ICTS AND THE REDUCTION OF POVERTY

Yesterday I posted links to a number of papers on the role of information and communication technologies in the reduction of poverty. Let me briefly describe what I believe about the topic.

First I think poverty is not simply the lack of money, but that people are also impoverished by lack of health, lack of knowledge, hunger, inadequacy in which other basic human needs are met, and indeed lack of information and of an effective voice in their own and their communities affairs.

Rolling out the ICT infrastructure is important, but so too is how that is done. Getting ICTs to the poor involves shared connectivity. Service providers naturally seem to prefer to roll out first to the highest return-to-cost ratio customers, who tend to be urban and rich; providers need regulatory requirements or incentives to rollout to the rural and poor. If the rollout is done only to the elites in a poor country, it seems unlikely that the poor will have much direct benefit from access to the infrastructure.

It seems obvious that poor people do benefit from ICTs when they do have access. Many (most?) poor people like radio and TV and spend time with them whenever they have access to programming that they like; examples exist of programming that not only entertains poor people but informs them in socially and economically valuable ways. People who use telephones sparingly probably get more benefit per use than we expect – saving on travel costs, and getting crucial information in important and emergency situations. However, I suspect there are big traps for those who assume that poor people in poor countries will benefit from Internet access in ways similar to the ways rich people in rich countries do.

Building ICT industries is also important, but so too is the way they are built. The emphasis on building export-oriented hardware and software industries is no doubt important, but such industries will provide little direct employment nor direct service to the poor. On the other hand, there are a lot of ICT enterprises that can be developed that will provide services and even employment to the poor. Community radio strikes me as a good example of such an industry -- one that deserves to grow rapidly in poor countries. The Grameenphone approach -- in which poor people are provided with micro-credit to allow them to acquire cell phones, and offer fee-for-service telephone in poor neighborhoods and villages -- seems another great idea that could work in other poor countries.

I believe strongly in the importance of developing applications of ICTs. ICTs can make small and medium enterprises more productive, thus helping them create jobs and provide services benefiting the poor. E-government applications serving the poor can help the poor to access government services, to spend less time satisficing government demands, to influence government, and indeed to reduce the dead weight of so many governments on their poor populations’ necks. I suppose that as a result of my own background, I feel it is especially important to utilize ICTs to improve health and education services for the poor, including but not only through telemedicine and distance education.

Again, I think building ICT industries must be done in a pro-poor policy environment to really benefit the poor. There will inevitably be limited resources available to utilize ICTs to accomplish new purposes, and I think there will inevitably be competition among the potential beneficiaries of those innovations for the allocation of those resources. ICTs can be used to improve hospital services limited only to the rich, or primary health care services benefiting many poor people; they can be used to improve elite education services disproportionately benefiting the rich, or to improve primary education and skills training programs primarily benefiting the poor. If the rich and powerful always succeed in assuring that all the innovations answer their needs, the poor will not benefit much from these indirect applications of ICTs.

Of course, in order for ICTs to be useful in improving performance of those sectors employing or giving services to the poor, the ICT infrastructure must (be extended to) reach the appropriate (public and/or private) enterprises. Moreover, the ICT industries needed to serve those enterprises (including software and hardware distribution and sales, ICT training, maintenance, application service providers, etc.) must also be in place. I suspect that the rollout of the infrastructure and industry to serve these intermediaries will be more important in alleviating poverty than direct rollout of services to the poor themselves, although I admit that I may well be wrong about that.

Now the issues get complicated. The rapid improvement of computer and communications technologies offers potential improvements in productivity in every part of the economy. Moreover, if communications, transportation, and energy industries can be made more efficient (through the application of ICTs), then their improved efficiency will also benefit manufacturing and commerce. Further, if manufacturing and commerce become more efficient, then there are feed-back effects to the communications, transportation, and energy industries. If investments in ICTs turn out to be very productive, it seems likely that people will invest more. In the right circumstances one has not only a virtuous circle, but a huge and complex network of mutually reinforcing virtuous circles leading to a general improvement of the rate of economic growth/

However, this happy state is likely to be achieved only if there are policies and institutions that encourage economic and social development. Then the information revolution can trigger a complex process in which improved rates of progress in the various sectors interlink, with each sectoral improvement further stimulating progress in other sectors. This kind of effect has occurred in the past with the industrial revolution, and other “technological” revolutions, and may well be occurring now triggered most notably by the ICT revolution.

I put the term “technological” in quotes, because history shows clearly that there are vast differences in the experiences of different countries facing the same technological opportunities. Historically the rich countries have on the average taken more advantage of technological innovation than have the poor countries. It is the favorable policy and institutional environment that allows countries to exploit technological opportunities, not something intrinsic to the technologies themselves.

Assuming that countries do utilize the potential in ICT for economic growth, will the poor benefit? Does a rising tide float all boats? I have seen World Bank analyses that indicate that there is a very strong correlation between average per capita GDP growth and reduction of poverty. This seems reasonable to me. On the other hand, it also seems clear that among rich countries in recent decades, the more rapid the process of rolling out and utilizing ICTs, the greater the inequality in distribution of income that follows; it seems reasonable that rapid technological change usually disproportionately benefits those who through education or other means are most able to appropriate the technology to their own purposes.

I conclude that in order for the poor to fully benefit from the Information Revolution, there must be simultaneous efforts to get the conditions right for national economic growth, for rolling out the infrastructure, for building ICT industries, and for utilizing ICTs in many sectors of the economy. Not only is it important for there to be pro-growth policies and institutions in place for the ICT revolution to be translated into economic growth and rollout of infrastructure and services, but it is also important that there be pro-poor policies and institutions in place to assure that the progress is shared by the poor.