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The Social and Economic Impact of Information and
Communication Technology on Developing Countries:
An Analysis
Farrokh Mamaghani
St. John Fisher College
The international development community is beginning to stress the role of Information
and Communication Technologies (ICT) as an enabler of broad-based social and
economic development. This has given rise to efforts to utilize ICT to achieve a variety
of development objectives, including poverty reduction, extension of health services,
expansion of education opportunities, and access to government services. More
specifically, ICT is a key to economic development on the national and individual
level, by improving developing countries’ positions in the global economy and raising
individual levels of income. This analysis indicates that ICT has a positive impact on
growth in developing countries, both socially and economically. Furthermore this analysis
concluded that in order for such benefits to follow from ICT, developing countries must
invest in both education and infrastructure; that without such investment ICT will not
have the benefits it has the potential to deliver to such countries.
Introduction
Information and communication technologies (ICT) offer major opportunities to
developing countries. New technologies can play an important role in accelerating
economic growth, promoting sustainable local development and reducing poverty.
The objective of this paper is to document how information and communication
technology is increasing the participation of developing nations in global e-commerce and
in turn offering an optimistic outlook of economic growth and societal improvements.
The influence of technological modernization and its subsequent social and economic
effect in the following areas will be reviewed:
- Workforce Participation and Education
- Healthcare
- Agriculture
- Mobile Communications
- Government
We will focus on the opportunities, challenges and recent impact that information
technology has had on developing countries in three separate world regions: South
America, Sub-Sahara Africa and South/East Asia.
Economic status of developing countries
Developing countries are in general countries which have not achieved a significant
degree of industrialization relative to their populations. In most cases, a developing
country will have a medium to low standard of living.
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Statistics from the CIA World Factbook database show a strong correlation between low
GDP per capita, Unemployment and high population growth (Table 1).
There are many reasons why developing countries are in their position. These reasons
could include political corruption, civil unrest and famine or disease. The lack of
education, infrastructure and proper medical care combined with rapid growth in
population are the main negative drivers. However, ICT offers a glimpse of hope for these
countries to improve their social and economic conditions. Given that these countries
have an insufficient capital base for needed investment, and through increasing population
or deteriorating environmental conditions, the pace of growth and improvement will be
very smlow on a per capita basis.
Implementation Issues
Before developing countries can gain from the technology boom some substantial issues
must be addressed. These issues can be categorized as follows:
Social Institutions – Language, Cultures and Customs
In the global economy the goal of business is to sell or service customers over the largest
area possible. To perform in this environment, the type of language spoken will have an
impact on what types of programs can be implemented, what target market will be chosen
and how business is transacted. If a country does not have a language that is globally
prominent, such as English, decisions on how product training should be performed
or what translations should be used in user manuals will have to be well thought out.
Within some countries, the development of business relationships outside the family,
tribal community or ethnic class could determine what direction to proceed.
Education
The level of knowledge and skill the people in the country will dictate what level of
service or product that can be marketed. If the labor force has received a higher level of
education or has computer skill, the transition to new markets could be quicker than if
you had to train from the beginning. The education levels of developing countries trail
that of developed as illustrated by enrollment ratios across region (see below).
Table 1
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Research has shown that higher education can “create greater tax revenue, increase
savings and investment, and lead to a more entrepreneurial and civic society. It can also
improve a nation’s health, contribute to reduced population growth, improve technology,
and strengthen governance. The benefits of higher education for a country’s economy can
attribute to India’s leap onto the world economic stage as stemming from its decades-long
successful effort to provide high-quality, technically oriented education to a significant
number of its citizens” (Bloom, Canning, Chan, 2005).
Infrastructure
“Infrastructure is one of the most important driving forces for economic development”
(Iimi, 2008). The ability to provide services and information access to rural areas within
developing countries is a key component in improving the quality of goods and services
produced. Poor infrastructure is a barrier to private investment in the developing world.
This problem significantly drives up the cost of doing business, limits opportunity, and
hinders economic growth.
Research has shown a strong link between improved infrastructure and poverty reduction
in the areas of income, education, and health of the poor. Projects to improve roads,
bridges, energy facilities, water services, industries, and schools should be pursed.
Investment
Whether there are sources within a developing country or region that provide capital
needed to start and maintain information technology businesses will decide how much
the economies could grow. Foreign direct investment is an integral part of an open and
effective international economic system and a major catalyst to development.
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FDI can trigger technology spillovers, assists human capital formation, contributes to
international trade integration, helps create a more competitive business environment
and enhances enterprise development (Bell, Marin, 2004). Each of the above-mentioned
factors contributes to economic growth and as a result eases poverty. Outside of the
economic benefits foreign investment may also help improve environmental conditions
by transferring “cleaner” technologies and leading to more socially responsible corporate
policies.
Technological Innovations and Solutions
Information technology
In 1995 the World Bank initiated a satellite-based distance education project called
African Virtual University (AVU). The mission of the African Virtual University Project
is to use modern information technology to increase access to educational resources
throughout South Saharan Africa (SSA). This use of information technology will offer
SSA countries an “efficient and cost-effective solution to urgent educational and economic
development problems” (Kuroda, Shanawez, 2003). The AVU has the ability to reach
more students and help overcome the current barriers of low funding, too few faculty
and limited facilities that prevent access to higher education for a significant majority
of students in SSA.
The Cisco Networking Academy program in Africa is attempting to address a number
of issues related to the education and employment access of women in Africa. “The
Academy features a 280-hour learning model that includes web-based, media-rich content,
online testing, student performance tracking, and instructor training and support, as well
as hands-on labs” (Selinger, 2004). The program is designed to teach students the skills
needed to install, maintain and troubleshoot computer networks. These examples illustrate
how education based projects or programs can improve the technical knowledge of the
workforce in a developing country. Once this workforce has acquired the skills it will
be able to acquire employment and build business models with the local and possibly
the global e-commerce economy.
Healthcare
There are many programs throughout the developing countries that are utilizing
information communication technology via cellular networks and the Internet to improve
overall health care of citizens. The use of “telemedicine can diminish the cost and
hardship of long distance travel for medical attention and diagnosis and medical listserves can deliver at minimal cost recent medical findings to health workers lacking
research and technological facilities” (Scott, 2003).
In developing countries, the poor or rural citizen has difficultly accessing routine health
care information. The Internet can provide up to date medical information as opposed
to books or reference material that can become outdated (Lai, Arthur, Chau 2004). With
increased Internet access, programs can be designed to answer specific health related
questions and to promote lifestyles that incorporate diet and physical fitness. This type
of information could lead to a healthier, more productive workforce.
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In rural Gambia, malaria is a major public health issue. In some parts of the country,
it accounts for 40% of all deaths in children aged between one and four years (WHOAFRO, 2000). “The disease is also responsible for loss of productivity among the adult
population, school and workplace absenteeism and increased household expenditure on
health (Dawson, Joof, 2005).
In 2004, a computer-based training program was developed for Community Health
Nurses working at the village level. The goal was to improve the training of health care
providers and to increase community awareness in order to reduce the malaria burden
by 50% before 2007 (Dawson, Joof, 2005). In Brazil, the high costs of diagnosis and
treatment combined with the growth and aging of the population are some of the problems
impacting national public health. Aside from these issues, most health services facilities
are concentrated in urban areas thereby limiting their accessibility to poor people.
In 2006, Intel Corporation and several technology companies installed a high-speed
WiMAX wireless network in Parintins, Brazil. Through this network, over 100,000
inhabitants gained access to medical, educational and information resources. The project
involved providing high-speed Internet access to a primary healthcare center, two public
schools, a community center and Amazon State University. Intel donated and installed
all the telemedicine equipment at the healthcare center and computer labs at the two
schools. Residents of the region, who benefited from the project, include teachers,
students, healthcare providers and patients (Davis, 2006)
Natural Resources and Agriculture
Information technologies are being utilized in various ways to promote the sale of and
protect resources in developing nations. These technological advances are vital to
famine early warning systems, food security, humanitarian assistance and monitoring
epidemics.
In Botswana, the Livestock Identification Trace-back Systems (LITS) project employs
radio frequency identification technology (RFID) to capture data on individual cattle.
The data is transferred immediately to a central database and enables Botswana’s meat
export agency to obtain European Union (EU) certification for its beef exports. After
the outbreak of foot and mouth disease in Europe, these regulations mandated that all
imports of deboned beef must be traceable from the packing plant back to the individual
farms in the country of origin
This RFID technology allows everyone involved in livestock management the ability to
monitor performance and to react to issues immediately. The LITS initiative is helping to
ensure the long-term security of Botswana’s beef export market and offers an additional
marketing edge that allows the country to complete worldwide for new export orders.
At the same time, this tracking system has dramatically cut down the theft of cattle by
more than 60 percent. (McFarland, 2005)
The majority of the poor and malnourished in the world depend directly or indirectly
on agriculture for their livelihoods. It is greatly important for subsistence farmers
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in developing countries to become more productive. For these individuals and their
communities, losing a crop to a drought or a crop-destroying insect can be the difference
between life and death. The ability to collect information regarding weather patterns
and predict drought conditions could allow the farmer the ability to maximize a crop in
a good season. This information could also help manage a poor season.
Mobile Telecommunications
One of the biggest innovations currently driving the ICT explosion is mobile
communications. The telecommunications industry will be a key contributor to economic
growth of developing countries. Research performed by the World Bank, shows that “a
1 percent increase in the number of Internet users increased total exports by 4.3 percent”
(Van Ark, 2003).
Significant portions of developing countries do not currently have access to a computer
or the Internet. The graph below clearly shows Middle East and Africa as areas that are
behind the rest of the world. At the same time, the data shows that between the years
2000 and 2009, the growth in Internet users in Africa and Middle East was 1100% and
1296% respectively (http://www. internetworldstats.com).
According to China’s Ministry of Information, almost 400 million people or one-third
of the population of 1.3 billion, subscribe to mobile telephone services, making it the
largest mobile market in the world (Lu Weber, 2007). Under China’s economic reform,
the government shifted its thinking on the telecommunications and information industry
from one of solely being a tool to propagate the government’s political ideology to one of
harnessing its commercial potential to deliver consumers to service providers. Revenues
in 2005 totaled RMB 579.9 billion ($72.5 billion), an increase of 11.7 percent on 2004
figures of RMB 518.76 billion ($64.85 billion) and a 66 percent increase on 2000 returns
of RMB 349.8 billion ($43.7 billion). Within the industry, the mobile telephony sector
contributed almost half of all revenues (44.53 percent), rising to RMB 258.2 billion
($32.28 billion): an increase of 15.7 percent year-on-year.
A major issue in India is giving government services access to the rural population.
The poor of India have no mode of transportation that has long distance capability. The
government had no way to allow these people to obtain current information from the
government, document replacement, any kind of information. With ICT, it is possible
to locate service centers that provide documents, land records and other public services
physically closer to citizens. Such centers may consist of an unattended kiosk in a
government agency, or a service kiosk located close to the client. Potential benefits
include increased transparency, less corruption, better delivery of government services
and greater government responsiveness.
For minimal fees, Intranet kiosks -or telekiosks-2 provide caste, income, and domicile
certificates, avoiding villagers the common practice of paying bribes. The telekiosks also
allow farmers to track crop prices in the region’s wholesale markets-enabling them to
negotiate better terms. Other services include information on school results and on the
names of people included in the below poverty line list, and a public complaint line for
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reporting broken irrigation pumps, unfair prices, absentee teachers, and other problems.
Telekiosks are run by local operators along commercial lines and are placed in villages
located on major roads or holding weekly markets, so that each of them can serve 25 to
30 villages (Cecchinia, Scott, 2003)
While the need for a better educated workforce, public health initiatives and access to
medical care are important. There is one area where capital investment provides out-sized
returns for individuals and nations, it is mobile telecommunications. This is one area
where developing nations can easily attract outside capital investment with regulatory
policies that favor open access and competition.
Government
One of the main innovations of developing countries is the adoption of government
initiated multipurpose smart cards. In Malaysia, a multi-purpose smart card called the
MyKad “stores thumbprints, a digital photo, and basic information of the cardholder
such as religion, ethnic group, address, and gender. In addition, the card also serves as
a drivers license, passport, health card, automated teller machine card, Touch N Go (a
stored value transportation card), Electronic Payment System (MEPS - a micropayment
card), public key-infrastructure card, and frequent-traveler card. Hong Kong, India,
and the sultanate of Oman are following Malaysia’s example of implementing similar
multipurpose smart identity cards. China, Thailand, the Philippines, and Vietnam, are
already rolling out smart identity cards. (Yeow, Loo, Chong, 2007)
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A major investment policy decision made by Malaysia was to come up with an answer to
the Silicon Valley. The Multimedia Super Corridor (MSC), which was launched in 1995
with the aim to create a knowledge-based economy through technological leapfrogging;
steps a country would normally go through in the whole growth process from need
identification to acquiring local technological capabilities. This lengthy process requires
heavy investments in the development of variegated skills to acquire the capacity to
absorb, adapt, diffuse and eventually create local technologies. Malaysia’s strategy
for leapfrogging has led to the setting up of the Multimedia Super Corridor. This is a
strategy aimed at encouraging local and foreign investments in ICTs and multimedia
content development.
The Multimedia Super Corridor (MSC) represents Malaysia’s response to the growing
pressure of competitiveness arising from globalization and rapid technological progress.
The MSC was thus adopted not only to enhance competitiveness, but also to enable
Malaysia to be a niche player in the global market through technological leapfrogging.
The MSC in Malaysia is a government-initiated project aimed to provide the technological
knowledge base for sustainable industrialization and economic growth. To date, the
MSC has succeeded in attracting well-known global powerhouses Sun Microsystems,
Intel, Motorola, Oracle, Cisco, and Lucent.
Conclusions
This research work findings shows that the information and communication technologies
have a major impact on social and economic growth of developing countries. Technologies
such as the Internet, personal computers, wireless phones can turn the world into an
interconnected network of individuals, firms, and governments. These technologies
offer immense opportunities for developing countries so that they can compete within
a global economy and improve the social conditions of their citizens. However, these
developing countries must implement the necessary structural factors in order to reap the
positive externalities that ICTs are capable of achieving. It will take years of investment
in education and infrastructure combined with strong political leadership in order for a
developing country to compete and prosper in the global e-commerce environment.
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Contact email address: fmamaghani@sjfc.edu
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Addresses of Authors
Cheng-Min Feng
Hui-Chuan Hsieh
Institute of Traffic and Transportation
National Chiao Tung University
1001 University Rd
Hsinchu 300
Taiwan
Juan A. Marin-Garcia
Yolanda Bautista Poveda
Departamento de Organización
de Empresas
Universidad Politécnica de Valencia.
ETSII -edificio 7D
Camino de Vera s/n 46022
Valencia, Spain
Farrokh Mamaghani
Bittner School of Business
St. John Fisher College
3690 East Ave., Rochester
NY 14618 USA
Eddy Junarsin
School of Business
Southern Illinois University at Carbondale
Carbondale
IL 62901 USA
Li-Yueh Lee
College of Business and Administration
Kun Shan University
949 Da Wan Rd
Yung Kang 710
Taiwan
Darren Van Vorst
School of Business
National Cheng Kung University
No 1 University Rd
Tainan City 701
Taiwan
Nicholas J. Beutell
Iona College
New Rochelle
NY 10801 USA
Subramaniam Ananthram
Richard Grainger
Tadayuki Miyamoto
School of Management
Curtin University of Technology
GPO Box U 1987
Perth
WA 6845 Australia
Kenichi Yasumuro
Faculty of Business Administration
Osaka University of Commerce
4-1-10 Mikuriyasakae-machi
Higashiosaka-shi
Osaka 577-8505
Japan
Dalton E. Brannen
Nabil A. Ibrahim
College of Business
Augusta State University
Augusta
GA 30904 USA
Chin-Hsien Hsu
Dept of Recreation and Sports Management
National Chin-Yi University of
Technology
35 Lane 215 Sec 1, Chung Shan Rd
Taiping City 411
Taiwan
Bhavik K. Pathak
School of Business
Indiana University South Bend
South Bend
IN 46634 USA
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