Impact of global technological advancements on the Jamaican economy

¶ … Global Technological Advancements on the Jamaican Economy

Advances in information communication technology (ICT) have led to changes in the economies of developing nations that are forcing them to conduct business in the global marketplace. ICT development has led to an integrated marketplace that means businesses that never had access to the international marketplace now can engage in business on a global level. However, in order to receive the benefits that this new technology has to offer developing nations must have the infrastructure and social structures in place to allow their population to take advantage.

Manufacturing is a growing sector, but resource-based production remains the mainstay of the economy. As resource-based economic pursuits are dwindling, the Jamaican economy must undergo some drastic changes if it wishes to compete. The development and acceptance of ICT in the business and general population is an important step in this process.

Moving from a resource economy to an information economy if filled with challenges. There are many issues that need to be resolved in order for the transition to take place successfully. There are economic considerations, social considerations, and policy considerations. All of these elements must flow together in order to allow the transition to take place smoothly. This research will explore each of the major areas and the data available in order to devise a set of recommendations for the continued development of ICT in Jamaica. It will focus on the participation of small and medium businesses, as these types of entities are the driving force of the Jamaican economy.

CHAPTER 1 - INTRODUCTION

The arrival of new technologies such as broadband providing fast communication, the ease of access to computers and the internet, together with changes in the collection and management of information, have broken down geographic, social and economic barriers. This sets the stage for countries to operate in a global environment. Jamaica, as a developing country, has no choice but to participate in this global economy. These changes in the international environment will continue to reorient the economy to becoming knowledge based and as such, major policy initiatives have to be designed in order to take advantage of the opportunities within the context of this global village. According to one E-Readiness report prepared for Jamaica's Central Information Technology Office,

The principal strategy for achieving growth and employment is the investment in the Information Communication Technology (ICT) sector, which has been designated the principal industry for achieving and generating thousands of jobs over the next three years. It is considered the route to improving productivity and efficiency, better targeting and delivery of services and benefits of development programs to citizens' island-wide." (NEEDS COMPLETE CITATION)

Jamaica has been experiencing economic difficulties for several years. The country is faced with balance of payment problems; coupled with high public debt, relatively high interest rates, a declining local currency and a high inflation rate.

The (ICT) industry is targeted as the principal engine for growth and is expected to generate a significant number of new jobs. The major policy initiatives are geared towards a stable economic environment. To realize the benefits of these initiatives, there needs to be a careful assessment of the global competitive environment and the state of ICT readiness in the country. The readiness to embrace ICT is contingent upon a number of factors. It is imperative that there is competition within the sector, adequate policy and regulatory framework in place, investment facilitation initiatives, macro-economic and social stability and the fostering of an entrepreneurial culture, among other factors.

It must be made abundantly clear that technology by itself will not bring about development. Technology should instead be viewed as an enabler to development.

In a knowledge economy, the material good, as well as the mind is important for benefit realization. It is the embrace and proper application of knowledge to the material world with worthwhile objectives that will lead to social advancement and economic development. Initiatives such as the introduction of the smartcard in the transportation system, introduction of new 'toll' roads, electronic meter reading and the electronic voting system are likely to improve productivity. These, coupled with the pending rollout of additional broadband services along with the plans for all public sector companies to begin accepting payments by way of E-commerce (called E-Government) will certainly represent a leap into improved productivity.

The benefits of Science and Technology are translated into quantitative and qualitative variables and indicators such as social and economic condition, access to ICT, and the extent of organizational learning among other things. The status of the ICT environment as well as the social and economic dynamics will determine the success or failure of the new initiatives.

CHAPTER 2 - HYPOTHESIS and RESEARCH OJECTIVES

The financing and promotion of the ICT industry or lack thereof is critical to Jamaica's growth. Indications are that Jamaica's financial system has increasingly become an inefficient intermediary of funds. This is obviously creating problems for the financing of the ICT industry. It is in this area that venture capital financing could play a huge part and as such, policymakers ought to examine the legal framework to see how a true venture capital market can be encouraged. The government should examine new models for creating innovation within the ICT sector, and ways in which it can generate a more vibrant venture capital funding industry. Arrangements should be examined between local banks, the various development banks, Export/Import Bank and other funding agencies to design financial instruments, venture capital and small business loans that will stimulate innovation in the sector.

So far, most of the funding in the sector has either come from government or large foreign owned telecoms companies. However, greater participation of local private companies is urgently required to maximize economic benefits. The purpose of this exercise was therefore to access the current state of technological readiness in Jamaica and establish the initiatives that the country has to undertake to benefit from new technological trends. It will support the hypothesis that in order for the use of ICT to grow in Jamaica sufficiently to boost the economy, education and infrastructure would be the primary challenges that need to be addressed.

The research will not only support the stimulation of venture capital financing, but will assess the various resources available. It will examine the infrastructure, as well as social, economic, political, and current resources available to do so. The objective of the research will be to asses the current status and needs of ICT usage in Jamaica. It will address ways to fill in the gaps so that the use of ICT will continue to grow. The ultimate objective is to provide solutions to the problems associated with ICT growth and its role in boosting the Jamaican economy.

CHAPTER 3 - LITERATURE: OVERVIEW

The impact of advancing technology and ICT in particular, is a subject that currently occupies the minds of many scholars. Government entities on a local, national, and global basis realize the impact of ICT on the ability to participate in the global economy. Much of the information that is currently available stems from government agencies involved in the ICT initiative.

From as far back as 1996, UNESCO in the document entitled "UNESCO and an Information Society," made the point that ICTs have the potential to dramatically reshape the ways people organize their lives and interact with each other. These technologies form the basis for a shift from industrial definitions of developments to a new paradigm based on the model of information societies.

Much has been written about the positive impact of ICT and the World Economic Forum is one body that has consistently written on the subject. They posit that the more successful countries are those in which governments, business and civil society determine ways to give high priority to boosting education and training. They also believe that the central element of this is the ability to harness the potential of ICT to leverage the development process.

According to 'The Economist Intelligence Unit', governments make a difference. In their 2005 e-readiness ranking, they indicated that focused government ICT policies helped to propel Mexico to a four-notch rise in the ranking. It suggested that the government's e-Mexico project which opened 3,200 community centres with public Internet access kiosks played a vital role in this regard.

The World Economic Forum indicates that countries such as India have transformed their economies, largely due to the benefits of the ICT revolution. Other countries, such as Ireland and Israel, have also emerged and have benefited from the contribution of ICT, and have emerged as centers of software development.

M. Desai, S. Fukuda et al., wrote an important paper "Measuring Technology Achievement of Nations and the Capacity to participate in the Network Age." They put forward the view that not all countries need to be on the cutting edge of global technological advance. However, they felt that every country needs the capacity to understand and adapt global technologies for local needs. They felt it often mistakenly assumed that technology transfer and diffusion are relatively easy, that developing countries can simply import and apply knowledge from outside by obtaining equipment, seeds and pills. However, they remind us of the author Lall (2000), who declares that before companies or farms can use and derive the benefits of the technology, they need to learn and develop new skills. Beyond the capacity of adopting new techniques, developing countries also need the capacity to invent and adapt new technologies. Poor countries need to foster their own creativity to use both local and global knowledge and science to find technological solutions to their development problems.

In most cases studies of ICTs and development, the studies do not openly acknowledge failures. Most are disguised under the cover of the phrase, 'lessons learnt'. O'Farrell (2001) believes that before one can advocate for the development of ICTs among the poor, they must understand the existing information systems of the poor, how they interact with formal information and the best way to strengthen them before intervening with new information sources and means of access sources. Access to information and knowledge are enablers in poverty reduction.

Breathnath (2000) explored the emergence of niche markets among transnational cities. This article highlights the uneven impact of globalization on cities across the globe. It makes the point that for some, globalization has meant tremendous growth and new possibilities. However, for those that were not ready for the changes, such as underdeveloped countries, globalization has meant falling farther behind.

Breathnath examined the growth of the call-center business in Dublin Ireland. The historical development of Dublin set it up the center of government and bureaucracy. It was already an established center for the conduct of international business among all sizes of business entities. Dublin saw the opportunity to expand on this established business presence and to develop the establishment of call centers. Dublin poured money into financing, infrastructure and developed policies that made it easy for the establishment of this business.

Dublin's efforts resulted in an influx of foreign domestic investment, especially from American firms. At the time of his study Breathnath found that over 70% of the firms in Dublin and nearly 80% of the employment opportunities in the call center industry were from American firms. Approximately 90% of the call center sector in Ireland is located in Dublin as a result of these moves. Dublin has gained a nickname as "The Call Center of Europe."

This case highlights the importance of examining the strengths and weaknesses of a nation. The development of ICT in Jamaica may depend on the ability to develop current markets using ICT as a facilitator (Stirton and Lodge, 2001). The case in Dublin demonstrates the need for government support of the efforts of cities to develop their niche markets. The analysis of niche markets within a sector represents many opportunities for the development of local economies on a global level.

In a speech to the World Summit on Information Society, Dr. Paulwell highlighted the steps that were necessary to improve the development of ICT strategies in Latin American and Caribbean countries. He stressed the importance of integrating many processes and strategies including, "liberalization, legislation, education, infrastructure, trade, transport and logistics" (Paulwell, 2000). He stressed the importance of the development of clear strategic goals and strategies in the success of the project.

Paulwell (2000) highlighted the importance of Small and Medium Entities (SMEs) in the economy of these countries. A majority of the business entities in Latin America and the Caribbean are SMEs. Encouraging the use of technology to stimulate the efficient delivery of their services and allowing them to fully integrate the supply chain will make a major impact on the economy of the area. Paulwell felt that ICT offer export opportunities in many human resources intensive sectors and this will help to stimulate job growth. He saw opportunities in tourism, the cultural industry and in professional services. This plan would address two major issues that are an important factor in the Jamaican economy, economic stimulation and job development.

Up to this point most Latin American and Caribbean (LAC) countries have focused their attention on connectivity and e-government. There are a number of programs and policies available to stimulate the telecommunications market and to generate new users. At the time of Paulwell's speech only about 8% of the general population in LACs were connected to the Internet. In order to promote the e-economy more attention will have to be paid to the needs of the general population and their use of the Internet. This is referred to as the "Digital gap" in many scholarly works.

Paulwell suggested several areas that need to be addressed in order to promote the development of ICT and the technology sector in general. They are:

Promote the e-economy

Increase the budget for science and technology that is appropriate for an information society

Focus on the infrastructure, including involvement of the private sector

Enlarge physical and cultural access the Internet

Make national governments model agents and consumers

Promote competition among Internet providers to facilitate Internet access among the general population.

Promote the development of local content and interest, including multiple indigenous languages

Concentrate on the use of ICT as a tool for poverty reduction and development.

As can see from the available literature, there are many gaps that need to be filled in order to resolve the issues associated with ICT usage and growth. We saw several examples of how countries have attempted to resolve these issues and promote the development of certain sectors within local communities. However, we have also discovered that there are many challenges in the development of ICT usage that plague LACs. Poverty and lack of access to the Internet are major challenges to the growth to ICT use in LACs. The focus of this research is to help resolve some of the issues that stand in the way of ICT development in LACs.

CHAPTER 4 - METHODOLOGY

The problems associated with ICT usage in LACs, such as Jamaica are complex. As we discovered in the literature review, there are many areas that need to be addressed in the resolution of the issues. The areas that need to be addressed are relatively unrelated and require different research strategies. Therefore the research methodology will require different research strategies as well.

Some areas, such as the social and political factors that effect ICT usage require a qualitative approach. Research into these areas will involve collection of data from secondary sources, such as the agencies responsible for implementation of the strategic initiatives. It will also use information gleaned from informants and experts it the field.

The purpose of the study is to determine the gaps that currently exist in Jamaica's ability to take advantage of the increased opportunities that exist through the use of ITC. One of the key difficulties in this assessment is a lack of empirical studies to date. In order to assess factors such as the economic impact of ITC on the growth of the country, we will have to rely on government statistics as a key source of data.

There are several factors that could affect the accuracy of the study. The first is that because the study relies on secondary sources, there is a question as to the reliability of the data. There may be biases in the figures presented that will have a negative impact on the ability of the study to make an accurate assessment. However, in many cases primary data is not available to the general public, therefore the study will have to rely on secondary sources. Data will be derived from the most credible sources available, such as government agencies and industry leaders. Data from several different sources will be compared and any differences will be examined.

The assessment methodology entails establishing the current status of science and technology in Jamaica and to assess the extent to which the country is embracing these technologies to its advantage. It will use a combination of quantitative and qualitative data to support the thesis and to answer the research questions. Quantitative data is appropriate for data that can be transformed into numerical form. Qualitative data is typically used for subjective data that is not easily transformed into numerical form. This study will entail both types of data. The appropriate presentation method will be used depending on the specific area of the research being analyzed and the data being presented.

Hybrid quantitative and qualitative techniques have been found to represent the best method for answering certain types of research questions (Walker, 2001). There are many advantages and disadvantages associated with each type of research that will impact the ability to draw conclusion in this study. Quantitative studies are considered the traditional research method. A key advantage of this type of study is that they give definitive yes and no answers. Statistical analysis determines whether or not the data meets criteria for the acceptance or rejection of the hypothesis. In qualitative studies the acceptance or rejection is often subjective and may not be as well defined. The ambiguity of results is a key disadvantage to the use of qualitative studies.

However, there are certain advantages to this type of research as well. For instance, quantitative studies may give more easily defined results, but they may not provide the insight needed to fully address the issues at hand. This is where qualitative research techniques have an advantage over quantitative methods. Qualitative research allows the participant to expand on the topic and give clues as to why something happens or whether there are other factors that may have influenced the results, but were not included as a part of the research study (Morgan, 1998). The open format of the qualitative study allows for more in-depth study of the research topic.

Murphy (2000) found a combination of quantitative and qualitative methods useful in the assessment of technology use in the health care profession. Quantitative analysis is useful in the assessment of the level of technology usage. However, these methods do nothing to explore the reasons behind the trends. Qualitative research must be used to support the quantitative research and to examine solutions to problems. Qualitative results can also be used to validate the answers found by quantitative methods (Murphy, 2000). This research will depend on data produced by other research.

This research is solution oriented and not only wishes to explore the level of ITC usage in Jamaica, but will examine the challenges associated with increasing the usage of ITC. Therefore, a hybrid between quantitative and qualitative methods will likely result in the solution-oriented answers that this research intends to address. This research will explore the variables associated with the problem of increasing ITC in Small and Medium businesses with an eye on providing solutions to the gaps in strategy that are discovered. The end result of this research will results in strategy recommendations for the development and use of ITC in Jamaica.

CHAPTER 5 - OBSERVATIONS and FINDINGS

There are several key areas that need to be addressed in order to properly evaluate the reasons behind current trends in technology usage. The following will address policies and legislative issues, educational issues, infrastructure issues, and market issues that may effect the development of ITC in Jamaica.

Protecting Citizens from Cyber Crime

Security is a primary concern as the market expands across national boundaries. In order for society to accept the use of ITC they must feel certain that they will not fall victim to crime. Jamaica must take steps to make their citizens feel secure in the fact that they will not fall victim to crime when they log onto the Internet. This represents a change in ideology and culture that will have to occur before society will be willing to fully embrace technologies such as the Internet.

The government and policy makers will play a key role in the facilitation of security measures to help protect citizens from crime when they engage in commerce over the Internet. It is critical for the necessary institutions be put in place to research and investigate the new forms of cyber crimes. This will facilitate the enactment of the necessary laws to protect the society.

The institutional framework should provide a forum for arbitration between parties having disputes and also facilitate reporting and investigation suspicious activities. It is imperative that laws are put in place to give legal credence to the use of electronic communication such as signatures and other specified forms of electronic verification and validation technologies. It is also necessary to make certain that the citizens have access to these laws and that political or economic barriers do not impede their usage of the system. This is especially true for SMEs as they increase their holdings to include the global marketplace (Dolowitz and Marsh, 2000). They need access to information regarding legal proceedings should something unfortunate occur.

The Internet transcends nation states and consequently varying laws and legislation, which may result in conflicting legal implications. These conflicts could lead to tax evasion and money laundering. Legislation must be drafted to establish standards and regulations related to the use of the Internet. Furthermore, this legislation must be uniform and enforceable. It must transcend local and regional differences in language and custom (Scott, 2001). It must be specific and result in actionable steps that localities can use to develop their own set of policies.

Unification begins on the national level, but enforcement will always be in the hands of local authorities. New laws need to reflect this interdependence between national policies and local issues. The only way to achieve laws that are comprehensive, yet enforceable, is through the cooperation between national and local authorities. As many cases in the United States have demonstrated, control and use of the infrastructure will undoubtedly impose another issue that will have to be worked out as Internet usage and the use of other ITC technology increases (MacLean, 2006).

Science and Technology development is an evolutionary process and ICT industry is continually shaping the economic and social environment. Developing a legislative framework will have to be a process of assessing the forces in the environment and continually revising existing laws and legislations to meet the needs at the time. This will depend on the status of S & T. development and the interacting forces in the environment. The Jamaican government must give serious consideration to the drafting of new legislation in a number of critical areas. The most important being privacy, security, electronic document and consumer protection.

Towards a Sustainable Initiative primary concern in the development of ITC technology is the ability to maintain thee changes once they are in place. In order to do so, there is the need for Government to undertake compensation and training initiatives in collaboration with academia, and the private sector to ensure adequacy and relevance in these areas. There needs to be a closer relationship between the educational institutions and the business community so as to enable relevance between the school curriculum and the business needs.

The literature review revealed that Internet usage is extremely low in the private sector in Latin American and Caribbean countries. For sustainable development in the ICT sector, it is necessary to ensure wide scale access to computers and the Internet at reasonable prices. There needs to be a review of the pricing structure of the Internet service providers. Economic access and training are key issues in the development of the ITC sector in Jamaica.

The development of e-commerce is constrained on the supply side by the lack of innovation in the production sector; lack of investment in product development; lack of focus on niche markets; use of appropriate marketing tools and techniques. However, there are benefits to be derived from investments in call centers and introduction of facilitators such as merchant accounts and Internet training sites. Research funding as well as venture capital is very limited and seems to not be a priority in public and private sector resource allocation to S & T. initiatives. As we have found, e-commerce is also constrained on the demand side by limited Internet access in the general public (Polidano, 2001).

E-Readiness

The changing demands of users in the business environment while taking advantage of the rapid changes in ICT sophistication and technology innovations is an indication that E-readiness is an evolutionary concept. Relevant features include broadband access from homes or businesses to backbone network, and secure servers. Emerging features include sophistication of end devices through links to global positioning systems, ITC to enhance distributed computing and associated communication, public infrastructures for secure and authenticated e-commerce, the public and private institutions for proper monitoring as well as the necessary legal framework.

Based on international ranking as used in data presented in Jamaica and by International organizations such as UNDP, Jamaica ranks on most indicators in the second quartile and in a few areas in the third quartile (UNDP, 2006). Even though these rankings are not very impressive, they are indicative of a changing situation and a foundation for transformation into a developed society. The following summarizes the rankings of Jamaica according to the UNDP 2006 E-Readiness report.

Source: UNDP 2006 E-Readiness Report. http://www.cito.gov.jm/cms/index.php?id=88

Jamaica ranked at 54% in the overall ranking. Connectivity and the adoption of the technology by consumers and business were among the main concerns. The most significant finding that this study revealed was that there was no significant positive change in any of the categories. In most cases there was a small decrease in readiness. This indicates a disconnect between the adoption of technology in Jamaica and the increased pace of the global marketplace. This chart should raise some concerns over Jamaica's ability to keep pace in the future.

Connectivity marked a major improvement between 2005 and 2006. However, adoption of the technology demonstrated that even though the technology is becoming available, consumers are not using it. These two statistics are closely related. In order for consumers to adopt the new technology they must first have access to it. However, they must have the knowledge and education necessary as well. The increase in connectivity is a step in the right direction in allowing people to gain access to the technology. The next step will be to launch initiatives to increase awareness and knowledge about the new technologies coming available.

This study demonstrates that more aggressive ICT initiatives are needed to bring about the changes necessary to promote sustainable development. The dynamic element in transition economies must co-ordinate to break the vicious cycle of weak innovation and ineffective use of technology. A more active role of government would have a substantial exogenous impact on innovation and technology transfer over the medium term.

E-Learning

Access to knowledge is essential for development. Insufficient access is a major cause of the prevalence of socio-economic difference and poverty in Jamaica and many other developing countries. While the formal education system, per se, provides access to knowledge, its reach has been limited in disadvantaged parts of the country. This is due to economic and human resource constraints, among other factors.

Jamaica, like other developing countries, has limited experience with distance education. Only a few educational institutions have delivered distance education services (JADOL, 2006). These services have developed in spurts resulting from enabling policies and also from the emergence of supportive technological developments. Interactive distance learning and service networks seem to be promising tools in ensuring both cost-effectiveness and minimum human resource requirements for knowledge sharing owing to the inherent economics of scale. With increased Internet and broadband capabilities and the offering of multimedia capabilities, government and educational institutions can offer the country improved distance education (CARADOL, 2006).

Modern societies are dominated and driven by the initiatives afforded by S & T. And it is very likely that the influence will increase in the years to come. Science and Technology knowledge and skills have become the catalyst for modern development and are crucial for most of our actions and decisions at home, at the work place and during interaction with society at large. To benefit from modern technologies, societies need people with scientific and technological qualifications at the highest level as well as a general public awareness of the content and methods of S & T. And their role as social forces that shape the future. The content and methods of S & T. will differ based on the nation's level of development and exposure and will therefore require institutionalized learning that keep pace with the demands at the time.

The supply and demand for Information Technology skills has changed significantly over the last five years. This has resulted in changes in the it skills base in the country. It has an impact on the position of it personnel within the organizational structure of institutions in the private and public sector, compensation systems and training programs, in-house and within secondary and tertiary institutions.

The main focus of Government for the education and training system is Early Childhood Education (ECE) with increase allocation of funds to facilitate the improvement of basic schools. The Government and Opposition signed a consensus in education incorporating a Five-Year Plan, which includes increased expenditure in the sector, improvement in teacher quality and a shifting of resources to the lower tier of the education system. The qualities of teachers in the classrooms continue to be affected by overseas employment.

The total number of students enrolled in the public education system declined by 1.2% to 673,697. The gross enrolment rates in schools at the pre-primary, secondary and tertiary levels have shown improvements. There was an 8.3% increase in the number of graduates in the category, Professional, Senior Officials and Technicians to total 9,709. Those graduating in the Skilled and Semi-Skilled category totaled 21,783. (Jamaica Survey of Living Conditions, PIOJ, 2003) the national performance at the General Proficiency Level (CXC) for science related subjects needs to be improved. (see Table 1).(WHERE IS TABLE 1?).

In the 2002-2003 academic year, the faculty of Pure and Applied Sciences at the University of the West Indies (UWI), Mona, focused on the offerings at both graduate and undergraduate levels, to make them more relevant in terms of enrolment. Simultaneously the Faculty sought to be more engaged with the society. The focus was on the commercial sector, with intention to convert expertise in the Faculty, and its research output into improved training and more diverse and competitive products and processes in both the public and private commercial enterprises. During the same period, the Department of Life Sciences drafted a new MSc. degree in plant production and protection. In addition, an M.Sc in Water Resource Management was designed for the Department of Geography and Geology. (Planning Institute of Jamaica Economic and Social Survey Jamaica 2003)

In September 2006 the Jamaican government launched its e-learning project in 31 institutions across Jamaica. The one-year pilot was implemented in 28 high schools at the grades 10 and 11 levels, and three teachers colleges. This project was launched under the guidance of an organization formed by the government called e-Learning Jamaica Company Limited.

After the test phase, the project will be rolled out to all of the nation's 150 high schools from grades seven to 11. The pilot phase is aimed at testing all the planned procedures and methodologies of the project, identifying best practices and determining the support systems that must be in place for successful project implementation. The 28 high schools selected for the pilot are located in Kingston and St. Andrew, St. Thomas and St. Catherine, while the three teachers colleges are Church in Manchester; and Shortwood and Mico teachers college in Kingston.