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Bill Gates versus Che Guevara

Are you an enthusiast or skeptic in the technology and development debate?


[essay] "We have computers, but we are still illiterate," sighs Hernán. He is a teacher at a public high school in Santo Domingo, the capital of the Dominican Republic, and is apparently skeptical of President Leonel Fernández's focus on information and communications technology (ICT). Fernández is known for being a sign of spreading the use of ICT in the country, and has among others ensured that students at all the public advanced schools in the country have access to computers and the internet.

In recent years, ICT has spread rapidly around the world, and this has created a lively debate that stretches between two outer edges. On the one hand, there are ICT enthusiasts, who believe that the wave of new technology has the potential to bring both economic and human development to most developing countries. They like to have Bill Gates as an idol, and their favorite example is the high-tech district of Bangalore in India – proof that one can actually create advanced technology centers anywhere in the world.

On the other hand, ICT skeptics are protesting that these new technologies actually have so much new to bring to developing countries. On the contrary, the effect of this technology is likely to be that rich countries, which already control most of the world's technological resources, will gain an even greater technological lead over developing countries. The leading leader of ICT skeptics is Che Guevara – although they are reluctant to admit it – and when ICT enthusiasts come up with their Bangalore example, skeptics like to point out the fact that poverty is very high both in other parts of India and in neighboring countries.

Technological capacity.

The debate around ICT and development is often characterized by a focus on the transfer of advanced technology from rich to poor regions of the world, even though – as enthusiasts sometimes admit – the technology must be adapted to the local context. An example of such a context-adapted technology transfer is MIT professor Nicholas Negroponte's initiative to offer poor countries cheap laptops that, among other things, are designed to better cope with short-term power outages (see Ny Tid 12 May 2006).

But what is technology, and what happens when advanced technology is transferred from the North to the South? We believe that a country's technological capacity is no more about having access to specific technological products. Technological capacity can be better portrayed as a bunch of abilities: the ability to recognize, imitate, use and create advanced knowledge. Different aspects are important for strengthening the technological capacity of a country, but three are particularly relevant (see also Human Development Report, UNDP, 2001).

Knowledge and educational level are the first pillar. A country that does not have an adequate level of "human capital" will be unable to recognize the possibilities advanced technology produced abroad can provide, nor will it be able to imitate and use the technology.

The second dimension is technological infrastructure, which is the basis for productive activity and which enables communication between economic actors. Judging from traditional technological infrastructure is fixed telephony and electricity, while ICT-related networks such as the internet and mobile telephony are judging by newer technological infrastructures.

The third pillar is a country's innovation capacity – the ability to not only use and imitate innovations produced elsewhere in the world, but also to produce entirely new knowledge. The latter is not only about producing new inventions, but also about the ability to protect them and adapt them to the international market.

If one thinks of technology in this way, the focus on transferring technological equipment to developing countries is misplaced. The key is then not to transfer technology products from the North to the South, but rather can contribute to strengthening the developing countries' expertise in managing technological knowledge and creating their own innovations. In short, one goes from an object-centered to a knowledge-centered view of technological development.

What does this suggest in practice? When one understands technology in this way, do the statistics support the enthusiast's optimism or the skeptic's pessimistic future perspective?

Technological "catching up"?

When we look at statistics covering most countries in the world during the period from the mid-1980s to the present day, two phenomena draw attention to our brand.

The first phenomenon is that although the technological gap that separates the industrialized countries from the developing countries is not surprisingly large, the differences between the countries have decreased in many areas over the past two decades. These debt indicators measure the three different aspects of technological capacity: Knowledge and level of education are measured by judging figures on enrollment in higher education and higher education. The indicators for traditional and new technological infrastructure are the speech on fixed telephones and electricity consumption on the one hand and the speech on mobile phones and internet users on the other, while innovative capacity is measured by the speech on patents and published scientific articles. This variable path is taken from the World Development Indicators (Verdsbanken, 2006) and indicates that there are three groups of countries with very different levels of technological development.

The first group is a small collection of rich countries that is far ahead of the other two groups in all the areas examined here. The second group is larger and consists of middle-income countries, most from Latin America, the Middle East and Central Asia. These are not so far away from the rich countries when it comes to technological infrastructure, but they are far behind when it comes to innovative capacity. For example, while the group of rich countries produces an average of 115 patents per million people, this group produces less than ten. The third group includes low-income countries – many of the major Asian economies as well as most African countries. The technology gap between this group and the rest of the world is large on all the previously mentioned indicators. For this group, for example, the consumption of energy per capita is about ten times lower than in the group of middle-income countries, and 30 times lower than in the richest group.

That the technology gap between north and south is large is in itself not surprising, but a smaller obvious point emerges when we look at the change in the technology gap in this period. Here the picture is less discouraging, at least for some factors. In fact, middle-income countries have managed to reduce the technology gap in most areas – also when it comes to innovative capacity, which they lag far behind. The patent gap has decreased by 20 percent. Low-income countries have also to some extent improved their relative position, especially when it comes to education levels and technological infrastructure. The distance to middle-income countries in relation to traditional technological infrastructure (for example electricity) has decreased by around 20 per cent, while the distance with regard to ICT infrastructure has decreased even faster. The number of Internet users and the spread of mobile phones show a dramatic reduction in the difference between middle-income and low-income countries of between 80 and 90 percent! 1-0 to technology enthusiasts, in other words.

But the skeptics still have a card in hand: The negative news is that for low-income countries, innovative capacity does not recover as quickly as in the other groups, and the technology gap in relation to this factor has dimmed quite a bit over the last two decades – the difference when it comes to patents has, for example, increased by 35 percent.

Some argue that in the modern, knowledge-based, global economy, innovation will increasingly be the main engine for growth. If a country fails to put in its work and investment to improve its innovative capacity, it will then be unable to build up new competitive advantages and dim even further. If this is correct, the innovation gap between rich and poor countries will probably lead to greater economic disparities in the coming years.

The international framework on intellectual property rights and the undisputed power of Western multinational companies in the global race for new patents and innovative activity do not give much cause for optimism here. This framework has changed since the western countries went through their industrialization processes and makes it more difficult for poor countries to both imitate and copy technology from other countries and to protect their own resources.

Larger income differences.

Just the latest theme, patent litigation, re-emerged in the program during Verda's social forum in Nairobi in January. Questions specifically related to ICT, on the other hand, found fewer elements of one's way through the endless overview of workshops and seminars. The reason for this may be that the lion's share of both organizers and participants fall within the category of ICT skeptics and view ICT as far less important than patent issues in social and economic development. And if we go back to the statistics, it may look as if technology opticians win points precisely when it comes to the connection between ICT and economic growth.

The other phenomenon that has attracted attention when looking at developments over the past two decades is that when it comes to economic rather than purely technological factors, the differences in the world increase. Statistics on GDP per capita show that while the middle-income countries have experienced a small reduction in the income gap compared to the rich countries, the difference in income between middle-income countries and low-income countries has increased by close to ten percent.

Why is this interesting in relation to the trends of technological development? The main message is that the distance between richer and poorer countries has increased both in terms of innovative capacity and income per capita, but not in terms of ICT-related factors. Indeed, the indicators for Internet users and mobile phones are the ones that show the most dramatic reduction in the divide between the North and the South. In other words, the worldwide spread of ICT seems to have gone quite quickly, and it is therefore unlikely that it is a decisive factor in creating economic growth in low-income countries. If one looks at the relationship between GDP growth per capita and the change in technological capacity, this is still clearer. Three factors are positively related to income growth: innovative capacity, traditional infrastructure (electricity is the indicator that correlates most strongly with GDP: 0,63) and educational level. ICT-related infrastructures such as mobile telephony and the internet, on the other hand, are negatively related to economic growth: For this technology, the differences between rich and poor countries have decreased, while the economic differences (measured in GDP per capita) have increased.

The fact that traditional infrastructures seem to be relatively more important than ICT in relation to economic development is probably not a big surprise either – for example, access to electricity for most people is a prerequisite for being able to use the internet. If we take a quick trip back to the Dominican Republic, that is precisely the problem: the current that is constantly flowing. If Negroponte were to test their computers there, they should be designed for more than short-term power outages.

Bill or Che?

Naturally, one must be careful when interpreting these figures. They do not tell us that ICT is not important for economic development. It probably is, but the causal relationship between ICT and economic growth is complex and it will probably take a long time before this correlation will possibly be shown in the statistics. ICT is important for economic development, to the extent that it contributes to strengthening the ability of various countries to utilize this technology in the most productive way possible. The development of human resources, traditional infrastructure and innovative capacity is necessary to achieve this. It is the interaction between various factors that create economic development. So for the different camps we have the following to say:

To the ICT skeptics: The speech we have presented here shows that for many of the areas we have looked at, the inequality between countries has diminished over the past two decades. And the ICT factors are actually the ones that show the strongest tendency to approach between rich and poor countries. It doesn't look too bad though, does it?

To ICT enthusiasts: The focus of the debate should, to a lesser extent, be on transferring technological product to developing countries and rather emphasizing on helping to strengthen these countries' technological capacity. ICT itself is not a miracle cure.

To us: When a technology enthusiast and a technology skeptic sit down to write an article, it can have unintended consequences. One of us got Bill Gates on the boat and started using open software on the computer, while the other decided it was time to put the Che t-shirt in the closet for good…

Fulvio Castellacci is a senior researcher at Nupi.

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