Abstract
In this chapter, I explore the many ways ICT is likely to impact competitiveness, private sector development and business innovation. The discussion is future-oriented, as the impact of the ICT revolution will become most evident and pervasive only in later stages of diffusion, consolidation and transformation. But by then, windows of opportunities would be lost and competitive positions of many developing countries would be significantly eroded. Most evidence therefore comes from OECD countries, or is slowly emerging from a few advanced developing countries. Some of the evidence is limited to pioneering or first-in-class companies, and thus detects early signs or emerging trends rather than common practice. On the basis of this evidence, I believe that ICT offers many promises and opportunities, even while posing serious risks and uncertainties for businesses in developing countries. Its impact is likely to be pervasive across all industries and services.
First, I explore some of the promises and manifestations of the ICT revolution. Next, I suggest that we are still in an early phase of a long-term technological wave and productivity revolution. Promising paradigm shifts within computing and communication suggest continuing dramatic decline in prices and increase in performance and intelligence of ICT systems. Moreover, long adjustment periods are needed for an economy to fully benefit from a disruptive new technology. The ICT revolution and the accompanying socio-economic adjustments constitute a techno-economic paradigm shift with profound implications for the renewal of the productive and institutional structures in developed and developing countries alike.
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Notes
- 1.
Of course, realizing the potential productivity gains is conditional. Other contextual factors and complementary investments condition productivity gains. Striving for a holistic approach is advocated here as the way to realize optimal or maximum productivity gains from ICT investments. This is elaborated in later parts of the book.
- 2.
These results are not robust for low and middle income countries since only 3.4% of population in low-income countries and 3.8% of population in middle-income countries had broadband, as of 2006, so penetration has not yet reached a critical mass to generate aggregate effects as robust as in developed countries (where corresponding GDP is increased at 1.2%, and where penetration has reached 18.6% in 2006). Another explanation for the higher impact of telecommunications in these cross-country studies is that the early beneficiaries of such penetration are the large and export-oriented enterprises or agencies who already have the necessary human and other complementary resources to leverage the new infrastructure.
- 3.
For a full discussion of the principles of network orchestration, see Fung 2008.
- 4.
Goldman Sachs and DELL are examples of event-driven organizations.
- 5.
The leading user has been financial institutions.
- 6.
For research or empirical basis for these possibilities, see Bryan and Joyce, 2007.
- 7.
Bryan and Joyce, 2007, pp 26 and 49.
- 8.
The enormous upsurge of electronic interactions combined with the expanded number of thinking-intensive workers results in unproductive complexity challenges that must be addressed to realize the potential of collaboration.
- 9.
The Economist, June 17, 2006, The Physical Internet, p.12
- 10.
SMART 2020, a 2008 report commissioned by the Global e-Sustainability Initiative. It calculates that while ICTs account for 2.5% of the world’s greenhouse gas emissions, they have the potential of reducing the global total by 15%.
- 11.
Moore (1965). Gordon Moore observed an exponential growth in the number of transistors per integrated circuit and predicted a continuation of this trend. This has been generalized into a continued exponential growth in ICT capacity.
- 12.
Network externalities are derived from the fact that the value of a telephone line increases with each new subscriber by the number of potential connections between users. This indicates substantial externalities and there may be a threshold effect through which ICT begins to have substantial impact only when at a certain penetration level in the economy.
- 13.
This could change with strategies to develop and produce low cost ICT products that are adapted to local markets in poor countries.
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Hanna, N.K. (2010). Implications of the ICT Revolution for Business. In: Enabling Enterprise Transformation. Innovation, Technology, and Knowledge Management. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-1508-5_2
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