Transcript ICTs and Economic Performance: Implications for Developing and

ICTs and economic performance:
implications for developing and
transition economies
Rouben Indjikian, Senior Economist
ICT and E-Business Branch, UNCTAD
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Outline
• Importance of ICT for economic development
• ICT Diffusion
• ICT Impact:
– Macro-level
– Firm-level impact
– Industry-level
• Role of government
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
2
ICT for economic development
ICTs increase productivity through:
• Better communication and networking at lower
costs
• Digitalisation of production and distribution
• New trade opportunities through e-commerce
• Access to knowledge
• Increased competition
The world economy...
... an ICT based economy
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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•E-government
Increased efficiency, better
communication & networking,
dimishing red tape, improving
transparency, better prices
•Financial services
Productivity gains from dramatically
decreased transaction costs of epayments, transparency, pricing and
disintermediation
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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ICT diffusion
Internet users doubled in 5 years
1200
1000
billions
800
South-East Europe and
CIS
Developing Economies
600
400
Developed Economies
200
0
2001
2002
2003
2004
2005
Source: UNCTAD (2006)
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Developing and transition
countries catching up
...
in number of Internet users
2001
2005
Developing
countries
28%
South-East
Europe and
CIS
2%
Developed
countries
70%
28%
Developing
countries
43%
South-East
Europe and
CIS
5%
Developed
countries
52%
43%
Source: UNCTAD (2006)
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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... but different penetration rates
Internet penetration
(internet users per 100 inhabitants), 2005
South-East Europe
and CIS
Developing
countries
14.6
8.5
Developed
countries
54.4
Source: UNCTAD (2006)
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Developing and transition
countries overtaking in number of
mobile phone subscribers...
South-East
Europe and
CIS
9%
South-East
Europe and
CIS
2%
Developing
economies
40%
2001
Developed
economies
58%
40%
ICT&E-Business Branch, UNCTAD
Developing
economies
54%
Para 166 Course, Geneva, 23 April 2007
Developed
economies
37%
2005
54%
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... and increasing
penetration rates of mobile
phone subscribers
6.7
South-East Europe and CIS
56.8
3.0
Africa
14.1
2001
8.0
Developing economies
2005
22.8
58.0
Developed economies
83.0
2001
World
33.6
0
ICT&E-Business Branch, UNCTAD
2005
15.6
20
40
60
80
Para 166 Course, Geneva, 23 April 2007
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Digital divide: Internet users worldwide
South-East
Europe and
CIS
5%
Developed
economies
52%
Developing
43%
Users
Penetration
2005
(thousands
rate
World
1 020 615
15.6
Developed economies
531 290
54.4
Developing economies
441 133
8.5
South-East Europe and CIS
48 194
14.6
Africa
35 389
3.6
ICT&E-Business Branch, UNCTAD
Africa
3%
Asia
31%
Latin
America &
the
Caribbean
9%
Oceania
0%
Para 166 Course, Geneva, 23 April 2007
Source: UNCTAD (2006) based on ITU data
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Limited broadband penetration
Broadband use and penetration, selected economies (2005)
60000
30%
25.5%
23.6%
50000
40000
30000
20.8%
17.5%
16.3%
14.2%
20.2%
15.4%
Total users (thousands)
25%
Broadband penetration
20%
15%
20000
10%
10000
2.9%
0
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0.6% 0.2% 0.8% 0.2% 0.3% 0.2% 0.1% 5%
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Source: UNCTAD (2006)
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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ICT diffusion: Countries have not
invested to the same extent in ICTs
OECD ICT investment as % of
non-residential investment
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Why the differences?
• Lack of strategies on public and business
levels and other instiutional barriers
• Cost considerations and access to finance
• Risk perceptions and nature of business
• Entry barriers and level of competition
• Lack of skilled labour
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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ICT Impact on economic growth
• Multifactor productivity and impact of ICTs on:
labour, capital and technical progress
• Increase in productivity in ICTs producing
sector.
• Increase in productivity and overall efficiency
in ICT using industries due to lower
transaction costs, automation of production
processes and network effects
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Macroeconomic impact
Positive correlation between GDP & Infodensity
Infodensity≃ ICT productive function of an economy (ICT–enhancing capital & labour)
Source: UNCTAD (2006)
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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ICT Impact on economic growth
1% increase in Infodensity resulted on average
in 0.3% increase in per capita GDP
0.35
0.30
elasticity
0.25
0.20
0.15
0.10
0.05
0.00
1996
1997
1998
1999
2000
2001
2002
2003
Source: UNCTAD (2006)
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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ICT Impact on economic growth
Impact unequal among countries at different
stages of development – critical threshold
Elasticities by country group
0.30
0.25
high
elasticity
0.20
elevated
0.15
intermediate
moderate
0.10
low
0.05
0.00
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: UNCTAD (2006)
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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ICT Impact on economic growth
The impact of investment in ICT:
0.3-0.9 GDP growth (1995-2002)
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Impact of ICT at the firm level
• Positive impact of ICTs on firm productivity due to
making ICTs an integral part of production
production process and supply chains, better
communication lines and coordination, improved
skills, innovation, organizational change,
experimentation
• ICTs help efficient firms gain market share
• Powerful impact of ICTs in services sector, but
also in manufacturing and primary sector
• Impact on labour: skill biased technological
change
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Level of e-business intensity
E-business development
Extranet
E-commerce Customer
Intranet
Web presence
PCs
E-mail
Product service
& support
Web
E-mailing with
customers &
suppliers
Web info search
Relationship
Integration with Management
suppliers’ system
Invoicing and payment
HRM, finance
Some logistics
Data sharing
Time, business size, investment
Source: UNCTAD E-Commerce and Development Report 2004
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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From upgrading factors of production
to better performance
ICT Investment
Training
Organisational Changes
Efficiency
Gains
Higher Productivity
Higher Growth
More Wealth
Next Circle of Investment in ICTs,
Knowledge and Better Organization
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Sector level impact: e-finance
• Massive decrease in transction cost due to
migration of finacial services to electonric
communications and particularly Internet
• Emergence of click and mortar banks and
brokerages
• Security in e-finance and e-payments
• Financial flows to developing countries: eremittances
• E-finance for SMEs
• Microfinance
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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E-credit information
•
•
•
•
•
ICTs and information assymetry
moving out from informal economy
online credit risk databases
online scoring and rating of enterprises
lower transaction costs to assess SMEs
credit risks
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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e-trade finance
• ICTs and credit risks, payments and short
term trade finance in international trade
• bank based e-trade finance platforms
• specialized e-trade finance platforms
• e-trade finance in developing countries
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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e-credit insurance
• major credit risk databases of credit
insurers
• moving databases online
• insuring from paymnet default risk online
• participation of developing countries in ecredit insurance networks
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Sector-level impact: Oil
Oil: a capital intensive & labour saving
industry increasingly becoming an
info-intensive one
• Vertically integrated oil companies –ideal
structure for ICTs
• ICTs in upstream
• ICS in midstream
• ICTs in downstream
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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ICTs and Oil Markets
• Traditional spot and futures oil markets
• Migration to online trading platforms
• Other use of ICTs in international oil trade
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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ICTs as drivers
in commodities sector
•ICTs play crucial role in streamlining the commodity
supply chain
• They link more tightly supply with demand and help
to avoid losses in upstream, middlestream and
downstream operations
•Turning capital intensive and labour saving sectors
of extractive industries into more info intensive ones
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Role of governments
• Foster a competitive and supportive environment for the
increase in invstment in ICTs
…and hence encourage the development of ICT
infrastructure
• Open markets and encourage competition for supply of ICT
goods & services
...through trade, financial and fiscal policies
• Build confidence in use of ICTs
... by developing a supportive legal framework,
• Harness the potential of innovation and technology diffusion
… by promoting the development of R&D, venture capital
and ICT skills of population at large
• Make national programmes more efficient
… by establishing a comprehensive ICT strategy
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Conclusions
• ICTs–a powerful driver of productivity growth and
accelerated development
• Opportunities of new technologies such as mobile
• Decreased connection, hardware and software
costs
• Focus policies on narrowing digital divide
• Link between ICT & overall economic policies –
need coherent strategy
• Measure impact of ICT
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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Thank you!
Questions or Comments?
[email protected]
ICT&E-Business Branch, UNCTAD
Para 166 Course, Geneva, 23 April 2007
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