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    Putting "E" to Work


    © International Trade Centre, International Trade Forum - Issue 3/2003

    Whether it is in processes, products or markets, exporters who do not keep up with technological innovations in their field may fall behind. A solid investment strategy in "e", however, can help SMEs enter new markets and overcome or sidestep many traditional obstacles they face while competing internationally.

    In many developing countries, small and medium-sized enterprises (SMEs) are increasingly concerned about being able to benefit from the electronic, or "e", dimension of the information age. They are far more aware of the rich potential of "e" to sharpen their competitiveness in world markets. But with limited resources and a bewildering choice of information and communications technologies (ICTs), they need help in deciding how and where to invest.

    Governments, trade support agencies and technical cooperation institutions can help 'put "e" to work' for the benefit of these firms. SMEs are, after all, the backbone of most developing country economies and foremost among their exporters.

    Opportunities for small firms

    The "e" dimension emerges as a powerful trade tool, widening market prospects, increasing market visibility, improving access to clients and reducing transaction and promotional costs. It throws open entirely new business opportunities, and also helps do 'old' business in new, more efficient ways, bringing new forms of support to exporters. Acquiring technology is one thing; making it work to benefit SMEs and society at large is quite another.

    Countries want to ensure that their SMEs and the communities that rely on them for their economic well-being benefit tangibly from new digital opportunities. This is a key factor linking the debates at the World Summit on the Information Society (Geneva, December 2003 and Tunis, December 2005) to the achievement of the United Nations' Millennium Development Goals by 2015.

    "E" for exports

    Many developing country firms are tapping into the new business opportunities offered by the digital economy. They are key exporters of ICT products and services, from semi-conductors to software, and ICT-enabled services, such as back office operations. Brazil and India are just a couple of shining examples. The possibilities for growth continue to be promising. What is lagging in many countries is how SMEs incorporate new technologies into their own business processes. SME managers and governments often want to hear more persuasive arguments for investing in "e".

    Why invest in "e"?

    There are three main reasons why developing countries should invest in "e". First, information and communication technologies can improve the ways they produce, market and buy and sell their goods and services. For instance, SMEs can use online auctions and exchange mechanisms on the web to buy and sell everything from automotive parts to almonds and from shoes to flowers.

    Second, ICTs can help level the competitive playing field between developing and industrialized economies. For example, because the Internet is a global system, companies' exact locations are becoming, in many respects, increasingly irrelevant. Sellers can open new markets in previously unthought places and exchange valuable data across borders and time zones with small investments in standard Internet technologies.
    Third, electronic business - retail and business-to-business - is growing substantially despite the dotcom companies staggering a few years ago. And it's not just business - governments are getting in on the act.

    A solid investment strategy in "e" can help SMEs enter new markets and overcome or sidestep many traditional obstacles they face while competing internationally.

    The public sector has a role to play here, working with business, as any national strategy to use "e" for trade development should start 'from the bottom up'. Once strategy-makers identify the business sector's needs and concerns, they can work towards creating an enabling environment, including a legal framework, e-government, financial access, Internet access and practical training. It also makes sense to focus in priority on areas and sectors where "e" tools can be most effective, i.e., export sectors with the most potential to transform quickly and become efficient users of ICTs in the conduct of their business.

    "E" for efficiency

    Financial services, tourism, software, media and entertainment industries are typical examples of such e-friendly sectors. With a digital product such as software, for instance, the entire business transaction, from marketing to delivery, can be most efficient using digital networks.

    The significance of "e" in marketplaces for physical products differs from sector to sector. Companies still have to ship physical products in a traditional manner, but they can use ICTs to boost efficiency in areas like production, search and ordering processes.

    The goal for traditional manufacturers of goods and agriculture products is to apply appropriate technology to drive costs down and become more efficient.

    "E" tools for SMEs

    The tools of the information age can sharpen exporters' competitive edge, but finding "e" tools for SMEs can be hard, if not impossible. Large corporations invest heavily in developing ICT solutions to business problems, with the result that most products in the market cater to their needs. Small businesses find existing solutions overly complex for their needs and often unaffordable. They want inexpensive, uncomplicated tools to increase market visibility, conduct research, manage clients, develop products and increase overall efficiency.

    The public sector and development cooperation agencies can help to bridge the gap by finding solutions that meet minimum standards of quality and are within the reach of small and medium-sized companies. By partnering with solutions providers, governments can ensure that advisory, information and technology solutions match small business needs and are commercially sustainable for the producers.

    ITC supports "e" for trade

    ITC recognizes that companies export, not countries. The entrepreneurs who generate the wealth that fuels growth are its primary concern and the ultimate beneficiaries of its services. As part of its technical assistance activities, ITC helps developing countries implement a strategy for e-facilitated trade that brings together government policy-makers and the trade associations promoting business interests to better understand small exporters' concerns about adopting "e". It helps raise awareness, build knowledge and create competence at key levels on using "e" for trade.

    What's more, ITC integrates technology applications in all its trade development programmes for exporters and trade development institutions. From gourmet coffee auctions on the Internet, to computer-assisted analysis of winning export market sectors, to online information on trade development topics and more, ITC helps SMEs apply technology to trade to gain a competitive edge in global markets.

    Making a difference

    There's an old saying in India that can be adapted to the emerging information age:
    "It is not what you eat that counts; it is what you digest;
    It is not what you read; it is what you absorb;
    It is not what you say; it is what people hear and understand;
    It is not how rich you are; it is how you use your wealth…"

    In the same vein, one could add:
    "It is not how many ICT assets society possesses that counts;
    It is how they are applied to benefit society."

    R. Badrinath (badrinath@intracen.org) is Director of ITC's Division of Trade Support Services, which includes the organization's E-trade Bridge programme and its E-trade Development Unit. He is also the Coordinator of ITC's activities for the World Summit on the Information Society.