Improving understanding of the links between ICTs and poverty reduction

The role of information and communication technologies (ICTs) in development and poverty reduction remains controversial and unclear. Connectivity rates are slowly increasing in many countries, but isolated regions and women are being left behind. ICTs may not be a complete solution, but they can provide a development opportunity that governments should take advantage of.

A new book, published by Johns Hopkins University Press for the International Food Policy Research Institute (IFPRI), investigates links between ICT growth and economic growth and suggests ways to enable more poor people to access ICTs. In a collection of case studies, the book explores the relationship between ICTs and development in Bangladesh, China, India, Ghana, Laos, Peru, and East Africa.

Enthusiasts say ICT infrastructure offers economies of scale that stimulate network building and promote inclusive participation by overcoming barriers of physical distance and social standing. Its expansion generates benefits for both new and existing users. The immediacy of ICTs promotes faster and more efficient decision-making.

Sceptics argue that access to ICTs depends on income. Limited education, inappropriate language skills or lack of resources prevent disadvantaged people from accessing ICTs. This widens information gaps and income inequality between and within countries. Income inequality is further widened if introducing ICTs into manufacturing and service industries reduces demand for unskilled labour.

Estimates for 113 countries over a 20-year period show a positive link between telecommunications infrastructure and income. They also suggest a 1 percent increase in the telecommunications penetration rate might lead to a 0.03 percent increase in GDP. However, growth effects are strongest in areas where the number of people with access to phones or the internet is between 5 and 15 per cent. Above and below this threshold, growth effects were limited.

Telephone penetration in South Asia and Africa has grown by about 20 per cent per annum for 15 years, but levels of access remain low at just 6.2 and 5.8 percent, with growing inequality between urban and rural areas. Ill-judged regulations deter private-sector participation and restrict competition. Access costs remain high and interconnection between phone networks is problematic.

The authors show that:

• ICTs cannot be developed without strong institutions to encourage private investment.
• While some countries have introduced policies to encourage the private sector and new service providers, many governments resist reform.
• Public intervention in ICT provision is required for areas and people that cannot otherwise be served, even under the most efficient market conditions.

There are innovative ICT projects leading to more efficient delivery of health and education services but gaps still exist in the use of ICTs for the delivery of public goods.

Realising the potential benefits of ICTs in developing countries requires:

• deregulation, competition among service providers, free movement of technologies and subsidies to improve access
• incentives to increase Internet use and create a critical mass of ICTs
• recognising the three Cs: connectivity, capability and content. There is little point increasing penetration if ability to use new tools lags behind and relevant content is not provided in useful forms.

Source(s):
‘ICTs: Information and Communication Technologies for the Poor’, International Food policy Research Institute, by Maximo Torero and Joachim von Braun, November 2005 Full document.
‘Information and Communication Technologies for Development and Poverty Reduction: the potential of telecommunications’, Johns Hopkins University Press and IFPRI: Baltimore, edited by Maximo Torero and Joachim von Braun, 2006.

id21 Research Highlight: 12 February 2007

Further Information:
Maximo Torero and Joachim von Braun
International Food Policy Research Institute
2033 K Street, NW
Washington, DC 20006-1002
USA

Tel: +1 202 8625600
Fax: +1 202 4674439
Contact the contributor: m.torero@cgiar.org, j.vonbraun@cgiar.org

International Food Policy Research Institute

Other related links:
'Empowering poor people through information and communication technologies'

'ICTs enlisted in the development of African women'

'Understanding the connections between ICTs and poverty'

'World Summit on the Information Society What did it achieve for ICTs and Development? What did it ignore?'

'Understanding rural telephone use'