Economic Development, ICT and Poverty

¶ … Economic Development, ICT and Poverty Reduction in Ethiopia

The objective of this work is to propose a research study on the link between economic development, information and communication technology (ICT) and poverty reduction, and specifically in the country of Ethiopia.

Every nation has embarked on economic development and usages of information and communication technology in socio-economic, health, education, and many other areas as well. This work seeks to research the existing indications that countries such as Ethiopia might not have an effective ICT policy thereby barring or hindering the development hoped for through ICT. India has effectively set out policy framework that supports the development of ICT. Specifically the country of Ethiopia is stated to have ranked "...158 out of 12 in the UNDP's 2001 Human Development Index, Index." (International Telecommunication Union, Geneva, Switzerland - July 2002) Furthermore, the telecommunications network in Ethiopia is stated to be "among the least developed in the world..." (Ibid) Less than 3% of the population in Ethiopia has a telephone line in the country of Ethiopia. Finally, telecommunication services in Ethiopia are greatly limited and restricted. (Ibid; paraphrased)

RESEARCH QUESTIONS

The questions this research study will seek to answer are those of: (1) What is the level of ICT usage in Ethopia?; (2) How can Ethiopia learn from developed countries? (3) Is there a link between economic development and the usage of ICT?; (4) Is there a link between poverty and digital gaps in countries? (5) How can Ethiopia best narrow the digital divide? (6) How does ICT help to reduce poverty?

REVIEW of the LITERATURE

The work of Ziadi and Kuofie (2006) entitled: "Impact of ICT on Organization in Tunsia" States the fact that in the face of changes that are economic and technological in nature companies become "more conscious of the importance of their structure, technologies and intellectual capital." These authors cite Zack (1999) in the statement of "This capital is considered as a not easily imitable competing weapon." Nonaka (1991) is cited in the statement of: "This is why the competitiveness of these companies is dependent on acquisition, creation, the localization and the renewal of the organizational knowledge." (Ziadi and Kuofie, 2006) Ziadi and Kuofie address ICT in relation to its potential agents of 'organizational change' pointing out that this was the "subject of great theoretical debates...in the fifties and sixties." (Ibid) the work of Kodakanchi, et al. (2006) entitled: "An Economic Development Model for it in Developing Countries" states that the world's economy has been "revolutionized" by information technology. According to Kodakanchi et al. (2006) Given the applicability of information, technology "has significantly affected the economy by providing information and development content on products and processes." In fact, this is proven by the "substantial growth in both the Labor Productivity (LP) and the Multi-Factor Productivity (MFP) in the United States following the year 1995 in that proof has been provided that "IT definitely steered the economical advancement of industrialized nations such as the U.S. And the United Kingdom (UK)." (Ibid) Kodakanchi et al. (2006) proposes "An Economic Development Model Based on it for Developing Countries (EDM-BITDC)." This model as has its' main components those of (1) Large Foreign Investments (LFIs); (2) Government policies and support for it, Social awareness of it importance, and Efficient use of it." (Kodakanchi, et al. 2006) it is related in the work of Kodakanchi et al. that information technology (it) has brought a great change to economics on a worldwide basis due to the globalization of the economy impact the productivity rates in the U.S.A. over the past twenty years. It is stated that "this can be attributed to the accelerating productivity growth and large investment in the it field." (Ibid) Ernst (2001a) is cited by Kodakanchi et. al. In the statement of: "The rapid development and diffusion of it has changed the dynamics of global competition." (Ibid) During the later part of the 90s decade labor and productivity growth for the G7 countries of Canada, France, Germany, Italy, Japan, UK, and the U.S. were analyzed and it was shown that these countries experienced economic growth of a considerably large nature as it was introduced in the economic policies. The following table lists the growth in labor in each of these countries and the contribution of it toward this growth.

Labor Productivity Growth and it Contribution

G7 Countries (Later 1990s)

G7 Nations Labor Productivity

Contribution

Canada 1.3-0.27

France 1.6-0.25

Germany 2.1-0.19

Italy 1.9-0.24

Japan 1.9-0.19

UK 1.4-0.40

US 1.0-0.41

Source Kodakanchi et al. (2006) citing Schreyer (1999), Table, page 19

Further reported by Kodakanchi et. al, is the fact that one of the African countries, and there are many, that faces poverty and inequality disaster is the country of Ghana. Advances in technology in Ghana are stated to be "meager since its independence in 1957." (2006) the economic development model based on it for developing countries takes into account the major concerns to it advent into these countries which are those of the: (1) Inability to invest in the it field due to poor financial infrastructure; and (2) inadequate human power with the knowledge of it." (Ibid) the economic model, which has been proposed, is one that has larger foreign investment and government policies in support of it development as well as an awareness on the social level of the importance of it. Higher productivity in the model leads to faster economic growth, which in turn leads to investment in it. The work of Raji, Ayoade and Usoro (2006) entitled: "The Prospects and Problems of Adopting ICT for Poverty Eradication in Nigeria" states that there are gaps in per capital income that have increased between countries who are developed and those who are not developed and that there are in fact, approximately 1.2 billion individuals who live in 'dollar poverty' (those who consume less than one dollar per day). It is also related that the economy in Nigeria is over-dependent on crude oil which is the countries' one and only resource. Another developing country is India. The country of India has "positioned itself to take advantage of the booming global it generated economic marketplace" through systematic investment in education of individuals in the country for production of "high quality software to support the it-driven global economy." (Ibid) Resulting from the investment India is predicted to have a software export worth "approximately 100 billion U.S. dollars" (UNDP Choices - the Human Development Magazine, June, 2000 in Raji, Ayoade and Usoro, 2006) Ajayi (200) is cited in the statement of: "Government and people around the world have started appreciating the ability of Information and Communications Technology (ICT) to stimulate rapid development in all sectors of the economy. Related as well is the fact that in Nigeria there are presently 21.5 million GSM subscribers across four providers of services and 1.3 million through other networks. As compared to only 475,000 phone lines in May 2005 in a country with a population of 120 million. Education is promoted via the Internet in Nigeria and this "facilitates scientific advancement through sharing of research as well as resulting in expansion of healthcare's reach via telemedicine. (Gross, 2005 as cited in Raji, Ayoade and Usoro, 2006) ICT is stated to have the potential for Nigeria and other countries, specifically in this study the country of Ethiopia in the following: (1) provision of employment opportunities (this will require proper training); (2) promotion of freedom's course through strengthening democracy by access to knowledge; (3) spark economic growth if approach is "well-planned and systematic"; (4) act as the mechanism for access of and sharing of information and knowledge "in a manner that redefines space and time" (5) Increase participation in government through "governance capacity building, e-learning, e-government, environmental management, enhancing advocacy programmes and empowerment of communities and persons as results of appropriate use of ICT." (Raji, Ayoade and Usoro, 2006) Other countries that have witnessed economic transformation due to ICT include the countries of Bangladesh and Jamaica. Constraints experienced include government policies either lacking or restraining ICT development; the high cost of bandwidth, poor infrastructure, Lack of local content or language barriers, high rate of illiteracy in rural areas, gender insensitivity, inadequate human resources, and the ability of projects to be sustained. Africa is reported as the country having the "most serious constraint to Internet adoption" due to the factors of "thin bandwidth, non-existing intra-regional connectivity and the low level and inefficient fixed lines that is equally constrained by inter-exchange congestion (Oyeyhinka an Adeya, 2004 as cited in Raji, Ayoade and Usoro, 2006) the roles that government play in the facilitation of appropriate use of ICT include: (1) approval of policies for the major sectors of the industry [National Telecommunications Policy, National Information