Kentaro Toyama raises at least two interrelated issues. One is whether technology, including ICT, has contributed to development and benefited the poor. The other is whether, given the lack of capacity to absorb and implement the new digital technology, developing countries should embrace it.
On the former, Toyama’s claim that “technologies generate optimism and exuberance eventually dashed by disappointing realities” ignores extensive literature to the contrary. Rapid technological progress in developing countries has helped to raise incomes and reduce the level of absolute poverty from 29 percent in 1990 to 18 percent in 2004.
To a significant degree, technological progress also makes the difference between fast-growing developing economies—some of which were among the poorest countries just two decades ago—and slow-growing ones. East Asia, South Asia, and emerging markets in Europe have seen rapid growth in GDP per capita, while growth has been weaker in Latin America, the Middle East, and Africa. The former group has seen fast-paced advancement in ICT, while the latter has lagged.
Toyama’s argument that cell phones may distract drivers or be useful in the sex trade is unconvincing given the volume of evidence showing the wider benefits of cell phones. All technology has positive and negative uses; demanding that it transform human behavior is too much to ask. And to bemoan the fact that even poor people pay to download ringtones is patronizing.
On the question of whether developing countries should embrace digital technologies, one must consider the place of technology in a long-term process of economic development. And ICT, in particular, is worth the investment.
ICT is a “general-purpose technology.” It has strong spillover effects on long-run productivity in other sectors of the economy. The steam engine and electricity are earlier examples. Unlike incremental technologies, general-purpose technologies trigger economic and social transformations. In this sense, ICT may help us meet some of the development challenges in the face of which traditional aid to developing countries—trillions of dollars—has had only limited success.
Three related trends in ICT are particularly encouraging. The first is the spread of mobile technology. There are now more than 4.5 billion mobile subscriptions globally. No technology has ever spread more quickly. Virtually all new mobile customers in the coming years will be in developing countries, specifically in rural areas, implying that mobile technology is reaching populations with low levels of income and literacy. The potential of mobile networks, the largest distribution platform in the world, should not be ignored, especially as information and related services are becoming new sources of economic growth.
Economic agents need time to figure out how best to use general-purpose technologies.
A second trend is the growing interest of the private sector in investing in developing-world ICT infrastructure and applications. A market-based approach is particularly suitable for the ICT sector: public-private partnerships could harness the investment resources and technical expertise of the private sector to meet policy objectives and distribute the risks associated with the adoption of fast-changing technology. ICT investment is likely to be more fiscally sound than other public- spending options as well because it has the potential to pay for itself.
A third promising trend is that ICT innovations increasingly are emerging from developing countries themselves. Especially in sub-Saharan Africa—where market information, financial services, education, and health services largely were unavailable in the past—ICT is promoting new economic and social opportunities for both rich and poor.
The fact that ICT can have a substantial growth and development impact does not mean that it is a panacea. Here I agree with Toyama. The spread of technology by itself is not going to help end global poverty. But the question is not whether technology or other development activities will solve global poverty. The question, rather, is how ICT can be an effective tool for other sectors.
Because advanced technology does not guarantee outcomes, ICT projects sometimes fail. Toyama’s list of reasons for such failure—the absence of demand- and context-driven design, a sustainable business model, and committed and competent implementers—however, is not limited to ICT interventions. These must be in place no matter the goal or the means, in developing and in developed countries.
But new technology does pose a specific challenge. There is often an initial inability to exploit it, and it takes time and resources for the full benefits to permeate the economy and society. Since general-purpose technologies affect all sectors of an economy, practically all economic agents (individuals, firms, communities, and governments) need time to figure out how best to use them. Large investments in worker training and organizational change are the norm.
Does that mean we should hold off on these projects, as Toyama seems to suggest, if local capacity does not already exist? Or should we try to overcome the difficulties in designing and implementing ICT projects so as not to forgo the economic and social benefits technology could bring?
I recommend the latter. The world is becoming ever more information-intensive and integrated. New digital technology offers novel solutions to some of the long-standing challenges of socioeconomic development. Parallel investment in capacity building carries little risk and offers potentially large benefits. Developing countries, especially the most economically challenged, that don’t adopt ICT will miss out on those large and long-term gains.