The digital sector can make poor nations prosper
Approximately two in every three people in the US have direct access to a computer. In sub-Saharan Africa, fewer than two in every 100 do. Narrowing this digital divide, by giving more people access to information technology, is one of the great challenges facing governments and the private sector.
Information technology (IT) is fundamental in driving productivity and economic growth. A McKinsey study found that IT-producing sectors of the US economy generated 36 per cent of its productivity growth in 1993-2000, in spite of accounting for just 8.0 per cent of gross domestic product (GDP). A similar study, by the United Nations International Telecommunications Union, recently found that 27 per cent of GDP growth in the Group of Seven (G-7) leading industrial nations in 1995-2003 was a function of investments in IT. These dry numbers translate to real economic opportunity and the kind of well-paying jobs that are greatly needed in all parts of the world.
Some developing nations are already experiencing significant gains. India, for example, generates more than $21bn a year in revenue from its IT industry -- up from $150m 15 years ago -- and over the past two decades employment in India's IT industry has increased from just 6,800 to more than 1.0m. Similarly, China now exports more IT goods than any country. Likewise, Malaysia, with only 25m people, has become the US's 10th largest trading partner in part by creating an attractive environment for IT investment.
But for every China, Malaysia and India, there is a Chad, a Paraguay and a Bangladesh - countries where information technology is practically non-existent. Building domestic IT sectors in countries such as these may seem a daunting task, given the many other day-to-day challenges. But a number of countries have created templates for how it can be done. In 1991, Singapore set out to transform itself into a high technology hub and took important steps such as building a national broad band network and eliminating the 49 per cent cap on non-state ownership of public telecommunications companies. Today, Singapore is a technology centre and the World Economic Forum recently ranked it second when measuring countries' ability to participate in, and benefit from, information and communications technologies.
Ireland has also realised great gains by focusing on IT. The government advanced an action plan on the information society in 1999 and then launched an initiative focused on funding research targeted at niche technologies. Significantly, Ireland also created a favourable tax regime and complemented its tax policy by welcoming foreign investment, as Dell learnt when we first considered investing there in 1990. Today, Dell is among the largest of Ireland's 1,300 IT companies.
There are a number of steps developing nations can take that will help to develop an IT sector while also generating broader benefits. First, improve access to high quality education, with a focus on building 21st-century skills.
Second, focus on developing infrastructure - this means encouraging the development of multiple communications networks, because broad band is instrumental in attracting foreign investment in technology and will ultimately be a key driver of growth. Spectrum policies that facilitate wireless broad band will allow countries to modernise quickly. Third, governments need to open their markets to IT products from other countries by creating a market-friendly tax and regulatory environment. This approach attracts new investment and jobs, giving consumers more choice while forcing domestic producers to remain competitive on quality and price.
Businesses have an essential role to play in expanding digital access. They should view it as a two-dimensional opportunity: first, to improve lives by making IT solutions more accessible to more people - whether a budding entrepreneur in Latin America looking to launch a niche business or a doctor in Africa searching for information to combat a rare disease; second, and just as important, expanding digital access is a vehicle for expanding sales and profitability. The full potential of information technology is far from being realised so, as more people get access to modern IT equipment, there will be greater demand for IT-enabled services.
Information technology has helped build a wealthier world but also a better world in which more people can get more of their needs met. But for hundreds of millions of people, IT is little more than a distant dream. Turning the dream into a reality is a goal everyone in the world of IT should be able to support and willing to work to achieve. (The writer is chairman of Dell.)
Under syndication arrangement with FE