CIAO DATE: 05/02

Georgetown Journal of International Affairs

Volume 1, Number 2, Summer/Fall 2000

 

Development Goes Digital
An Interview with Carlos Braga

 

The information revolution is a phenomenon whose introduction occurred in the industrialized world, but whose conclusion may very well take place in the developing world. Advances in information technologies have enabled developing countries to connect themselves to the world economy and world community at an unprecedented pace. They have also created new opportunities for improving education and engaging in e–commerce. But not everyone has embraced this integration. Government telecommunications monopolies have slowed the expansion of Internet networks, and many are uncertain as to whether information technologies are tools that will empower developing countries or simply the newest mechanisms of control for the industrialized world. Indeed, a digital divide is emerging that has the potential to further weaken the position of developing countries in the world economy. Carlos Braga, Manager of the Information for Development Project at the World Bank, joined Professor Charles Weiss of Georgetown University’s School of Foreign Service to discuss the impact of information technology on the developing world, as well as the policy issues confronting newcomers to the information revolution.

Weiss: Has the information revolution reached the developing countries, and is it having an impact there?

Braga: Yes, there is no doubt it is having an impact, but there is a lag. How it affects countries varies a lot. Middle–income countries naturally are the ones that are more actively promoting the kind of development and access to modern information infrastructure that you already witness in industrialized countries. In 1999, for example, we saw significant advancements in the penetration of wireless networks, as well as the explosion of the Internet all over the developing world–Latin America was the region with the highest level of growth in Internet–wired hosts. At the same time, it’s quite true that in the least developed countries, the information revolution is at best affecting some very discrete parts of the economy and society.

Weiss: Let’s start with the more advanced developing countries. What are the major applications of the Internet, and what difference is it making?

Braga: There are very different aspects of Internet use and how it’s affecting the economy. First, the Internet as a platform for communication and networking is something that’s already having an impact in many middle–income countries–a whole new segment of the industry has appeared, the so–called Internet service providers. Countries like Brazil and Mexico have hundreds of Internet Service Providers, and this segment is very dynamic. At the same time, this creates a whole new array of questions for the regulatory authorities and the content carriers, and affects opportunities for using the Internet for communication. So that’s one dimension. The other dimension is the question of the impact on education. Once again, in Latin America but also in Asia, the Internet is increasingly used to support educational activities and access to information, be it government information or information by separate communities of interest. These types of activities are undoubtedly proliferating all over the developing world.

Weiss: Is e–commerce growing?

Braga: E–commerce is growing, but many questions remain. The challenges for developing countries remain quite significant because they have to deal not only with the level, quality, and pricing of connectivity–these are often bottlenecks for many developing countries–but on top of that, they must deal with the complementary services that you need to have in place if you are going to seriously engage in electronic commerce. By that I mean express mail delivery, a modern financial system, and the use of credit cards. In many developing countries, these complementary services are still very weak, so on top of the problems with the network, you have problems with the complementary services that, of course, make it more difficult to engage in e–commerce. But even without these challenges, there is an explosion of activity and a lot of dynamism in certain regions of the developing world with respect to electronic commerce, be it business to consumer or business to business.

Weiss: Do you find that there’s an important social impact, with people talking to each other in new ways that are not necessarily political? Do you find new forms of communication taking place?

Braga: Definitely. The Internet creates cyberspace, which is really a new space because it increases the opportunities for people to communicate and create communities. And it’s very interesting to see these communities thriving. The way that information technology is shared in cyberspace is really fascinating, and the creation of these communities is opening new doors for participation. The Internet is very powerful in terms of creating opportunities for interaction, and the World Wide Web is undoubtedly creating opportunities for this to happen in a more significant fashion than ever before.

Weiss: Are developing countries coming to terms with the same types of policy issues confronting the developed countries, such as those dealing with privacy, conflicts of law, and copyright?

Braga: Most developing countries are still struggling with more basic issues such as connectivity and how to regulate interconnection and prices for the Internet. Those that are in the intermediate stages of their e–commerce development have a relatively large proportion of their population connected and are already facing issues such as privacy, intellectual property rights, and security of transactions. But these issues are much more on the radar screen of industrialized countries than on those of developing countries. One of the concerns is that the dialogue is being conducted in a limited environment because most developing countries have not yet been exposed to some of these issues. For example, it is important to give a voice to developing countries in organizations like ICANN [Internet Corporation for Assigned Names and Numbers], which handles the allocation of domain names; the World Trade Organization, which deals with issues such as taxation and Web–related foreign trade; and the World Intellectual Property Organization, which is the authority on intellectual property rights.

Weiss: Let’s talk a little about the obstacles to connectivity. I know there are serious problems with access to simple telephone service, let alone broadband service. What’s the status of connectivity in different parts of the Third World, and what has been the reaction of the telephone monopolies to this situation?

Braga: The good news is that connectivity has improved significantly throughout the 1990s as a wave of liberalization and privatization washed throughout the world, both in industrialized and developing countries. Many countries have opened their markets and state–owned enterprises, allowed privatization, and seen significant improvements in levels of connectivity. The bad news is that, at the same time, there are still those countries, particularly the ones lagging behind in their policy reforms, that still face very substantial problems with quality and level of access. Actually, in some new areas, if you talk about wireless telephony, you see signs of convergence between developing and industrialized countries in the sense that networks are expanding faster in the developing world than in the industrialized world. But if you are talking about Internet access, the situation is much more uneven, and in some cases, you’ll see an even greater divergence.

Weiss: What is the problem? Why is there a tension between a government postal, telegraph, and telephone monopoly [PTT] and the provision of connectivity?

Braga: There are examples of PTTs around the world that have done a good job. But there is a typical problem in terms of the incentives for the provision of services. What has been proven again and again is that, on average, a competitive environment is the primary stimulus for a policy centered on the consumer, and in this sense, it is the best mechanism to direct investments in connectivity. Entities in a monopoly are in a position to extract rents from the consumer, and these rents are not used for the expansion of the network in many countries. PTTs are a cash cow for the government to fund other activities of the government. Hence, you see a negative relationship between monopoly and expansion of networks.

Weiss: What important experiments are going on in terms of Internet use for educational purposes?

Braga: There are many initiatives all over the world that are experimenting with the Internet. It’s important to emphasize "experimenting" because all of this is very new. And these initiatives are being implemented from universities all the way to private research. The World Bank, for example, created the links for a development program that connects schools in developing countries with schools in industrialized countries in order to create communities that dialogue through the Internet. Hundreds of schools are now connected all over the world and engage in pedagogical experiments.

Weiss: How about for medical applications?

Braga: Again, the Internet has become a powerful tool at several levels. One is to provide access to medical information. Imation, which is supported by the World Bank’s Information for Development Project, is an NGO that transmits medical information to a low–earth orbit satellite, aimed particularly at sub–Saharan Africa. More and more health practitioners can access this medical information through the Internet, use it for their own training, and post important information. At the same time, you have increased use of the Internet for training in medical schools and access to medical literature. Many journals are now online, and the mechanisms for access and dissemination of this information are more pervasive.

Weiss: Let’s turn to the question of the digital divide. One hears two contradictory stories. One is that the Internet spells the “death of distance,” but the other is that of a digital divide, a tale of a global shakeout between those who can manage globalization and the Internet and those who cannot. What are we to think?

Braga: I think both of the stories are true. Information technologies are distance–insensitive. The costs for you to call from Georgetown to downtown Washington or to downtown Moscow are not that different. The price may be different because of the pricing structure and regulatory bottlenecks that allow companies to continue to exercise monopoly power in this area, but the costs, technologically speaking, are very much distance–insensitive. These will become even more so with the delivery of fiber optics, advanced networks, and a new generation of satellites around the world. All of these point to the death of distance because the costs of telephony are less and less distance–sensitive. Having said that, this should not be equated to the death of geography because the characteristics of each region will continue very much to dominate and define the reach and the impact of globalization.

Weiss: What about the rural areas in developing countries? Will there be a digital divide within developing countries?

Braga: There is definitely a digital divide within developing countries as well as within industrialized countries. Typically, areas with either low income or low population density, like rural areas, are the ones less well–serviced by networks. Therefore, it is very misleading to look at average densities around the developing world, because once you go out of the main urban centers, the decline in the level of connectivity is dramatic. So, yes, there is a digital divide, and unless governments are able to take proactive approaches toward network development with special attention to rural areas, it will continue to be a major problem.

Weiss: All things considered, is information technology going to be an empowering technology for poor, disadvantaged, and rural people, or will it just be another technology that helps the rich more than the poor?

Braga: I’m very optimistic about the information revolution as a mechanism of empowerment. The Internet, to a certain extent, is a subversive technology, because it enables and facilitates, giving a voice to the poor. Now, having said that, it is also true that given the structure of existing networks, given the kind of access we have now, you can see this nascent revolution sharpening the divide because those who are wealthy are the ones that have access to modern networks. But the logic of the network is inclusive. As the technology becomes more widespread, the value of the network will increase exponentially, and with the proper regulatory environment, market forces can be complemented by a proactive policy agenda, so that specific market gaps in rural access to the Internet and access by the poor in urban areas will begin to be filled. So it is in the hands of governments, to a certain extent, to respond to this revolution. But in the end, it is really in the hands of each one of us–and the communities to which we belong–to explore the Internet and to gain a voice in this emerging global network.