Information technology and its mobile solutions in particular continue their rapid growth in spite of the economic crisis, reports the United Nations Conference on Trade and Development (UNCTAD) survey “Information Economy Report 2009: Trends and Outlooks in Turbulent Times", published on 22 October. Even though the digital gaps between industrialised and developing countries are closing, as far as broadband connections are concerned, developing countries are falling way behind others. This, on the other hand, slows down their development.
The report was published on Thursday morning, 22 October, in the Ministry for Foreign Affairs (MFA) premises. Ms. Ritva Koukku-Ronde, Under-Secretary of State for Development Cooperation and Development Policy at the MFA opened the event by saying that Finland has long supported UNCTAD's work in the developing countries. Finland has also given financial support for the new report, which is a part of the information society project currently under way with UNCTAD. Koukku-Ronde emphasised that an equitable and wide-ranging development of information society is an important part of a successful development policy and a part of the goals in sustainable development. The holistic implementation of ICT-reforms and its coordination are sectors in which Finland seeks to support its partners.
Pekka Säilä, Deputy Director General at the Department for External Economic Relations emphasised the interrelatedness of trade and development. He told the participants about Finland’s Aid for Trade policy. The Information Economy is a key theme in Finland’s Aid for Trade Action Plan that recognizes that technology and innovation skill are vital for achieving development also in least developed countries. Finland’s work on Information Society is focused on the follow-up to the World Summit on Information Society.
The head of the ICT analysis group, economist Torbjörn Fredriksson presented the main conclusions of the report. He began his presentation by stating that the use of mobile technology is still increasing rapidly, including in the developing countries. In fact, since 2003, the number of mobile phone contracts has increased more rapidly in Africa than in any other part of the world. Within five years, the number of subscriptions has grown from 54 million to almost 350 million.
According to UNCTAD, mobile solutions are considered the best ICT tools available and, therefore, investors both in the North and the South are confident that the growth will continue. The structural conditions for growth are most favourable in Western countries. For example, when measured in terms of broadband access, Finland becomes second highest on the list of most dynamic economies in the world.
On the other hand, broadband connections in particular are the area where the digital gap between the industrialised and developing countries remains the widest. In industrialised countries, more than 50 per cent of population uses the Internet, whereas in developing countries only 15 per cent of the population have access to the Internet. Especially when it comes to the number of broadband connections, Africa falls clearly behind other continents. In most other developing markets, broadband connections are ten times more common than in Africa.
Lack of broadband-based Internet connections in particular obstructs development. Most applications that would accelerate development most effectively are network-based and require proper ICT infrastructure in order to function properly. Such applications include remotely assisted healthcare, remote learning and teaching, crisis management, electronic administration and trade, and network-based, commercially marketed services.
The financial crisis has had negative impact on ICT business. Even though the utilisation of new technologies is increasing, the trade and exports of ICT-related products has decreased particularly in the countries where their exports were slowing down even before the actual crisis began. According to the report, the Asian economies are increasingly dominating the exports of ICT sector products.
On the other hand, the service sector related to information and communications technology has been much better at holding its own ground in the economic crisis. Companies operating in the service sector are internationalising their activities rapidly. They are seeking for business locations in areas from where they could cover several language areas and time zones simultaneously. In IT services, India is still the leading exporter with a market share of approximately 55 per cent.
Fredriksson also paid attention to policy guidelines given in the report. Due to its close connection with development, information technology should be regarded as a central part of recovery packages, and one should not forget the related infrastructure and innovation support. The broadband gap can be bridged, for instance, by means of liberalising competition between operators and by providing support for public Internet terminals and centres. At the end of his presentation, Fredriksson commended Finland’s exemplary ICT contributions for development assistance.
The first person to present comments on the presentation was Janne Rajala, Senior Manager, Nokia Siemens Networks. According to him, mobile broadband is the fastest growing business sector in Western countries. Perhaps similar approach could be adopted in the developing countries and, this way, the current broadband gap could be crossed without going through the phase of fixed connections. In addition, Rajala underscored the importance of general liberalisation of the markets. Nokia’s own surveys have revealed that most of the costs in mobile telephony consist of various kinds of taxes and subscription fees.
Jari Tammisto, CEO of the international mobile technology forum MobileMonday, emphasised mobile technology as an actual, multi-faceted dynamic force. In the best possible case, it could make e-banking services available to those living in developing countries, enhance the transparency of administration, and facilitate empowering social innovations. Tammisto is of the opinion that the most important objective is to use ICT for encouraging people towards entrepreneurship, citizenship and participation. Operators in particular should understand to support the actual needs of their customers and enhance their loyalty instead of concentrating on competing with the price alone.
Rajala agreed with Tammisto’s opinion, pointing out that adopting more and more technology must not be an end in itself. The most important matter is to understand what it is used for and with what kind of user skills. Precise identification of such elements benefits besides the end users, also companies and investors.
The audience commended both Fredriksson and UNCTAD for a high-quality report and gave them some homework for next year. How could information obtained from developing countries concerning the development of the ICT sector be rendered better and more reliable? How to ensure that also the heavily populated rural areas can be linked to information networks? Fredriksson admitted that these are among the key challenges for the future and the next annual Information Economy reports will probably return to these issues.
