The Importance of ICT Policy Development and Initiative

Why is a ITPDI important? Why are so many countries investing huge amounts of money in the construction of a ITPDI? Previous studies (for example, Arnold and Guy, 1992; Brainard, Leedman and Lumbers, 1988 and Bessant et al., 1985) on the diffusion and innovation of information technology reveal that there are at least three reasons why governments all over the

world are framing policies to stimulate the production and use of information technology.

First, the information technology supply industry is recognised as one of the major growth areas of the economy. Technological change in the information technology sector, particularly in the core area of microelectronics, has been rapid and vast. Improvements in cost/performance ratios and the consequent potential for economic returns and employment growth within the sector, ensures that governments must consider the role of an indigenous information technology sector in their industrial strategies.

Second, information technology is seen as an essential prerequisite for performance improvements downstream in user sectors across the entire economy. Its very pervasiveness guarantees government interest in its diffusion. In part, these potential performance improvements are expected as a result of the direct substitution of new generations of information technology equipment with improved performance/cost profiles, but there is also another dimension to the expectations associated with information technology.

Among others, Bessant et al., (1986) have pointed out that the full potential of information technology will only be realised when information technology is used not only to substitute for capital stock in the performance of existing tasks, but also to augment performance by opening up entirely new ways of performing tasks both old and new.

Third, access to state-of-the-art information technology is vital for the maintenance of effective, indigenous defence capabilities; an extremely important consideration for many nations.

The major reasons for the development of a ITPDI is related to four main factors or perspectives (OECD, 1997). First, is that the information technologies infrastructures, and related applications, are viewed as providing the foundation for the transformation of existing social and economic relationships into an “information society”. Such an information society is

viewed as resulting from a paradigm shift in industrial structures and social relations, much as the industrial revolution transformed the agrarian societies.

A key feature of such society is the transformation of the marketplace;

networks will provide the marketplace of the future handling of transport, access and market transactions. The driving force behind the economic growth and development in such society will not be natural resources or physical goods but information. Based on the premise that communication networks and markets are to play an important role in economic exchange in the future, their development, structure, price and availability will be very important in shaping future social and economic life.

In the present economic context, harnessing the process of change promised by advanced communication infrastructures, and accelerating change, is viewed to be important. There are several reasons for this: first, the need to stimulate economic growth, and in particular, long term employment growth which the development of ITPDI is expected to generate; secondly, the belief that public policy has a role to ensure that the potential economic gains from ITPDI will be realised rapidly; and finally, that country differences in market structures and policy tools to assist the development of ITPDI can lead to potential friction’s between countries and will also act to limit the overall economic impact potential which could result from development of such infrastructures.

The third perspective is related to the commercial opportunities which manufacturing and services industries foresee arising from the development of ITPDI and their applications. The basis for these opportunities is that digitalisation is providing and allowing common delivery systems to be used for all types of information, integrating different types of services and providing the opportunity to develop new services. These developments are also leading to the breakdown of existing industry boundaries not only in the industries traditionally producing and delivering information but also in using industries. The increased role of information in economic activity is also a significant factor in this context. Information differs from other economic

outputs in that it is non-exclusive (it can be consumed by many consumers) and it is often non-destructive (that is consumption does not always require an increase in supply). The development of ITPDI and its applications are also viewed as having longer term impacts on employment, occupational structures, working conditions and social relations.

The fourth perspective believes that ITPDI have international spill-over effects. Networks and the delivery of services on these networks do not respect borders. Already, there is an interconnected global telecommunication network in place based on national public switched telecommunication networks. This has taken place through the interconnection of packet switched data networks. Many private networks have become global.

Increased bandwidth and more sophisticated applications and services will have important implications at the global level for the development of networks.

King and Kraemer (1996, 22) suggested that the ITPDI can possibly affect economic development and competitiveness. This will happen through four ways:

Support activities of existing industries and enhance their competitiveness.

Better computer and communications technologies will enable all organisations to operate faster, more flexibly, more co-ordinated and less expensively, thereby enabling them to compete more successfully. It will enable a nation’s businesses to be at the forefront in exploiting new opportunities created by the technology whether these enable shifts in market share, focus on niche markets, or entirely new products, services and markets.

Attract new multinationals to locate in a country and encourage existing multinationals to expand. Advanced communications and computer technologies such as those proposed for the ITPDI, allow businesses to locate manufacturing, engineering and sales closer to markets and still

co-ordinate these distributed and far flung activities with head quarters and regional locations around the world.

Increase communications traffic over the nation’s network thereby enabling cost reductions and/or reinvestment in advanced facilities and services. An advanced infrastructure can attract in-transit communication activity and stimulate greater use of telecommunications through advanced services such as electronic mail, teleconferencing, EDI, packet switching and data communications.

Develop information industries that can create information product and services for export. It is likely that firms within nations that lead in deployment of ITPDI will be first to create the new information products and services used domestically that can be exported to the rest of the world. The providers of information services and the makers of information appliances will have growing opportunity for export.

Kim (1996, 57-60) listed four key points to highlight the importance of a ITPDI:

First, users require much more powerful telecommunications networks so that they can have easier access to more diversified, higher quality services. The capacity of existing telecommunications networks, mainly composed of copper wired cables, is not sufficient for satisfying the different users, nor for accommodating explosively increasing telecommunications traffic. The ITPDI can be the effective solution to these deadlocks as massive amounts of data being transported at high speed and provide a higher quality of interactive services by combining the advantages of television, computer and telephone.

Secondly, ITPDIs are intrinsically based on their economic significance. To enhance national competitiveness, each nation has tried to foster its information and telecommunications industry, which is universally seen as a leading industry of the Twenty-First Century (Figure 3.4). The development of a telecommunications network causes, or is a prerequisite for, economic

development, in that such networks are the most basic components of the infrastructure in the information society. For these reasons, the expansion of the telecommunication infrastructure is given high priority in the setting of investment in most countries. Policy-makers across the world seem to consider that their country’s economic growth and social development and their citizen’s well-being, will be greatly dependent upon the improvement of their information networks.

Thirdly, increasing competition among telecommunications service providers provides a motive for the proliferation of ITPDIs. Friction between countries associated with trade in goods has now spread to the service sectors as legal services, education, intellectual properties, and telecommunications services.

The Uruguay Round negotiations not only brought services into General Agreement on Tariffs and Trade (GATT), but became a watershed towards the free competition of world trade.

Finally, information and communication technologies have been progressing rapidly since the 1980s, owing to the concentrated efforts of both private companies and governments across the world.