89 / 208
for individuals and organizations to take risks and make investments
for satisfying information and learning needs. A balance in the level
of fair and open competition among these groups ensures access to
the highest quality offerings at the lowest possible price.
Advances in digital technology and the corresponding conver-
gence in their application can have a profound impact on
transforming these matching mechanisms and ensuring citizens
access – as users and producers – to information and learning
resources. As the technological capacity to access, compile, process,
distribute and transmit data is increased, digitalization can poten-
tially bring about profound changes in the economics of information
production, distribution and access. Institutional realignments are
crucial in realizing this potential.
Digital convergence is occurring simultaneously on various levels.
One level is between voice and data communications, including the
current battle between public switched telephone networks and
voice over Internet protocol (VoIP). On another level, it is occurring
between telecommunications and broadcasting. Three types of
convergence are being played out on this level: network conver-
gence that makes it possible for telecommunications companies
and broadcasters to enter each other’s markets within the context
of shared use; service convergence that includes Internet broad-
casting; and terminal convergence that includes multimedia PCs
and television receivers equipped with communications functions.
A third level of convergence is between telecommunications and
consumer electronics, where advances in digital technology make it
easy to connect equipment, including consumer products, to the
telecommunications network.
Digital convergence presents a fundamental challenge to tradi-
tional approaches to regulation, not to regulation per se. Advances
in technology do not replace regulation. However, they do challenge
government policy makers and regulators to rethink how they carry
out their functions in a new context. Public policies and regulations
define the climate for risk-taking and investment needed to promote
innovative applications of digital technology.
The fundamental policy and regulatory issue is to ensure that
conditions are created that promote incentives for innovation in the
applications of converging digital technologies in three areas: infra-
structure, software and content. The challenge for policy makers,
the private sector and civil society is to define what constitutes fair
and open competition in each of these levels and how to be sure that
fairness and openness is achieved overall. Undoubtedly, this will
require some combination of public and private incentives in each
of the three areas.
One additional point should not be overlooked. Policies and regu-
lations that promote fair and open competition throughout the
economy must exist and be enforced. Fair and open competition
among the firms in the knowledge economy is not a substitute for
the absence of fair and open competition throughout the economy.
Efficient, equitable and sustainable economic growth is a product
of the symbiotic relationship between fair and open competition
among knowledge economy organizations and between them and
organizations in other sectors.
Development paradigm: seeing the ‘new’ in the ‘old’
One reason why there are increasing calls for a new development
paradigm may well turn out to be an insufficient understanding of
the role of information and knowledge in the current paradigm.
Advances in digital technology and convergence in their application
help focus on the ‘new’ in the ‘old.’
The development debate is primarily between those who call for
increasing development assistance and those who promote free trade
to achieve development objectives. However, a third way has always
existed – value-added development. This consists of applying ideas,
information and knowledge to local resources to create and distrib-
ute new wealth. Value is added to resources by the application of
knowledge to increase their information content. Knowledge
economy expansion reflects the capacity of an economy to add value
to resources. This approach has been implicit in the development
efforts of countries and development assistance organizations. As
it becomes more explicit, new opportunities can emerge.
The profound differences among countries can be traced to
the degree to which they are committed to creating conditions
through which individuals and organizations can add value to
themselves and other resources. In other words, one of the basic
differences among countries is the degree to which they build
human capital through policies and projects that contribute to
a comprehensive expansion of their knowledge economy. Various
countries without abundant natural resources have achieved
significant substainable economic growth by focusing their devel-
opment strategies on adding value through knowledge economy
expansion. Other countries with abundant natural resources
sometimes fail to achieve needed levels of growth because of an
insufficient and/or ineffective commitment to the value-added,
human centered approaches to development that simultaneously
diversify local production while increasing local purchasing
power.
Access to information for humans to build and apply knowledge
has historically changed the volume and character of supply and
demand for all goods and services. Put simply, the application of
ideas transforms raw materials into products and services as well
as changes the processes that produce them. Similarly, people
become more productive the more they learn. In the context of a fair
and open competition, access to information and the application
of knowledge can increase productivity and competitiveness on the
supply side. On the demand side, this competition can contribute
to opportunities that can increase purchasing power and improve
quality of life.
A knowledge economy reflects the capacity to add value to the
factors of production for example, by increasing the information
content in rawmaterials, financial and human resources. Newmixes
of them can lead to the creations of new wealth in more efficient,
equitable and sustainable ways. The core of the knowledge economy,
the information sector, is an economic activity the character and
size of which have not yet been sufficiently measured and integrated
into development planning.
Adding value takes place on two levels. As raw data in text, image,
audio and/or multimedia formats is organized, it is transformed
into information that becomes more valuable for users. As people
use information as an input to create and apply knowledge to non-
information resources, those resources also assume more value for
potential users. The capacity to add value offers the potential to
change the volume and character of supply and demand for all
goods and services. Similarly, a value-added perspective involving
information and knowledge, helps define and promote a deeper
understanding of the inextricable and symbiotic link between macro
and microeconomic growth. In the macro context, the production,
distribution and use of information takes place through the oper-
ation of a marketplace. In the micro context, the production, and
distribution and use of information is generated within organiza-
tions. Sometimes referred to as the primary (external) and
secondary (internal) information sectors, respectively, these are
economic activities that are provoked by and contribute to expan-
sion of other sectors in the economy.
[
] 89