Digital Reach

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information flow between rural and urban regions and thus

reduce the gap in economic development. For example, if rural

people obtain more information about agricultural prices, markets

and economic opportunities beyond their geographical horizon,

they will be able to increase their productivity.

Market Efficiency Effect

– By facilitating information flow and

enhancing the communication between buyers and sellers,

telecommunications increase the efficiency of market operations

by increasing arbitrage opportunities in financial markets, which

in turn lowers the capital costs of production.

Spill-over and externality effects

– Telecommunications networks

and their use generate significant spill-over effects in other sectors

of the economy. The externalities involve lower search costs,

increased arbitrage abilities; and more information on the distri-

bution of prices and services. Because of these spill-overs and

externality effects, the social rate of return on telecommunica-

tions is expected to be much higher than its return on just the

telecommunications investment itself.

Coordination of economic activity

– In business, this mechanism

improves the capability of managers to communicate with each

other and helps them to make better decisions and business

plans. Telecommunications help to remove, to a great extent, the

physical constraints on organizational communications in all

sectors of the economy.

Indirect effects of telecommunications on economic development

–

Telecommunications contribute to economic development indirectly

by improving the coverage of basic services like health, education

and environment protection in a country. Telecommunication facil-

itates emergency medical assistance, long-distance consultation,

and quality assurance to remote locations. In developing countries,

there is a growing consensus that telecommunications can ease the

cost of providing medical care throughout the nation, subject to a

tight national budget constraint. Telecommunications also helps to

spread education to remote locations. Modern telecommunications

services like voice, data and video services through high bandwidth

allow effective distance learning.

The social constraints to the ownership and use of

telecommunications technology for development

In developing countries there are various social problems, which

create barriers to people owning and using telecommunications

and ICT. These barriers include, amongst others, illiteracy, cultural

obstacles, lack of computer skills and technological know-how,

lack of access to computers and computer networks as a result of

the digital divide, lack of Internet access, lack of significant usage

opportunities, background to increasing information equality and

structural information equality.

The Internet, for example, is a good educational tool but can be

expensive for poor members of society in terms of paying for all

the monthly connections to the Internet service providers. Most

LDCs in Africa still do not have access to the Internet, which will

add to their slow development. This is exacerbated by poor telecom-

munications infrastructures and low teledensities. Should people

have access to the Internet, they can access a wealth of information

from this global service and develop many aspects of their lives.

The use of the Internet by members of the general public and

commercially is, however, a relatively recent phenomenon.

A key for development and growth

Information is the key for development and growth. Information

flows can be enabled or ameliorated through the use of telecom-

munications infrastructure and ICT. The availability of an

adequate telecoms infrastructure is key to the further develop-

ment of a country, and it is the role of the developed countries

to help put in place this infrastructure.

Today, developed countries already assist LDCs in the devel-

opment of various ICT projects. This role should be emphasized

because developed countries have the financial or economic

muscle to provide development aid to LDCs without compro-

mising their own financial standing or development plans. The

International Telecommunications Union, with many members

among the developed countries, assists many LDCs with the

development of telecommunications infrastructures. Also, the

United Nations Development Programme carries out various ICT

projects in African and Asian countries, such as the development

of telecentres. Together, developed and developing countries can

create a richer, global village.