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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.