fighting the digital divide carlos a. p. braga senior manager, informatics program information...
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Fighting the Digital Divide
Carlos A. P. BragaCarlos A. P. BragaSenior Manager, Informatics ProgramSenior Manager, Informatics Program
Information Solutions GroupInformation Solutions Group The World Bank The World Bank
February 2002February 2002
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The New Economy The New Economy
The Threat of a Digital DivideThe Threat of a Digital Divide
Embracing the New Economy: An Agenda Embracing the New Economy: An Agenda for Actionfor Action
The WBG Agenda on Knowledge and ICT The WBG Agenda on Knowledge and ICT
Outline
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The concept and its implications for economic development
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New Economy: New Economy:
– Association of non-inflationary sustained growth with high Association of non-inflationary sustained growth with high investment in ICTinvestment in ICT
Claims:Claims:
– ICT are at the core of the productivity revival in industrialized ICT are at the core of the productivity revival in industrialized countriescountries
– Higher sustained economic trend growthHigher sustained economic trend growth
– Affect short-term trade-off between inflation and unemployment Affect short-term trade-off between inflation and unemployment (affect business cycle…)(affect business cycle…)
– New business models applyNew business models apply
What do we mean by ‘new economy’?
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Even Solow has declared obsolete his 1987 assertion (we can see Even Solow has declared obsolete his 1987 assertion (we can see the computer age everywhere but in productivity statistics…)the computer age everywhere but in productivity statistics…)
Labor productivity growth rate in the US non-farm business sector: Labor productivity growth rate in the US non-farm business sector: from 1.37 (74-90) to 1.53 (91-95) to 2.57 (96-99) from 1.37 (74-90) to 1.53 (91-95) to 2.57 (96-99)
ICT contribution: 0.44 (74-90) to 0.62 (91-95) to 1.10 (96-99). ICT contribution: 0.44 (74-90) to 0.62 (91-95) to 1.10 (96-99). (Source: Oliner and Sichel, 2000)(Source: Oliner and Sichel, 2000)
The ICT-related contribution to productivity growth is expected to The ICT-related contribution to productivity growth is expected to continue in the future even though the overall growth trend has continue in the future even though the overall growth trend has slowed down significantly in 2001.slowed down significantly in 2001.
Hype vs. Reality: Good News
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P-E ratios typically soar and then collapse in periods of significant P-E ratios typically soar and then collapse in periods of significant technological changetechnological change
Share prices in early 2000 assumed not-sustainable rates-of-profits Share prices in early 2000 assumed not-sustainable rates-of-profits (from dot com euphoria to dot coma…)(from dot com euphoria to dot coma…)
Consolidation is the typical pattern after periods of hyper-Consolidation is the typical pattern after periods of hyper-investment in technology-driven industriesinvestment in technology-driven industries
Macroeconomic variables (e.g., consumer confidence after Macroeconomic variables (e.g., consumer confidence after September 11) continue to influence short-term economic trendsSeptember 11) continue to influence short-term economic trends
In short, the business cycle is alive and well…In short, the business cycle is alive and well…
Hype vs. Reality: Bad News
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Conventional wisdom:Conventional wisdom: Distance matters (geography, economic distance: regulatory, Distance matters (geography, economic distance: regulatory,
trade barriers…)trade barriers…)
Knowledge-based development (building upon human capital) Knowledge-based development (building upon human capital) is more rewarding over the long-term than resource-based is more rewarding over the long-term than resource-based developmentdevelopment
There is a natural sequence in stages of development There is a natural sequence in stages of development
E-Development: Challenging Development Theory
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Impact of ICTImpact of ICT Economic distance becomes even more relevant, but Economic distance becomes even more relevant, but
the role of geography diminishesthe role of geography diminishes
Additional advantage for human-resources rich Additional advantage for human-resources rich societiessocieties
Opportunities for “leapfrogging” expandOpportunities for “leapfrogging” expand
E-Development: Challenging Development Theory
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-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1995 1996 1997 1998 1999 March Now
Last 5 Years
Bil
lion
US$ DJIA Mkt. Cap
NASDAQ Mkt. Cap
Total Mkt. Cap
More Wealth Created0
100
200
300
400
500
600
700
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Fixed+Mobile -- OECD Fixed+Mobile -- Non-OECD
Internet Subs -- OECD Internet Subs -- Non-OECD
Source: Pyramid Research, 2000
Defining the Digital Divide: How serious an issue is it ?
Divergence in wealth creation is a major concern
The situation in terms of Aggregate Connectivity level has been improving…
Connectivity isonly part of the story
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0
20
40
60
80
100
120
140
160
Mob
ile a
nd F
ixed
Tel
epho
ny p
er 1
00 in
habi
tant
s, 2
000
Nig
eria
Uga
nda
Ken
ya
Pak
ista
n
Indi
a
Sen
egal
Nic
arag
ua
Indo
nesi
a
Sri
Lank
a
Per
u
Gua
tem
ala
Mor
occo
Tha
iland
Chi
na
Bot
swan
a
El S
alva
dor
Col
ombi
a
Rus
sian
Fed
erat
ion
Mex
ico
Rom
ania
Pan
ama
Sou
th A
fric
a
Bra
zil
Ven
ezue
la, R
B
Arg
entin
a
Mal
aysi
a
Chi
le
Slo
vak
Rep
ublic
Tur
key
Cro
atia
Can
ada
Aus
tral
ia
Kor
ea, R
ep.
Fra
nce
Uni
ted
Sta
tes
Japa
n
Ger
man
y
Italy
Fin
land
Nor
way
Net
herla
nds
Uni
ted
Kin
gdom
Sw
eden
Mobile & Fixed Telephony, 2000Mobile & Fixed Telephony, 2000
mobilefixed
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-200.00%
0.00%
200.00%
400.00%
600.00%
800.00%
1000.00%
1200.00%
1400.00%
1600.00%
1800.00%
2000.00%
Gro
wth
Rat
e, 1
998-
2000
%
Fin
lan
d
Co
lom
bia
No
rwa
y
Jap
an
Sw
ede
n
Pak
ista
n
Th
aila
nd
Un
ited
Sta
tes
Per
u
Nig
eria
Ca
nad
a
Aus
tra
lia
Kor
ea,
Re
p.
Mal
aysi
a
Ital
y
Arg
ent
ina
Ven
ezu
ela,
RB
Slo
vak
Rep
ublic
Fra
nce
Sri
Lank
a
Un
ited
Kin
gdo
m
Sou
th A
fric
a
Ne
ther
lan
ds
Ch
ile
Ge
rma
ny
Bra
zil
Ro
man
ia
Indo
nesi
a
Ru
ssia
n F
eder
atio
n
Mex
ico
Ch
ina
Tu
rkey
Nic
ara
gua
Indi
a
Pan
ama
Cro
atia
El S
alv
ado
r
Ug
and
a
Gu
ate
mal
a
Bot
swan
a
Sen
egal
Ken
ya
Mor
occ
o
fixed growthmobile growth
Mobile & Fixed Growth Rate 1998-2000
Mobile & Fixed Growth Rate 1998-2000
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Source: International Telecommunication Union Yearbook of Statistics (2001)
Internet Hosts, 2000Internet Hosts, 2000
1
10
100
1,000
10,000
100,000
1,000,000
10,000,000
100,000,000U
gand
a
El S
alva
dor
Nig
eria
Nic
arag
ua
Sen
egal
Mor
occo
Sri
Lank
a
Egy
pt, A
rab
Rep
.
Bot
swan
a
Ken
ya
Gua
tem
ala
Pak
ista
n
Per
u
Pan
ama
Ven
ezue
la, R
B
Cro
atia
Indo
nesi
a
Indi
a
Slo
vak
Rep
ublic
Rom
ania
Col
ombi
a
Tha
iland
Mal
aysi
a
Tur
key
Chi
na
Chi
le
Sou
th A
fric
a
Arg
entin
a
Kor
ea, R
ep.
Nor
way
Fin
land
Mex
ico
Sw
eden
Bra
zil
Italy
Fra
nce
Aus
tral
ia
Net
herla
nds
Uni
ted
Kin
gdom
Ger
man
y
Can
ada
Japa
n
Uni
ted
Sta
tes
Inte
rnet
Hos
ts, 2
000
Upper Middle IncomeLow Income
High IncomeLower Middle Income
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Internet Hosts Growth Rate 1995-2000Internet Hosts Growth Rate 1995-2000
Source: International Telecommunication Union Yearbook of Statistics (2001)
100%
1000%
10000%
100000%
1000000%
Gro
wth
Rat
e 19
95-2
000
%
Fin
land
Uga
nda
Uni
ted
Kin
gdom
Sou
th A
fric
a
Egy
pt, A
rab
Rep
.
Sw
eden
Ger
man
y
Aus
tral
ia
Nor
way
Can
ada
Cro
atia
Fra
nce
Mor
occo
Chi
le
Net
herla
nds
Indo
nesi
a
Tur
key
Slo
vak
Rep
ublic
Per
u
Uni
ted
Sta
tes
Italy
Kor
ea, R
ep.
Ven
ezue
la, R
B
Rus
sian
Fed
erat
ion
Tha
iland
Mal
aysi
a
Japa
n
Col
ombi
a
Rom
ania
Chi
na
Mex
ico
Bra
zil
Indi
a
Arg
entin
a
Bot
swan
a
Pan
ama
Sen
egal
Ken
ya
Sri
Lank
a
Pak
ista
n
Nig
eria
Upper Middle IncomeLow Income
High IncomeLower Middle Income
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Source: International Telecommunication Union Yearbook of Statistics (2001)
Internet Users, 2000 (as a share of total population)
Internet Users, 2000 (as a share of total population)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Inte
rnet
Use
rs a
s a
shar
e of
tota
l pop
ulat
ion,
200
0
Uga
nda
Sen
egal
Indi
a
Indo
nesi
a
Egy
pt, A
rab
Rep
.
Ken
ya
Bot
swan
a
Tun
isia
Per
u
Pan
ama
Chi
na
Tha
iland
Rus
sian
Fed
erat
ion
Col
ombi
a
Mex
ico
Bra
zil
Tur
key
Rom
ania
Ven
ezue
la, R
B
Cro
atia
Sou
th A
fric
a
Arg
entin
a
Italy
Chi
le
Slo
vak
Rep
ublic
Fra
nce
Mal
aysi
a
Net
herla
nds
Uni
ted
Kin
gdom
Ger
man
y
Sin
gapo
re
Uni
ted
Sta
tes
Aus
tral
ia
Japa
n
Fin
land
Kor
ea, R
ep.
Can
ada
Sw
eden
Nor
way
Upper Middle IncomeLow Income
High IncomeLower Middle Income
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Source: International Telecommunication Union Yearbook of Statistics (2001)
Internet Users Growth Rate 1995-2000Internet Users Growth Rate 1995-2000
Upper Middle IncomeLow Income
High IncomeLower Middle Income
100%
1000%
10000%
100000%
Gro
wth
Rat
e 19
95-2
000
%
Fin
land
Uni
ted
Sta
tes
Sou
th A
fric
a
Net
herla
nds
Nor
way
Fra
nce
Sw
eden
Cro
atia
Can
ada
Sin
gapo
re
Bot
swan
a
Col
ombi
a
Aus
tral
ia
Uni
ted
Kin
gdom
Rus
sian
Fed
erat
ion
Ger
man
y
Indi
a
Egy
pt, A
rab
Rep
.
Italy
Slo
vak
Rep
ublic
Japa
n
Indo
nesi
a
Mex
ico
Bra
zil
Pan
ama
Tha
iland
Ven
ezue
la, R
B
Chi
le
Uga
nda
Tur
key
Per
u
Rom
ania
Kor
ea, R
ep.
Arg
entin
a
Mal
aysi
a
Tun
isia
Chi
na
Sen
egal
Ken
ya
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Source: International Telecommunication Union Yearbook of Statistics (2001)
Secure Internet Servers, 2000Secure Internet Servers, 2000
1
10
100
1,000
10,000
100,000
Sec
ure
Inte
rne
t S
erv
ers
, 2
000
Mor
occo
Sri
Lank
a
Pak
ista
n
Egy
pt, A
rab
Rep
.
Pan
ama
Per
u
Ukr
aine
Rom
ania
Indo
nesi
a
Cro
atia
Col
ombi
a
Slo
vak
Rep
ublic
Ven
ezue
la, R
B
Indi
a
Tha
iland
Chi
le
Mal
aysi
a
Chi
na
Tur
key
Arg
entin
a
Mex
ico
Rus
sian
Fed
erat
ion
Kor
ea, R
ep.
Nor
way
Fin
land
Sou
th A
fric
a
Sin
gapo
re
Net
herla
nds
Sw
eden
Bra
zil
Italy
Fra
nce
Aus
tral
ia
Japa
n
Can
ada
Ger
man
y
Uni
ted
Kin
gdom
Uni
ted
Sta
tes
Upper Middle IncomeLow Income
High IncomeLower Middle Income
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Source: International Telecommunication Union Yearbook of Statistics (2001)
Secure Internet Servers Growth Rate 1997-2000
Secure Internet Servers Growth Rate 1997-2000
Upper Middle IncomeLow Income
High IncomeLower Middle Income
100%
1000%
10000%
100000%
1000000%
Gro
wth
Rat
e 19
97-2
000
%
Mor
occo
Sou
th A
fric
a
Can
ada
Italy
Net
herla
nds
Uni
ted
Sta
tes
Bra
zil
Nor
way
Aus
tral
ia
Mex
ico
Indo
nesi
a
Slo
vak
Rep
ublic
Chi
le
Mal
aysi
a
Sin
gapo
re
Sw
eden
Kor
ea, R
ep.
Uni
ted
Kin
gdom
Ukr
aine
Per
u
Fra
nce
Rus
sian
Fed
erat
ion
Cro
atia
Fin
land
Arg
entin
a
Japa
n
Ger
man
y
Tur
key
Col
ombi
a
Rom
ania
Sri
Lank
a
Pak
ista
n
Chi
na
Egy
pt, A
rab
Rep
.
Tha
iland
Pan
ama
Ven
ezue
la, R
B
Indi
a
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Total Investment: OECD - $129 per capita; SSA - $9 per capita.
Investment in Telecommunications Projects with Private Participation in Developping
Countries by Region, 1990-99
Data Source: PPI Database, World Bank, 2000
0
10
20
30
40
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
1998
US
$ B
illio
n Latin America and the Caribbean
East Asiaand the Pacific
Europe andCentral Asia
South Asia
Middle East
Sub-Saharan Africa
Concentrated Investment
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Information Infrstructure Investments, 1991 - 1998
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
1991-1994 1995-1998
US
$ M
illio
ns
OECD
Sub-Saharan Africa
Middle East/North Africa
Latin America
Eastern Europe
Asia Pacific
Cross-Country Inequality: Information Infrastructure Investments
Skewed toward Rich Countries
Source: Pyramid Research, 2000
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The US broadband revolution
Adopter Countries’ broadband revolution
National In
form
ation Infrastructu
re
(scope a
nd q
ualit
y)
Time
Latecomers
Source: Pyramid Research, 2000
The Promise and Peril of the Networking Revolution
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Within-Country Inequality
In Cambodia, by end of 2000, 85% of the country’s fixed telephone lines were in Phnom Penh even though it accounted for less than 10% of the country’s population.
0 0.5 1 1.5 2 2.5
overall fixeddensity
fixed density inPhnom Penh The density in Phnom Penh is
60 times greater than provinces
Vietnam, by 2000, Hanoi and HCMC accounted for 86% for all Internet subscribers and all the leased line accounts even though they only make up 10% of the population. (ITU, 2000)
I. Urban vs. Rural Divide
Source: ITU, 2000
In China, the least connected provinces, with 600 million people, have only 4 million Internet users, while Shanghai and Beijing, with 27 million people, have 5 million users. (UNDP, 2001)
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Within-Country Inequality
III. Income Divide
II. Gender Divide By 2001, in Ethiopia, men made up 86% of Internet users, 83% in Senegal , 70% in China, 67% in France.
Some of these disparities are lessening. In Brazil, women account for 47% of Internet users, and in the United States for 51% of users. (UNDP, 2001)
Source: Boston Consulting Group
Internet Penetration in Upper & Middle Classes
32%
14%
12%
11%
0% 5% 10% 15% 20% 25% 30% 35%
Brazil
Mexico
Argentina
Chile
2.1
2.6
2.7
2.5
Penetration in total population
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Connectivity is a requirementConnectivity is a requirement
It is next to impossible to envision markets with less than 5% It is next to impossible to envision markets with less than 5% voice penetration leapfrogging into Internet connectivity voice penetration leapfrogging into Internet connectivity
Competition is the VehicleCompetition is the Vehicle
Competition leads to decreased prices, subscriber growth & Competition leads to decreased prices, subscriber growth & new technology development. We must promote new technology development. We must promote competition, while supporting universal access via innovative competition, while supporting universal access via innovative government support, focusing on convergence issuesgovernment support, focusing on convergence issues
Infrastructure Support Systems Are Critical Infrastructure Support Systems Are Critical
Systems and services that support and deliver information Systems and services that support and deliver information such as postal and financial services, are a vital component such as postal and financial services, are a vital component of public actionof public action
Education is the EnablerEducation is the Enabler
Internet has higher social entry barriers than voice, requiring Internet has higher social entry barriers than voice, requiring literacy and ICT exposure at a minimum. literacy and ICT exposure at a minimum.
Strategies
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Support Competition and Privatization Policies (e.g., regulatory reform)
Facilitate Infrastructure Financing by the Private Sector
Invest in Digital Literacy
Explore Digital Opportunities (e-government, support development of relevant content, public-private partnerships to expand access)
Closing the Digital Divide:A Four-Part Program
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ICT and Economic Growth - enhanced competitiveness- increased business opportunities - access to market for rural communities
ICT and Improved Delivery of Social Services- better health/education/environmental services
- reducing vulnerability to natural disasters
ICT for Greater Transparency
- improved efficiency on government procurement
- reduced corruption
- increased civil society participation
ICT for Empowerment of the Poor
- allowing the poor to better communicate their concerns
ICT and Poverty Reduction
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Sustainable Growth
Financial Intermediation
SectoralPolicy
Knowledge Intermediation“Knowledge Bank”
Capacity Building
Poverty Reduction
Role of the World Bank Group
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Sovereign Loans
Advisory Services
Partial risk guarantees
infoDev Grants
Direct project loans
Loan syndications
Mezzanine financing
Equity participation
GovernmentRole
PrivateSectorRole
Global ICT Instruments
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Development Gateway
Global Development Learning Network
infoDev
Global Development
Network
Global Knowledge
Partnership
African Virtual University
WorldLinks
http://www.worldbank.org/knowledgebank/
The Knowledge Initiatives
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Development Gateway Foundation Development Gateway Foundation
http://www.dgfoundation.org
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The Development GatewayThe Development Gateway — using the power of the Internet to — using the power of the Internet to connect people, knowledge, and poverty reductionconnect people, knowledge, and poverty reduction
ICT Development ForumICT Development Forum – bringing people and ideas together for – bringing people and ideas together for discussiondiscussion
Research and Training NetworkResearch and Training Network – creating opportunities in the – creating opportunities in the developing world for good ideas and people to advancedeveloping world for good ideas and people to advance
Grants and InvestmentsGrants and Investments – funding initiatives that narrow the – funding initiatives that narrow the Digital DivideDigital Divide
The Foundation’s Four Major Initiatives
The Foundation’s Four Major Initiatives
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Development Gateway FoundationDevelopment Gateway Foundation
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www.developmentgateway.org
Development Gateway
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Value Proposition of the PortalValue Proposition of the Portal
Helping solve development problems by sharing high-Helping solve development problems by sharing high-quality information from local, national and global quality information from local, national and global sources, tailored to users’ needs.sources, tailored to users’ needs.
Providing a platform for establishing common standards Providing a platform for establishing common standards for the exchange of information within the development for the exchange of information within the development communitycommunity
Supporting an electronic marketplace for government Supporting an electronic marketplace for government procurement information related to development procurement information related to development agenciesagencies
Leveraging capacity building and knowledge sharing via Leveraging capacity building and knowledge sharing via a network of Country Gatewaysa network of Country Gateways
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Thank youThank [email protected]@worldbank.orgwww.developmentgateway.orgwww.developmentgateway.org