end up reaping differing levels of
benefits.
Governments need to take an active role in raising awareness,
building consensus and coordinating activities that are mutually
reinforcing. They need to identify competitive advantages for
export sectors, both existing and potential ones. They need to put
in place training programmes for e-competency. In short, they need
to have a well-articulated e-trade strategy and an action plan.
These have to be developed and implemented by working in close
partnership with the business-sector representatives.
A phased approach for SMEs
E-trade development is more than mere e-commerce development.
Most developing countries face low levels of Internet connectivity,
inadequate bandwidth and high access costs. Hence, the number of
developing country companies actually doing e-commerce (i.e.,
completing entire business transactions over the Internet) is small
indeed.
Yet technology is still relevant to the vast majority of SMEs
which are not ready for e-commerce. They can benefit immensely from
the new technology at almost every stage of their business cycle.
Equally importantly, it is not necessary that these firms be
e-literate. There are many service companies and support agencies
that act as intermediaries to pass on the benefits of technology to
SMEs. Against a fee, these intermediaries can do market research,
prospection, analysis, opportunity identification and even make the
first contact with potential business partners. This can generate
considerable savings for SMEs, rendering them more competitive
internationally.
In short, success in e-trade is about doing old business in new
ways and creating entirely new businesses.
ITC's role
In response to these challenges, ITC has developed an e-trade
strategy and implementation plan. It focuses on helping countries
build e-competence, through a package of training, advisory
services, information and partnership networks. At the same time,
ITC is also moving forward to enhance its own e-capability.
More information on the Executive Forum event and ITC's
e-strategy is available elsewhere in this magazine issue, as well
on ITC's Executive Forum site:
http://www.intracen.org/execforum
R. Badrinath is Director of ITC's Division of Trade Support
Services.
These views are adapted from a presentation at the OECD
Emerging Market Economy Forum on Electronic Commerce (Dubai,
January 2001), consultations with the DOTforce (March 2001), and
research for the Executive Forum 2000.