The impact of information and communication technology (ICT) on an economy is well documented. But going forward, in an information-based global economy, will ICT survive the test of time and space? What will be the factors that will influence the profits and growth of an economy, and the developmental strategies?
Historically, point-to-point networks like the rail-roads and telegraph have channeled resources away from the rural area. Also with the transaction costs being small in urban areas (high-density, small size), technology deployment has been focused on the urban parts of the country. This has created an urban-rural divide. But with new network technologies, we have an opportunity to develop the rural/non-metro areas.
The development of the non-metro/suburban areas will act as a counterforce to the external drain from the rural areas, and should be made a priority. Studies have shown that old-fashioned industries such as manufacturing, energy and agriculture are the ones that spark economic growth. The massive migration to the urban areas have resulted in high property prices, overcrowding and often anti-business conditions. For example – in a city like Bombay, relatively small number of skilled professionals and investors are doing very well. Yet millions are migrating to the urban slums of Bombay (which are ever growing) and living under very harsh conditions. I think, the dispersion from the urban to the suburbs/rural areas will solve a lot of the urban problems and will raise the standard of living of the people.
Wireless technology is the best way to expand the network connectivity in the rural areas. Not only is it cheaper than the wired option, but it can also handle various functionalities. It is a flexible technology (can be deployed based on demand), and is easy to re-deploy. With the use of solar powered cell towers, wireless technology is also an energy efficient option.
There was an article in the economist “The Real Digital Divide” which explains how the mobile-phone technology has a great impact on development and long-term growth, and that its impact is twice as big in developing nations than in developed ones. Hence, to promote bottoms-up development, we need to expand mobile-phone technology in the rural areas.
In a knowledge-based global economy like one we are in today, to gain a competitive advantage, one has to have the ability to innovate, focus on quality, and upgrade the quality of the workforce. A few things can be done to achieve this:
– The government should make it a priority to budget significant amount of money for research and development. There also has to be a strong collaboration between the government, the private sector and the universities. This is the best way to encourage innovation.
– Promotion of education, especially in the rural areas, should be made a high-priority. Broadband access to every town/village and e-learning in schools should be the goal. Information is empowering and technology/internet can do wonders in terms of educating the people and enhancing their knowledge/skills. The government also needs to take an active role in internet governance (IPV6 upgrade, cyber-security, internet freedom etc).
– Government should encourage the local crafts/skills (in some cases traditional skills are hundreds of years old and are a treasure to be cherished). Small businesses should be promoted and local brands developed. One has to get away from dependence on exports / overseas markets.
In a virtual internet-based, electronic embedded environment, there are new sources of transaction costs. Absence of face-to-face relationships is making it difficult for businesses to build trust with others. There is no substitute for learning from a grass root level and building trust with social interactions. The technology infrastructure growth strategy should not be a “deployment-based” one, but a “diffusion-based” strategy, focused on more interactions between government workers, NGOs, professionals, local leaders etc….to share experiences, get data and feedback, and come up with innovative solutions to developmental and other issues.
As far as the global operations go, we should not focus on a particular region, but think global. Product development should take into account the cultures and political system of various regions and should be based on inputs from the sales/marketing teams that are embedded in markets around the world. Also, intra-firm global relationships need to be built.
We are seeing a shift of power from a geographically based nation-states to transnational firms. But with international trade booming, businesses usually turn to national governments for guidance, and to learn about the diverse cultural norms and political rules. As trade expands, government intervention will be needed for building infrastructure or securing property rights. Although its role has been reduced in the new global economic environment, nation-states will have a crucial role to play in providing the resources and guidance, for eliminating the global digital divide.