34147 E-Development: From Excitement to Effectiveness Edited by Robert Schware Prepared for the World Summit on the Information Society Tunis, November 2005 Global Information and Communication Technologies Department THE WORLD BANK GROUP Washington, D.C. i E-Development: From Excitement to Efficiency ©2005 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Pub- lisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. ISBN-10: 0-821 3-6442-1 ISBN-13: 978-0-8213-6442-0 eISBN: 0-8213-6443-X DOI: 10.1596/978-0-8213-6442-0 Library of Congress cataloging-in-publication data has been applied for. ii Table of Contents Foreword v Preface vii Acronyms viii Acknowledgments xi Overview: E-Development: From Excitement to Effectiveness Robert Schware xiii Chapter 1 Look Before You Leap: The Bumpy Road to E-Development Isabel Neto, Charles Kenny, Subramaniam Janakiram, Charles Watt 1 Chapter 2 Creating the "Right" Enabling Environment for ICT Boutheina Guermazi, David Satola 23 Chapter 3 E-Strategies for Development Bruno Lanvin 47 Chapter 4 The Elusive Quest for E-Leadership Bruno Lanvin 65 Chapter 5 The Basic Building Blocks of E-Government Randeep Sudan 79 Chapter 6 Beyond Secondary Education Ron Perkinson 101 Chapter 7 The Role of International Cooperation in E-Development Bruno Lanvin, Isabel Neto 127 Annex 1 Regression Results for the Determinants of E-Development Isabel Neto, Charles Kenny, Subramaniam Janakriam 141 Annex 2 Selected List of National E-Strategies 145 References 149 iii E-Development: From Excitement to Efficiency Foreword This volume is not a compendium, but a mosaic. It tells emergence of an "e-agenda" is a sign that the neces- a story. A story of how various countries, institutions sary conditions, attitudes and policies have started to and sectors have reacted to the emergence of infor- coalesce to effectively utilize the potential of ICTs. Con- mation and communication technologies (ICT) and cretely, this means that we are starting to see more probed their way toward turning them into instruments and more e-development projects designed to meet the of development. essential development needs of poor countries and help them compete successfully in the international arena. It shows how, after initial years of enthusiasm, explora- tion and excitement, the "e- development agenda" has It is clear that, to achieve lasting benefits, ICT-enabled progressively matured into a set of policy instruments, development projects must be properly planned and sectoral applications and programmatic approaches. It their implementation accompanied by a careful pro- also provides evidence that e-strategies have acquired cess of monitoring and evaluation. It is equally clear the respectability brought by efficiency. Finally, the vol- that the role of decision makers, especially at the policy ume challenges some of the conventional wisdom re- level ("e-leaders"), is crucial for ensuring that the e- garding how and where ICT can best contribute to im- agenda is solidly rooted in a given nation's develop- proving the lives of people in developing nations. ment agenda and serves a vision that convinces stake- holders to invest their time, energy, hope and financial This volume is specifically addressed to policy makers, resources. While quick fixes remain appealing, suc- "e-leaders," international cooperation agencies, the pri- cessful e-development projects always involve good vate sector, and NGOs present at this second phase of preparation, careful design, discipline in execution, and the World Summit on the Information Society (WSIS) timeliness in delivery. and encourages them to focus on the growing economic impact of the ICT sector. As the volume shows, ICT It is our hope that this volume will provide useful knowl- has touched the lives of citizens in developing countries edge and practical guidance on the environment con- in an ever-increasing number of ways. Technology and ducive to successful national e-strategies, e-govern- infrastructure have contributed to empowerment, job ment and e-commerce activities, as well as e-educa- creation and competitiveness. This report gives the tion, e-health and e-finance projects. We look forward reader a sense of being at a turning point where several to pursuing the debates it may generate with interested forces are combining to accelerate change. We have stakeholders at WSIS and beyond. More importantly, reached a critical point where the social benefits of ICT we are eager to continue our work in the field with are becoming apparent and many governments are over- those who share our passion to use ICT as a tool to coming the inertia that previously prevented them from fight poverty and foster development. seizing the development opportunities of ICT. Katherine Sierra The presence of telecommunications lines, computers Vice President or even Internet connectivity, however, are insufficient Infrastructure in and of themselves to accelerate development. The The World Bank v Preface The Reality of E-Opportunities The first phase of the World Summit on the Informa- date, over 100 countries have received at least some tion Society (WSIS) in December 2003, together with World Bank support for information and communica- the preparations for the second phase in 2005, have tion infrastructure reform. An increasing number of highlighted the importance of ICT infrastructure and countries are receiving support for ICT components applications to development. It is now quite com- in traditional investment projects and to design e-gov- mon, and in some ways imperative, for policy makers ernment applications and integrated, large-scale e- to focus on e-education, e-health, e-commerce, e-fi- development projects (e.g., e-Sri Lanka, e-Bharat in nance and e-government as elements of an overall India, e-Ghana, Vietnam ICT Development, and the development strategy. ICT Sector Development Project in Tunisia). Yet the opportunities and promises of e-development This report attempts to distill some of the lessons also entail some major challenges. New risks are be- learned from e-development projects, including a num- ing created by the integration of ICT into the everyday ber undertaken with World Bank support. It avoids operations of businesses, organizations and govern- e-development hype in favor of realistic, down-to-earth ments, requiring policy makers to pay vigilant attention experience drawn from users, producers, regulators, to such issues as business process reform, behavioral leaders and providers of ICT from our member coun- resistance and cyber­security. Given the competition tries, developed and developing alike. We hope that for limited public resources, policy makers must also development agencies and policymakers will find the be ready to ensure taxpayer money spent on e-projects information and analysis presented in this report use- generate adequate economic and social returns. ful in supporting their development efforts and the design of `e-projects'. Since the first phase of WSIS, the World Bank has seen increased interest around the world in further Mohsen Khalil opening telecommunication markets, building out ba- Director sic backbone infrastructure, mobilizing ICT invest- Global Information and Communication ment for challenging rural areas and addressing the Technologies Department potential of new Internet-based and other ICT-related The World Bank services. In turn, the World Bank is supporting mem- ber countries to design and implement e-development policies, projects and measurement frameworks. These projects vary from country to country, depend- ing on differences in institutional, legal and techno- logical conditions, as well as development needs. To vii E-Development: From Excitement to Efficiency Acronyms ADR alternative dispute resolution AFDB African Development Bank, Côte d'Ivoire AGIMO Australian Government Information Management Office ANRT NationalAgency of Telecommunications Regulation, Morocco APDIP Asia Pacific Development Information Programme ATI Agence tunisienne de l' Internet ATICA Agence pour les technologies de l'information et de la communication (Information and Communication TechnologiesAgency), France BCC Business Corporation Contract (Vietnam) BOOT build own operate transfer BSNL Bharat Sanchar Nigam Limited, India BSP Bangko Sentral ng Pilipinas, Philippines BTA Bilateral Trade Agreement (WTO) CERT computer emergency response team CIF cost, insurance, freight CII critical information infrastructure CIO Chief Information Officer CITPO ICT Policy Division, Global ICT Department, World Bank CMDE China Modern Distance Education Project CME continuing medical education DAC Development Assistance Committee of the OECD DCITA Department of Communications, Information Technology and the Arts,Australia DLC distance-learning center DOT Force Digital Opportunity Task Force of the G8 EAP East Asia and Pacific region EBRD European Bank for Reconstruction and Development, London ECA Europe and Central Asia region e-GIF e-Government Interoperability Framework (UK) EIB European Investment Bank, Luxembourg ESD electronic service delivery EU European Union FBI Federal Bureau of Investigation, USA FDI foreign direct investment FLN Ford Learning Network, Ford Motor Company GATS General Agreement on Trade in Services GCNet Ghana Community Network GDP gross domestic product GICT Global Information and Communication Technologies Department, a joint department of the World Bank and the International Finance Corporation GIS Geographic Information System GITR Global Information Technology Report (World Economic Forum, INSEAD, infoDev) GPT general-purpose technology viii GSM Global System for Mobile Communications HDI Human Development Index of the UNDP IADB Inter-American Development Bank, Washington, DC ICA International Council for Information Technology in GovernmentAdministration ICANN Internet Corporation for Assigned Names and Numbers ICT information and communication technology ICT4D ICT for development IDA Infocomm DevelopmentAuthority, Singapore IFC International Finance Corporation, a component of the World Bank Group IP Internet Protocol IPR intellectual property rights ISO International Organization for Standardization ISP Internet Service Provider IT information technology ITU International Telecommunications Union, Geneva KAM Knowledge Assessment Methodology (World Bank) KEI Knowledge Economy Index (World Bank) KIA Kotoka InternationalAirport, Ghana LAC Latin America and Caribbean region LAN local area network LDC least-developed country MAHE ManipalAcademy of Higher Education, India MDB multilateral development bank MDGs Millenium Development Goals MENA Middle East and North Africa region MHz megahertz NBER National Bureau for Economic Research (USA) NEI Networked Economy Index (of the GITR) NERA National Economic Research Associates (South Africa) NOIE National Office for the Information Economy, Australia NORAD Norwegian Agency for Development Cooperation NREN national research and education network NTCA National Telecommunications CooperativeAssociation (US) OBA output-based aid OBHE Observatory on Borderless Higher Education, UK ODA official development assistance ODR online dispute resolution OECD Organisation for Economic Cooperation and Development OER open educational resources OGCIO Office of the Government Chief Information Officer, Hong Kong OSS open source software PC personal computer PPP public-private partnership PRM Performance Reference Model (U.S. government) PRSP Poverty Reduction Strategy Paper PTT Post, Telegraph and Telephone ix E-Development: From Excitement to Efficiency REN regional education network RP Reference Paper (WTO) RTC Record of Rights, Tenancy and Crops (India) SAC Shanghai Aerospace Computer System Engineering Co., Ltd., China SII Internal Taxation Service, Chile SME small and medium enterprise SMS short messaging service SMT surface-mount technology SMU Sikkim Manipal University of Health, Medical and Technological Sciences, India SSA Sub-Saharan Africa region SSL secure sockets layer SUBTEL Subsecretaria de Telecommunicaciones, Chile UNCITRAL United Nations Commission on International Trade Law UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme UNECA United Nations Economic and Social Commission forAfrica UNELAC United Nations Economic and Social Commission for Latin America and the Caribbean UNESCAP United Nations Economic and Social Commission for Asia and the Pacific UNESCO United Nations Educational, Scientific and Cultural Organization UNESCWA United Nations Economic and Social Commission for Western Asia UNICTTF United Nations Information and Communications Technology Task Force UNPAN United Nations Online Network in PublicAdministration and Finance UNU United Nations University UPOL University of Phoenix Online, USA USAID United States Agency for International Development USOTEC U.S. Office of Technology and Electronic Commerce UTL United Telecom Limited, India VAT value-added tax VC venture capital VoIP Voice over Internet Protocol VSAT very small aperture terminal (for downlink of a satellite signal) W3C World Wide Web Consortium WAN wide area network WEF World Economic Forum WGIG Working Group on Internet Governance (www.wgig.org) WIDER World Institute for Development Economics Research (United Nations University) WiFi wireless fidelity (any type of 802.11 network, whether 802.11b, 802.11a, dual-band, etc.) WiMax 802.16 fixed broadband wireless access systems employing point-to-multipoint architecture WIPO World Intellectual Property Organization WSIS World Summit on the Information Society WTDR World Telecommunications Development Report (ITU) WTO World Trade Organization YOK Yuksek Ogrenim Kurumu (Higher Education Council), Turkey x Acknowledgments This volume was produced by a World Bank team consisting of Subramaniam Janakiram, Boutheina Guermazi, Charles Kenny, Bruno Lanvin, Gareth Locksley, Isabel Neto, Ronald Perkinson, David Satola, Randeep Sudan and Charles Watt. Several e-leaders contributed to Chapter 4, lending a concrete dimension to the chapter. These in- cluded Lidia Brito, former Minister of Research and Higher Education of Mozambique; Markus Kummer, former e- envoy of Switzerland; Mart Laar, former Prime Minister of Estonia; Errki Liikanen, former EU Commissioner for Enterprise and the Information Society; and Lucio Stanca, Minister of Innovation and Technology, Italy. Valuable contributions and comments were received from external reviewers and World Bank colleagues Paulo Baioni, Deepak Bhatia, Subhash Bhatnagar, Carlos Botelho, Yann Burtin, Arsala Deane, Andi Dervishi, Antonio Estache, Henry Forero, James Guida, James Hanna, Robert Hawkins, Sudhakar Kaveeshwar, Michel Maechler, Kayoko Shibata Medlin, Craig Neal, Lorenzo Pupillo, Shobha Shetty, Ramesh Siva, EduardoTalero, Robert Valantin, Robert Whyte, Cesar Yammal, Degi Young and Christine Zhen-Wei Qiang. The guidance and support of Pierre Guislain, Manager of the Policy Division of the Global ICT Department of the World Bank Group, is deeply appreci- ated. The team also benefited from the research and administrative support of Naomi Halewood and Marta Priftis. Special recognition to Peggy McInerny and Mark Wahl for editing work, cover art and interior layout. xi E-Development: From Excitement to Efficiency Overview E-Development: From Excitement to Effectiveness by Robert Schware I nformation and communication technologies countability of government, more educated popu- (ICTs) are increasingly being recognized as lations). They can also be successfully deployed essential tools of development--tools that can through public-private partnerships, leveraging empower poor people, enhance skills, increase limited government funding to achieve greater productivity, and improve governance at all lev- impact, while building out crucial infrastructure. els. The success of ICT-enabled development (or e-development) will thus not be measured by Chapter 1 examines the limited data available on the diffusion of technology, but by advances in the impact of e-development at the macroeco- development itself: economic growth and, ulti- nomic level and reviews the major requirements mately, achievement of the Millenium Develop- of successful implementation of ICT-based de- ment Goals. velopment projects. Chapter 2 reviews the com- ponents of an enabling policy environment for e- This volume examines a wide range of issues development, including the need to facilitate the related to e-development, with a focus on the market penetration of personal computers to tap requirements and realities of using ICTs to ad- the full benefits of the information age. Chapter vance development goals. The report does not 3 explores the design of effective strategies for attempt to present a comprehensive overview e-development, noting that they must be rooted of e-development. Rather, it highlights key is- in a nation's broader development strategy and sues that have immediate relevance to policy utilize rigorous monitoring and evaluation. Chap- makers in developing nations who make deci- ter 4 looks at the qualities of leadership needed sionsoninvestmentsanddevelopmentgoals.Two to successfully implement e-strategies and fea- issues, e-government and e-education, are high- tures the observations of a number of individuals lighted in particular because ICT applications in who have led e-development efforts in countries these areas can lead to significant development around the world. outcomes (e.g., improved transparency and ac- xiii E-Development: From Excitement to Efficiency Chapter 5 examines the opportunities and chal- percent.1 Available evidence also suggests that lenges of ICT-based government applications (e- firms, governments, and civil society face diffi- government) and offers a number of suggestions culties in exploiting ICTs to their full potential on how nations can best organize their efforts in least-developed countries (LDCs); one re- to introduce such applications. Chapter 6 ex- cent study estimated that a majority of public plores the enormous opportunities that ICT- sector IT applications in LDCs are either par- based applications hold for expanding afford- tial or total failures, a finding equally true for able access to university and continuing educa- the private sector.2 tion in developing nations. Finally, Chapter 7 considers the expanding role of the international Yet when deployed well, ICTs can accelerate community in building an equitable digital soci- development outcomes. Recent World Bank sur- ety accessible to all. veys of over 20,000 firms in roughly 50 low- and middle-income countries show that firms in de- E-development is not easy veloping countries which use ICT show faster sales and employment growth, as well as higher Although ICT-enabled projects can contribute labor and total factor productivity, than firms greatly to the achievement of development goals, which do not use ICT.3 An analysis of advanced they are risky endeavors. Poorly designed Internet use across the world (see Annex 1), projects can waste precious resources that could however, suggests that the "digital divide" is very be devoted to competing development needs. much part of the broader "development divide," Lack of crucial pre-requisites, including afford- a finding that should temper some of the more able access to infrastructure, the rule of law and optimistic hopes for e-development as a tool for strong government and market institutions, can "leapfrogging" stages of development. Another derail even well-designed projects. To date, the cautionary consideration is that network exter- track record of e-development is short, complex, nalities come into effect only after a critical mass and difficult to measure. Difficulties include the of ICT users has been reached. Thus the devel- cross-sectoral dimension of the applications, the opment of ICT infrastructure may need to reach potential time lag between project implementa- a certain critical threshold before the effect of tion and the moment when benefits are realized, network externalities show a positive impact on and the limited investment resources available in development and spur further ICT investment. developing countries. Given the opportunity cost of investing in ICT-based projects, rigorous and Lessons to date indicate that successful ICT- hard evidence on impact and good practices is enabled projects must be: (a) suitable to the level urgently required. of a given country's development; (b) relevant to the needs of targeted users; (c) integrated A recent survey found, for example, that only with infrastructure, applications, and skills de- forty percent of companies that adopted on-line velopment; (d) designed and implemented within purchasing systems actually saved money when a broader process of institutional and business they deployed such systems as part of a change process change; (e) coordinated as one part of management process. The figure for compa- an overall national development strategy; and nies that introduced such systems without a (f) continuously monitored and evaluated for change management program was only three feedback. xiv No access without Creating the "right" enabling infrastructure environment For most developing countries, lack of adequate If there is no access without infrastructure, it is infrastructure remains the major obstacle to the equally true that there is no investment without uptake of ICT. ICT infrastructure is, however, an enabling regulatory environment. Given the enormously expensive. The upfront investment competition for international investment dollars, needed to build out modern telecommunications developing countries must create conditions that networks, particularly broadband networks, far make it attractive for outside investors to invest exceeds the resources of most developing na- in ICT networks. Yet the complexity of these tions. Several decades ago, the ICT sector was networks and the applications they facilitate, such in the hands of state-owned enterprises. Follow- as e-commerce, means that enabling policy ing a wave of PTT privatizations and regulatory frameworks must address issues far more com- reform in developing countries that began in the plicated than a fair return on investment. 1990s, however, the private sector became the primary source of ICT investment in developing The basic goal of regulatory reform should be to countries. Despite a noticeable decline of over- create a stable, open environment that encour- all North-South investment flows in the last few ages confidence in the ICT market.Amajor step years, continued rollout of physical infrastruc- towards this goal is to establish clear and trans- ture suggests that these flows have been replaced parent governance structures and respect for the by a combination of South-South FDI flows, do- rule of law. Basic principles that support regula- mestic private financing, and other sources. tory reform include encouraging market-based approaches and ease of market entry; promot- As a result, many innovative partnerships be- ing business confidence and clarity; enhancing tween governments, businesses, and civil soci- transactional enforceability; ensuring ety have been formed to build networks and de- interoperability (of systems, standards, networks, ploy advanced ICT applications in such sectors etc.); and protecting intellectual property and as government, commerce, and education. Such consumer rights. All developing countries will public-private partnerships allow developing need to adapt their legal and regulatory frame- countries to overcome the obstacles of insuffi- works not simply to improve access to telephony, cient resources, expertise, and project manage- but to better support broadband services, given ment skills and to leverage limited government that most e-applications require higher bandwidth funds to achieve far greater impact. Morocco, and permanent Internet connections. Harmoni- for example, built an effective regulatory frame- zation of legal frameworks across countries, work and then used a GSM license auction to moreover, is needed to ensure the cross-border attract over US$1 billion investment in its mobile interoperability of Internet-based applications. In telephony market.4 Chile allocated subsidies by the East Asia and Pacific region, for example, public tender that resulted in private operators research on 23 countries showed that isolated building public pay phones in 7,850 localities in activities of individual countries were ineffec- underserved areas of the country.5 tive in addressing this challenge and that harmo- nization of their legal frameworks was required.6 xv E-Development: From Excitement to Efficiency Globally, the trend in regulation is to minimize age banks from going online. In the case of Jor- licensing hurdles by establishing general authori- dan, the total transaction volume of Visa credit zation regimes and to adopt technological neu- cards in 2004 was estimated at US$258 million, trality. Many countries are accordingly moving of which online payments accounted for only away from service-specific licensing regimes to US$2.5 million, not even 1 percent of the total.10 embrace converged licensing approaches, reliev- ing investors from restrictive and burdensome The crucial ingredient: licensing rules.7 Monitoring and evaluation frameworks For developing countries, certain regulatory is- sues (e.g., digital signatures or the security of online transactions) may not appear immediately Although the positive impact of ICT-enabled relevant. However, these issues may be encoun- projects on development has been documented tered much earlier than anticipated in the devel- over the past decade, the evidence has not yet opment process. For example, successful opera- been aggregated in a way that can easily con- tion of telekiosks or Internet cafés--both cost- vince decision makers at the policy level. To a effective ways to provide access to the Internet large extent, the case for ICT for development and advanced ICT applications to large numbers still needs to be made.11 Monitoring and evalua- of people--requires a legal framework that ad- tion(M&E),includingtheuseofindicatorsclosely dresses the protection of intellectual property linked to broader development processes, is the rights and consumer privacy. key to ensuring cost-effective deployment of ICT- based projects. Analysis of e-commerce worldwide reveals that it depends significantly on a supportive institu- Unfortunately, the trend in ICT-based develop- tional environment, including national respect for ment projects has made such investments more "rule of law" and the availability of credible pay- difficult to track. At roughly the same time that ment channels, such as credit cards.8 In China, investment in the ICT sector shifted from public for example, only 13 percent of online transac- to private sources, a stronger international com- tions are paid for online, compared to 42 percent mitment to reduce poverty (e.g., the Millenium paid cash-on-delivery (COD) and 24 percent via Declaration and Goals) changed the focus of in- remittances sent by mail.9 Thus even when regu- ternational donors from infrastructure and tech- latory reforms establish a positive enabling envi- nology per se to ICT applications that could pro- ronment for ICT, if the financial system is not mote development. Many donors have subse- sophisticated enough to support electronic trans- quently "mainstreamed" ICTs in their develop- actions such as inter-bank electronic payments ment assistance programs, using ICT in differ- and bank credit cards, a country will find it diffi- ent projects (e.g., health or education) as a tool cult to reap the benefits of e-business. In the of development.As a consequence, the ICTcom- Middle East, for example, only 18 percent of ponent of these projects is often difficult to quan- banks (most of which are foreign) offer e-bank- tify or even identify. ing services. The absence of digital certification laws and the low level of credit card penetration Effective M&E requires both upstream linkages inArab countries are major factors that discour- (i.e., with national development objectives) and xvi downstream accountability (i.e., measuring re- transparency and accountability across govern- sults with proper tools). Most importantly, e- mental agencies. The record of e-government strategies should refrain from re-inventing the projects in both developed and developing coun- wheel and integrate existing M&E indicators tries has, however, been mixed. A survey con- into the design of national e-development plans. ducted by Richard Heeks of the University of Moreover, an M&E system must be compre- Manchester in 2003 found that 35 percent of e- hensible not only to the designers of e-strate- government initiatives were total failures in de- gies, but to domestic participants (e.g., the gov- veloping and transitional countries, 50 percent ernment, ministries, enterprises, and civil soci- were partial failures, and only 15 percent were ety) and external stakeholders (e.g., investors, successes.12 donors, partners) as well. While sophisticated e-government applications For example, if an e-strategy includes distance may appear to be the provenance of advanced education initiatives, it is important that such ac- industrial nations, many middle- and lower-in- tivities (and their outputs) be connected not only come developing nations have begun to success- to broader e-strategy objectives (e.g., promoting fully adopt such applications. Often, a good e- e-literacy or enhancing the use of ICTs in edu- government entry point is a department that is cation), but also to the objectives of the country's widely perceived to be corrupt and inefficient, general development strategy (e.g., promoting such as procurement, customs or licensing, where general educational goals or developing general cost savings can justify the initial investment. In ICT usage) and more generic policy objectives 1997, the South Korean government introduced (e.g., diversifying a traditional economy). Alter- an e-procurement system that offers online infor- natively, if a country adopts a policy objective mation on more than 420,000 standardized prod- (e.g., "to become a knowledge society within ucts. The system replaced a procurement pro- twenty years" or "to stimulate the growth of the cess that was widely regarded as corrupt, com- national ICT sector") various strategic goals will plicated,lackingaccountability,andnon-transpar- need to be articulated to assess progress towards ent. As of 2002, the government's investment of this objective. Such goals could include, for ex- US$26 million had generated savings estimated ample, providing primary education to 80 per- at US$2.5 billion a year.The system has enhanced cent of a class age by a certain date or generat- transparencyandpublictrust,andallowsforcross- ing a certain percentage of national income agency comparisons of procurement, making the through the ICT sector by a certain date. system more accountable.13 E-government and the need Chileintroducedanonlinetaxationsystemin1998 for leadership that has considerably improved the national tax service and made it easier for citizens to access vital tax information. Three years after project ICT has deeply changed the way in which gov- launch, over 400,000 taxpayers had checked their ernment functions, for example, through office tax assessments online, some 183,548 sworn re- automation and the growing ubiquity of Web- turns and 89,355 income tax returns had been based services. The advent of e-government and received online, and the Chilean exchequer had e-procurement, for instance, has allowed greater collected US$1.943 billion in taxes.14 xvii E-Development: From Excitement to Efficiency Not all e-government initiatives will be based on ICT applications can create redundancies, intro- networked computers. In certain developing ducing an additional element of tension. Strong countries, mobile telephone networks offer a leadership is thus needed to successfully deploy more immediately usable platform for e-govern- national e-strategies. One pitfall of such strate- ment applications. An application in the Philip- gies is to ignore or underestimate the inertia and pines provides a good example of how mobile rigiditiesofthepublicsector,meaningthate-lead- phones can be used in innovative ways. Globe ers must have sufficient power and authority to Telecom's G-Cash application enables micro implement decisions across multiple government monentary transactions between families, friends, departments. It is also vital that such leaders be and local merchants. The text-based messaging able to formulate an overall vision of e-develop- serviceallowsusers,includingthosewithoutbank ment and communicate this vision to stakehold- accounts or credit cards, to send money phone- ers across multiple layers of society. to-phone, buy goods and services, pay for busi- ness permits, and receive micro-financing and The potential of ICTs to international remittances. expand tertiary education The development of e-government services can A major application area with great potential for be a major latent market for the ICT sector in developing countries is e-learning. Since the early developing countries, particularly the software 1990s, both public and private higher education industry. By implementing such services, not only institutions in most countries have struggled to does government benefit, but the IT sector gets keep up with growing enrollment demand. Par- a kick start. One of the key lessons of e-govern- ticularly in developing countries, governments ment initiatives to date is the need to avoid an have been forced to balance education system "agency-centric" or "silo" approach to the use needs against fiscal realities. This is especially of ICT. Avoiding this problem requires an true given the priority that these nations have overarching architecture that can guide the de- placedonachievingtheMillenniumDevelopment velopment of applications across various minis- Goals in primary and secondary education. tries, departments and government agencies. The absence of such an architecture can lead to sub- Today, the majority of global e-learning applica- optimal results and, often, conflicting and incom- tions are found mainly in the developed world. patible applications. Thus a developing nation By comparison, developing countries have made that chooses to "enter" the e-government mar- only small beginnings in the field. Yet it is in the ket in a specific sector must first develop an ar- latter countries that e-learning holds the greatest chitecture that will allow future applications to chance of bridging the access, cost and quality interoperate with one another. gaps in higher education, a global enterprise that is struggling to reach the one-quarter of 18-to- It should be pointed out that e-government appli- 25 year-olds currently enrolled in higher educa- cations are major transformational exercises in tion.Total estimated student enrollment in global change management. ICT implementation chal- higher education in the year 2000 was around 90 lenges hierarchies by demanding horizontal com- million. By 2003, more than 100 million students munication between government institutions. In were enrolled in higher education worldwide. addition, productivity increases associated with xviii The changing landscape of global higher educa- starts in developing countries, including China, tion is reflected in changed student profiles in Mexico, Turkey, India and China. Most success- most countries. According to the U.S. Depart- ful providers of ICT-based higher education pro- ment of Education, over 5.9 million, or 39 per- grams today, which generally combine online cent, of all students enrolled in higher education learning with some kind of face-to-face instruc- programs in the USA in 2004 were over the age tion, are commercial ventures. Public-private of 24. This number is projected to reach 6.6 mil- partnerships may thus offer developing nations lion in 2007 and 6.9 million in 2012. In Canada, a cost-effective way to both expand infrastruc- around 30 percent of undergraduate students are ture and access to affordable higher education. over the age of 25; in Australia, New Zealand, Denmark, Norway and Sweden, over 20 per- The growing role of the cent of first-year university students were over international community the age of 27 in 2000.15 An increasing amount of international effort has New systems of distance learning and Web- been devoted to building information societies enabled education and training programs can over the last few years. Chief among these ef- be used to reach remote and underserved re- forts are the European Union's "e-Europe Ini- gions and segments of the population, as well tiative," the G-8 Digital Opportunity Task Force as to accommodate working adults that seek (DOT Force), the United Nations ICT Task flexible learning options. The emerging trend Force (UNICTTF), and the process surround- for working adults worldwide is to access online ing the World Summit on the Information Soci- education programs without leaving their jobs. ety (WSIS) of the International Telecommuni- For adults in developing nations, such programs cations Union. allow them to complete advanced educational degrees without incurring the high travel and The international community now faces a num- living costs, or stringent visa requirements, of ber of challenges and expectations with respect studying abroad. to e-development. On one hand, it is expected to support national efforts to build information so- In China, close to one million students are esti- cieties and bridge the digital divide. On the other mated to be studying online today.16 In the United hand, it has a responsibility to respond to chal- Statesin2003,therewere1.9milliononlinehigher lenges that are broader than those faced by indi- education students. This figure increased to 2.6 vidual nations, such as the technical, economic, million students (a 24 percent increase) in 2004, and policy rules that will constitute universally meaning that 16 percent of all higher education accepted rules of the game. This category of students in the United States were studying activity includes norms and standards (e.g., the online.17 Very conservative estimates project that International Telecommunications Union), trade the online e-learning sub-sector will become a agreements (the World Trade Organization), but global, US$150 billion plus industry by 2025.18 also to some extent, issues of global governance (e.g., the Working Group on Internet Gover- Although the majority online providers of higher nance). It also includes international financial education programs are based in the United support for regional infrastructure and other types States, several providers have made promising xix E-Development: From Excitement to Efficiency of cross-border cooperation, as well as facilitat- related international debates. The ambition of the ing collaboration on issues such as cyber-secu- international community should be to seize this rity. moment to reconfigure the ICT-for-development debate from both sides. By accepting the ex- One crucial responsibility of the international panded roles described here, international orga- community at present is to help develop analyti- nizations, business and civil society are in a posi- cal and policy tools that allow developing nations tion not only to turn the information revolution to better conceptualize the role of ICT in devel- into an instrument of global prosperity, but also opment, including monitoring and evaluation to shape the ways in which they interact with frameworks for ICT-enabled projects. Another each other in the face of other global challenges. crucial responsibility is to facilitate long-term in- vestment in relevant areas of e-development by both donors and private investors. Finally, the international community must provide forums where e-development issues can be discussed openly and professionally by both developed and developing nations. Measuring the benefits of ICT and the success or failures of specific projects is particularly ur- gent because current data is limited. ICT projects are difficult to track and there is insufficient rig- orous data to serve as the basis for policy deci- sions. Certain organizations are now tracking different aspects of ICT. The ITU's World Tele- communications Development Report (WTDR),19 for example, focuses on telecom- munications. The Global Information Tech- nologies Report (GITR) edited by the World Economic Forum also tracks ICT, but from a strong private-sector perspective.20 In addition, a recent report produced by the WSIS Task Force on Financing Mechanisms provides help- ful information on tracking ICT investments.21 The MDG+5 Summit of September 2005 and the second phase of the WSIS in November 2005 offer an unprecedented window of opportunity that will not be repeated in the near future. The former has the ability to make ICT a priority of the development agenda, whereas the latter can make development the main objective of ICT- xx Notes 11See, for example, K. McNamara. 2004. Information and CommunicationTechnologies, Poverty and Development-- Learning from Experience.Washington, DC: infoDev,GICT 1 S. Yusuf. 2004. Innovative East Asia: The Future of Department, World Bank. Growth. New York: Oxford University Press. 12See Richard Heeks. 2003. "Achieving Success/Avoiding 2 See R. Heeks. 2003. "Information Technology, Govern- Failure in e-Government Projects: Topic Summary. ment and Development." Report on the IT, Government "eGovernment for Development Information Exchange, and Development Workshop, 26 November 1998. University of Manchester, Manchester, UK. Available at Manchester, England. http:www.man.ac.uk/idpm/ http://www.egov4dev.org/topic1smry.htm. Accessed July itgovsem.htm. Accessed July 2005.; and C. Kenny and C. 2005. Qiang. 2003. "ICT and Broad-Based Development." in ICT 13World Bank. 2004. "Korea's Move to E-Procurement." and Development. Washington, DC: Global Information & PREM Notes, no. 90, July 2004. Poverty Reduction and Communication Technologies Department, World Bank. Economic Management Network, World Bank: Washing- 3C. Qiang, G. Clarke, and N. Halewood. "The Role of ICT ton, DC. in Doing Business" in World Information and Communica- 14World Bank. "Chilean Tax System Online." abstract, E- tion Technologies for Development Report, 2005. Edited Government, GSPR net (Governance and Public Sector by C. Qiang. Washington, DC: World Bank, 2005. Reform Sites): Washington, D.C. Available at http:// 4 See ITU, "The Role of Effective Regulation: Morocco www1.worldbank.org/ publicsector/egov/chile_taxcs.htm. Case Study," ITU, Geneva, 2002; and B. Wellenius, C. Accessed July 2005. Rosotto and A. Lewin, "Morocco: Developing Competi- 15OECD. Education at a Glance. Paris: OECD, 2003. tion inTelecommunications," CITPOWorking Paper, GICT Department, World Bank, Washington, DC, 2004. 16Estimate of contributing author Ron Perkinson, based on conversations with universities and accumulated market 5 Bjorn Wellenius, "Closing the Gap in Access to Rural appraisal data regarding a range of university distance pro- Communications: Chile, 1995­2002," infoDev Working viders. Paper, World Bank, Washington, DC, 2001. 17Sloan Consortium, Entering the Mainstream: The Qual- 6 D. Satola, R. Sreenivasan, and L. Pavlasova, 2004. ity and Extent of Online Education in the United States, "Benchmarking Regional e-Commerce inAsia and the Pa- 2003 and 2004, Sloan Center, Olin and Babson Colleges, cific and Assessment of Related Regional Activities," in FranklinW. Olin College of Engineering, Needham, Massa- "Harmonization of Legal and Regulatory Systems for E- chusetts, http://www.sloan-c.org/resources/survey.asp. Commerce inAsia and the Pacific: Current Challenges and Accessed July 2005. Capacity Building Needs." United Nations, New York. 18Michael T. Moe, "The Book of Knowledge: Investing in 7Examples include member states of the European Union, the Growing Education and Training Industry," Merrill India, South Africa, Tanzania and Zambia. Lynch & Co., Inc., New York, 2000. 8Firms in the Dominican Republic, for example, have found 19See ITU. 2003. World Development Report. Geneva. that residents are not ready to take advantage of e-com- merce offerings, largely because credit card fraud in the 20A forthcoming World Bank publication. World Informa- country is the seventh highest in the world. Kirkman et al. tion and Communication for Development Report 2006: 2002. "The Dominican Republic Readiness for the Net- Trends and Policies for the Information Society, " will worked World." Information Technologies Group. Center address these issues from the perspective of national gov- for International Development. Harvard University, Cam- ernments and international donors. bridge. 21WSIS. 2004. "The Report of the Task Force on Financial 9Yusuf. 2004. Innovative East Asia. Mechanisms for ICT for Development:AReview of Trends and an Analysis of Gaps and Promising Practices." ITU, 10Arab Advisor Group. 2005. "An Analysis of e-Com- Geneva. Available at http://www.itu.int/ wsis/documents/ merce Adoption in Jordan and the Gulf Region based on doc_multi.asp?lang=en&id=1372|1376|1425|1377. Ac- Reported Figures from Visa International." Arab Advisor cessed July 2005. Group: Amman, Jordan. xxi xxii Chapter 1 Look Before You Leap: The Bumpy Road to E-Development by Isabel Neto, Charles Kenny, Subramaniam Janakiram, and Charles Watt I t has become commonplace to laud the tion, health, commerce and finance), and the fact potentially huge role that the Internet and that there is often a time lag before the positive networked computing can play in the devel- effects of ICT use become apparent, has limited opment process.To date, however, we know little progress in estimating macroeconomic impact about the impact of these technologies, and it and the evaluation of ICT-based projects.2 The remains relatively difficult to evaluate the effec- role of governments in fostering electronic de- tiveness of past and current practices in the field. velopment is a relatively new area of practice This is in part because e-development is not an and research in particular. Nonetheless, given end in itself, but rather a process that uses mod- the opportunity cost of investing in ICTs rather ern ICTs to increase productivity, trade and the than in other areas of development, we need to delivery of services. In the end, the measure of find methods to increase the success rate of e- success of ICT in development will not focus on development as well as to monitor and measure the spread of technology, but on overall progress the impact of ICT-related investments to increase towards economic growth and, ultimately, our stock of best practices and lesssons learned. progress towards the Millenium Development Goals.1 This chapter first reviews what we know about the impact of e-development projects, examin- Compounding the difficulty of evaluating the po- ing evidence at both the macro and project level, tential of an intermediate tool such as e-devel- and briefly examines the role of the ICT sector opment is the rapid pace of change in the ICT in national economies. It then outlines the chal- sector and the broad applicability of the tech- lenges of e-development opportunities, explores nologiesinvolved.Thegeneralpurposeandcross- the drivers and preconditions of successful ICT- sectoral nature of networked computing (which based development projects and discusses the provides solutions in fields as diverse as educa- components of a holistic approach to project 1 E-Development: From Excitement to Effectiveness Box 1.1. Core definitions used in this report E-development is development that makes use of ICTs or ICT applications to provide information and knowl- edge services to enhance productivity, efficiency and quality of life. For the purpose of this report, e-development refers specifically to the use of the Internet and networked computers to contribute to development processes. The term refers to both the production of goods and services in the area of computing and networks (the "ICT sector"), as well as the use of networked computers across economic and social sectors. Information and Communication Technologies (ICTs) consists of hardware, software, networks and media for the collection, storage, processing, transmission and presentation of information (e.g., voice, data, text, im- ages), as well as related services. Communication technologies consist of a range of communication media and devices, including print, telephone, fax, radio, television, video, audio, computer and the Internet. ICT can be split into ICI and IT. Information Technology (IT) refers to hardware and software used to collect, store, process and present information. Information and Communication Infrastructure (ICI) refers to physical telecommunications systems and networks (e.g., cellular, broadcast, cable, satellite, postal) and the services that utilize them (e.g., Internet, voice, mail, radio and television). Information and Communication Technologies Sector (ICT Sector) is the combination of manufacturing services industries that capture, process, transmit and display data and information electronically. The ICT sector is complex and is more readily understood in terms of its impact on business, government and the individual citizen. ICT applications, or e-applications, are hardware and software solutions that utilize ICTs to meet business, public administration, social and other needs. Such applications are also sometimes referred to as informatics, a term that conveys ICT as a way of doing things. A new vocabulary is emerging with reference to the electronic character of applications using the prefix "e." Examples of such applications include conducting business trans- actions on the Internet (e-commerce), using networked computers both as a general pedagogical tool and to impart the skills needed for successful ICT-enabled projects (e-education), providing information to health man- agers, health professionals and the general public (e-health), and using networked computing to increase a government's transparency and inclusiveness (e-governance). While terms such as e-education, e-government, e-commerce, and e-health can refer to the applications themselves, they can also refer to the principles or strategies behind these applications. implementation. Finally, it concludes with some types of ICTs such as mobile phones and broad- pointers on the way forward. cast radio, many of which are widespread in developing countries today and have a proven The chapter and the report as a whole will focus track record of developmental impact. But pre- on the use and impact of networked computing. cisely because the track record of networked This is not to downplay the importance of other computing is both shorter and less well under- 2 Chapter 1: Look Before You Leap stood, there is a considerable need for re- of conditions described as the "digital divide" (see search and discussion on this topic. table 1.1). This relationship should come as no surprise. While rich countries spend a some- Part I. What (little) is known what larger percentage of their GDP on ICT (see about the impact of ICT on table 1.2), it is clear that the major reason for smaller stocks of ICT in developing countries is economic growth that ICTs are consumption and investment goods --and rich countries have more money to invest Looking at broad macroeconomic data, there and consume. appears to be strong a link between the level of welfare and the existence and use of ICT E-development is clearly a product of more gen- in developing countries. For example, the eral development, then. The more interesting correlation between the UNDP Human De- question is the extent to which e-development velopment Index (HDI),3 a measure of gen- can also be a driver of general development. eral development that includes non-income The cross-country evidence reviewed below factors, and the networked economy index suggests that investment in ICT production fa- (NEI),4 a broad measure of e-development, cilities and investment in ICT equipment have is very strong across countries (see figure both been a direct source of economic growth in 1.1). many countries. Similarly, rich countries have more Internet Looking at ICT production, `transition' countries users, more personal computers (PCs) and such as the Czech Republic, Slovakia or Hun- more bandwidth than poor countries--a set Table 1.1 Internet usage, PC ownership and ICT infrastructure by region of the world, 2002/2003 Source: World Bank, "Financing Information and Communication Infrastructure Needs in the Developing World: Public and Private Roles," World Bank, Washington, DC, 2005. Note: PC ­ personal computer. SSA ­ Subsahran Africa; EAP ­ East Asia and Pacific; ECA ­ Europe and Central Asia; LAC ­ Latin America and the Caribbean; MENA ­ Middle East and North Africa; SAR ­ South Asia Region. These regions correspond to World Bank groupings. For more information, see http://www.worldbank.org/html/extdr/regions.htm. 3 E-Development: From Excitement to Effectiveness Table 1.2. Investment in and expenditures on telecommunications and ICTs by region, 1995­2004 Source: World Bank. 2005. "Financing Information and Communication Infrastructure." Notes: (a) See Table 1.1 for explanation of regional acronyms. (b) ICT expenditures include external spending on information technology (tangible spending on information technology products purchased by businesses, households, governments, and education institutions from vendors or organizations outside the purchasing entity), internal spending on information technology (intangible spending on internally customized software, capital depreciation and the like), and spending on telecommunications services and other office equipment. gary have seen economic growth driven in no complexity. India's share of the global market small part by their ICT industries (see figure 1.2).5 for outsourced customized software grew from Vietnam has also experienced recently dynamic 11.9 percent in 1991 to 18.5 percent in 1999, re- growth in the software industry, which expanded flecting total market growth of 55 percent.9 There by over 40 percent in a single year, 2002 to 2003 has been significant development within this seg- (38 percent for domestic software services and ment of the software market, as Indian compa- 50 percent for export software services). In that nies progressively demonstrate their ability to same year, the hardware industry in Vietnam move away from "on-site" or "body shopping" grew27percent.AlthoughtheUS$2.1billionICT services to turnkey projects. Whereas the on- sector in Vietnam is relatively small, even when site element contributed 90 percent of India's compared to countries like the Philippines or In- software exports in 1988, this percentage fell to donesia, it has made considerable progress in just 40 percent by 2000.10 The drift upwards in value- six years.6 Again, in Estonia, the overall ICT added software and services in India is supported sector employed roughly 4,300 people in 2002, by an examination of ISO 9000 and SEI-CMM generating US$41 million per annum in taxes on quality certifications. Of the 31 companies that the basis of US$172 million in revenues.7 were certified worldwide in May 2002 at Level 5, the highest certification level, all 16 non-U.S. In leading ICT production countries such as In- companies were Indian.11 dia, the sector has not only grown in size but also 4 Chapter 1: Look Before You Leap Figure 1.1 Human development and Figure 1.2 ICT sector contribution to networked economy indexes GDP growth, selected countries, 1995­2001 Source: Based on van Ark and Piatkowski8 Source: B. Lanvin and C. Qiang. "Poverty `Eradication:' Using ICT to Meet the MDGs; Direct and Indirect Roles of E-Maturity," in Dutta, S., B. Lanvin and F. Paua, eds. Of note, 60 percent of the exporters and 80 per- 2004. Global Information Technology Report 2003­04. cent of the foreign-owned firms that were sur- Oxford University Press. Accesible at http:// veyed used email and websites, as compared to www.weforum.org. 20­30 percent of micro, non-exporting domestic firms. This result echoes a recent study which On the ICT usage side, investments in ICT have shows that the export performance of Indian firms the potential to significantly reorganize how that have adopted more advanced e-business goods and services are created and distributed. tools has been better than that of other firms in ICT applications can create new markets, new international markets. Indeed, the type of e-busi- products and activities (such as online ness technology, together with the skill intensity outsourcing of services) and new ways of or- of the workforce, were shown to be the most ganizing how society operates. Ideally, these significant factors influencing export perfor- activities can enable countries to diversify their mance.10Another recent study at the cross-coun- economies, enhance their export competitive- try level suggests that access to the Internet af- ness and produce high value-added services that fects the export performance of firms in devel- boost local economies. oping countries, stimulating exports from poor to rich countries.11 Recent World Bank surveys of over 20,000 firms in roughly 50 low- and middle-income Having said that, there is also evidence from de- countries provide evidence that firms in devel- veloping countries that limits to ICT use in some oping countries which use ICT show faster sales sectors of the economy may well be based on and employment growth, as well as higher la- practical calculations of cost and benefits. A bor and total factor productivity, than firms recent study of small- and medium-scale enter- which do not use ICT . The surveys also sug- 9 prises (SMEs) in the food processing, textile and gest that in countries where respondents con- tourism sectors of Kenya, Tanzania and Uganda sidered ICT services to be of high quality, com- confirms that ICT usage differs by sector in the panies use email and Web services for busi- developing world.12 This finding seems to result ness at higher rates. from differing cost-benefit analyses in sectors 5 E-Development: From Excitement to Effectiveness with differing production and marketing struc- Figure 1.3. Contribution of ICT to labor tures. The most advanced ICT use in the three productivity growth, selected countries studied was in the tourism sector of countries and years (% of GDP) Tanzania and Kenya, where SMEs are mainly safari tour operators. Flexibility and rapid coor- dination are especially important in this sector, which is oriented mostly towards foreign cus- tomers. (The tourism sector is also character- ized by management with the highest level of education, as well as the highest absolute stock of ICT capital.) The food and textile sectors in the three countries used ICT significantly less. This study also found that the stock of ICT capi- tal had a negative impact on labor productivity, save for the tourism sector, where a relatively Source: Qiang, Pitt and Ayers. "Contribution of ICT to high capital intensity had a positive impact on Growth." Note: Data for the EU is the average for the labor productivity. following countries: Austria, Denmark, Finland, France, Germany, Italy, The Netherlands, Portugal, Spain, Sweden and the United Kingdom. NIEs stands for theAsian Newly Growth accounting analyses of the impact of Industrialized Economies: Hong Kong SAR, South Korea, ICTs reflects the micro and macro data presented Singapore and Taiwan Province of China. 15 above. Across the world, per capita economic growth is driven by three factors: investment in ICT producing sectors may have had a consid- equipmentandinfrastructure(i.e.,physicalcapital, erable economic impact through gains in total including stocks of ICT), investment in human factor productivity (see figure 1.3). capital (i.e., skills and education), and efficient use of labor and capital, which increase total fac- For most developing countries, however, ICT use tor productivity (TFP). As seen earlier in table is likely to have a bigger impact than ICT pro- 1.2, there has been considerable and growing duction because the ICT industry is concentrated investment in ICTs worldwide over the last ten in relatively few countries, and because produc- years. There is every reason to believe that this tivity gains in ICT production appear to accrue investment has played a role in increasing global to users, not producers. Looking at the benefi- output and labor productivity, but the evidence is ciaries of TFP gains, East Asia has by far the elusive on whether this ICT investment has largest share of IT production in the developing earned economic returns above the normal rate world. However, even countries where tech- outside the ICTproduction sector, and some ques- nology exports constitute a higher share of total tions as to who benefits from TFP gains within exports in the region have failed to see more the production sector. rapid overall productivity growth, perhaps in part because returns accrue to (largely U.S.) patent Some developing economies have seen signifi- owners, rather than ICT manufacturers, in what cant labor and total factor productivity gains from has become an increasingly commoditized busi- ICT production, particularly the Newly Industri- ness.14 It is also worth noting that even in poorer alized Economies (NIEs) of Asia,13 where large developing countries such as India that have led 6 Chapter 1: Look Before You Leap the way in ICT exports from low income coun- development, this is unsurprising given its cross- tries, the sector remains very small compared to cutting application. Furthermore, evidence of the overall economy. considerable `spillovers' of the type that justify government intervention to subsidise expanded On the usage side, ICT investment will have pro- use are limited at the macroeconomic level for moted labor productivity, but given the remark- ICT as a whole. This suggests the need for cau- ably rapid growth in ICT investment worldwide tion in the development of significant programs over the last ten years, it is not improbable that of sector-specific interventions favoring ICT in- countries and companies have invested in ICT vestments over other types of investment. until the return on this investment matches the return on other types of investments. This phe- Part II. Policies for the nomenon might explain the elusive nature of to- development of IT sectors in tal factor productivity gains due to ICT invest- developing nations ment around the world. The above-mentioned study of SMEs in Kenya, Tanzania and Uganda, Developed, middle-income and developing na- for example, suggested that investment in ICTs tions can all reap benefits from having a healthy does not have a significant impact on enterprise IT supply sector, as we have seen. Software returns or export performance, and can even industries in particular can have a considerable have a negative impact on labor productivity.The impact on employment, pay and economic per- negative impact of ICT investment on labor pro- formance.17 At the same time, developing coun- ductivity can be interpreted either as an over- tries face considerable challenges in promoting investment in ICT (i.e., the non-divisibility of and sustaining ICT-enabled innovation and new equipment in case of small enterprises),15 or as business creation. They struggle not only to at- the result of the substantial learning required tract private investment (local and international) during the initial ICT adoption phase and result- to expand IT services, they find it difficult to ant lags before full economic benefits are felt.16 expand IT-enabled businesses in varied sectors Over-investment in ICT can also be attributable of their own economies. to poor choices of both hardware and software, a decision made more difficult by their wide price As part of their economic development strategy, ranges. some governments are making substantial efforts to develop national IT sectors that can compete To conclude, a growing ICT industrial base in globally. Countries such as India, Malaysia, some developing countries has created signifi- Greece, Israel, Singapore and the Republic of cant investment and employment opportunities, Korea have taken a pro-active stance to encour- while a growing number of applications for new age IT-led growth, investing seed capital in start- ICTs have created numerous opportunities for up companies, establishing joint ventures, and industries across the world to invest in the use of creating high technology parks and export initia- computers. Developing countries have already tives.18 Even skeptics of intervention appear to garnered significant returns as a result. Where agree that governments in EastAsia have played evidence is less clear is of supra-normal returns an important role in the development of the local to investment and leapfrogging opportunities. E- IT manufacturing industry. They have pursued development is crucially dependent on broader 7 E-Development: From Excitement to Effectiveness this goal through direct investments in human these services, not only does government benefit, resources and technology development (e.g., but the IT sector is given an important demand- Taiwan's Industrial Technology Research Insti- boost. In Estonia, for example, legislation created tute), as well as through incentives for private a favourable environment for the industry; gov- investment in the industry. Current initiatives by ernmental departments then actively procured in- the government of Russia reflect a similar strat- novative solutions from local companies, includ- egy (see box 1.2). ing online taxation applications, an "X-road" ini- tiative to modernize national databases, and an A major latent market for the IT sector in devel- ID-card initiative. The Estonian government has oping countries is the development and delivery contributed a stable 1 percent of its total budget to of e-government applications. By implementing financing ICT expenditure.19 Box 1.2 Information technology: Russia's next natural resourcea In an effort to jump-start its economy and diminish its dependence on natural resources, Russia has made local IT development one of its top priorities.21 The country set aside US$650 million in 2005 to invest in hi-technology initiatives, such as the e-Russia program, which encompasses both e-government and e-health services (e.g., putting medical records online). In 2005 software exports are already growing by 40 percent to 50 percent annually, and by 2010, the government hopes that Russian programmers' contributions will make up 7 percent of global software exports, and a $40 billion market To spur further growth, the country hopes to develop regional, government-sponsored IT research and development centres, or "techno-parks," similar to those of Bangalore, India. At the same time, the govern- ment is hoping to reassure investors by cutting red tape and amending the tax code to create simplified regimes favorable to the IT industry. Former Soviet Union President Mikhail Gorbachev when addressing a gathering of Massachusetts software industry executives in April 2005 stated "Russian society is ready to make a break- through. The high level of education and the potential of our science enable us to take our place in the post- industrial economy." The development of IT industry groups has also begun beyond Russia. The RUSSOFTAssociation, for example, is an association of the largest and most technically competent software developing companies in Russia, Byelorussia, and Ukraine. Headquartered in Saint Petersburg, the association comprises more than 70 companies and 6,000 highly qualified, professional software engineers. While these efforts are supporting Russia's attempts to attract significant investment in the sector, analysts note that the country faces a growing list of emerging-market competitors (including Poland, Hungary and Estonia) seeking to get their own slice of the IT industry. a"IT is Russia's next natural resource," quote from Leonid Reiman, Minister of Information Technology and Communications of the Russian Federation, at the Russian Economic Forum, London, United Kingdom, April 12, 2005. Source: Pruitt, S. 12 April 2005. "Russia looks to make IT its `next natural resource." ITworld.com, IDG New Service, London Bureau. 8 Chapter 1: Look Before You Leap At the same time, not all government efforts to ventions should be designed with care and lim- promote ICT sectors are successful. One ex- ited in extent. Evidence to date also suggests ample of an intervention that failed to deliver was thatthemostsignificantpoliciesthatgovernments the attempt of the Indonesian government to pro- can introduce to attract IT industries are the same mote a software production center as part of its that attract industries in general ­macroeconomic Action Plan for 2001­2005. The Bali Camp soft- stability, limited red tape and corruption, invest- ware development house began operations in ment security, a strong infrastructure and human 1999 with 50 programmers. It grew to supply capital base and so on. software modules to both domestic and interna- tional markets. At one time, its clients included Part III. Broad-based global IT companies such as Microsoft, Oracle, e-development is a Cisco and IBM. However, the inability of Bali complex venture Camp to attract and retain good IT staff, pay competitive salaries and develop programming Turning to the use of ICT in development pro- specialties beyond legacy system re-engineer- grams, while projects can garner significant re- ing all but forced it to close. turns, e-development solutions can also be costly, with a high failure rate among large ini- Similarly, Hong Kong's US$100 million venture tiatives. Lack of physical and human capital, capital fund for ICT was unable to find attrac- absence of the institutions required to success- tive investments. The Malaysia Multimedia fully implement ICT-enabled projects and frag- Supercorridor, which started in the mid-1990s mented ICT strategies are some of the difficul- with a government-backed venture capital fund, ties faced by developing countries when deploy- ten years of tax freedom and a promise of ing such projects.21 US$10 billion in infrastructure investment, at- tracted less than US$500 million in private in- The use of networked computers in schools pro- vestment, far below the government target. vides an instructive example of the uncertain cost- Reasons cited by companies for not moving to benefit ratio of ICT-based development projects. the Supercorridor included concerns over the Numerous studies suggest that computers can monitoring of Internet traffic, red tape, slow visa provide students individualized interactivity, a approval, as well as weak intellectual property more satisfying learning experience and market- protection, infrastructure and the skills base of able ICT-related skills. Yet the annual cost of the local labor market.20 providing just one computer to every 20 students is between US$78 and US$104 per student per Overall, macroeconomic evidence suggests that year. In some developing countries, annual dis- IT production, while a growing source of invest- cretionary educational expenditures per second- ment and employment opportunities, is unlikely ary student are below US$20. Furthermore, the to generate far higher economic and social re- impact of computing and Internet connectivity turns than other investments. This, combined on improved test scores is mixed, suggesting that with a patchy record of success in specific in- the broader educational environment (including terventions designed to attract IT industries and the quality and training of teachers, as well as growing international competition in the sector the quality and integration of digital instruction suggests that sector-specific government inter- 9 E-Development: From Excitement to Effectiveness Box 1.3 Gyandoot: Electronic government and the rural poor Gyandoot is an information and communication project designed to provide government services to the population of Dhar (Madhya Pradesh, India) via telekiosks. The project was intended to provide inhabitants of remote regions (primarily tribal peoples and the very poor) a cost-effective alternative to traveling to district headquarters to access such services as obtaining land records, information on market prices, and government entitlements (welfare schemes, public distribution of food, pensions, grants, etc); file grievances; and access email or a village newspaper. Recent evaluations of the project show that more than 78 percent of users surveyed are satisfied with the services. However, usage is low, financial sustainability of the project is doubtful, and the poorest residents of the district are not using Gyandoot. Out of the 38 telekiosks surveyed, 10 were not operational; the average use calculated for 18 telekiosks over a period of two years was only 0.62 users per day. Usage is also deteriorating over time. Revenue generated from Gyandoot services was also grossly inadequate to reach the breakeven point. According to one survey of 221 poor people, only 9 (4 percent of the total) had used Gyandoot and only 31 percent of the target group was aware of Gyandoot, which offers only a few services that directly benefit poor people. Among the key lessons learned from the project are that appropriate technology is a necessary but insufficient condition for the success of ICT projects. Community participation and ownership of such projects is needed, project implementation should be the responsibility of grassroots-based organizations and individuals who have appropriate incentives to work with marginalized groups, services offered by such projects must benefit targeted users (in this case, poor people), and awareness-raising campaigns must be conducted during deployment. Sources: Indian Institute of Management (IIM). 2002. "Gyandoot--Rural Cyber Cafés on the Intranet." and; S. Cecchini and M. Raina. 2003. "Electronic Government and the Rural Poor."; and http://gyandoot.nic.in. materials) is an important determinant of the suc- management program was only three per- cess or failure of ICT-enabled education cent.23 Available evidence also suggests that projects.22 firms, governments and civil society face dif- ficulties in exploiting ICTs to their full poten- Studies of e-procurement suggests that this tial in least-developed countries (LDCs); one generally mixed picture may extend to appli- recent study estimated that a majority of pub- cations beyond education. For example, a re- lic sector IT applications in LDCs are either cent survey found that only forty percent of partial or total failures,24 a finding equally true companies that adopted on-line purchasing for the private sector. Box 1.3 highlights an systems actually saved money when they de- example of an e-government initiative which ployed such systems as part of a change man- has won several awards ­ still, usage is low, agement process. The figure for companies especially for the poorer population, and the that introduced such systems without a change project may not be sustainable. 10 Chapter 1: Look Before You Leap Even if e-strategies are carefully developed ful e-education projects to date (see box 1.4), and implemented, project costs can threaten but implementation of the program was only the sustainability of ICT-enabled applications. possible due to significant funding from the The Enlaces program in Chile, for example, Ministry of Education and generous grants is often considered one of the most success- from Telefónica CTC, among others. Secur- Box 1.4 The Enlaces e-education program in Chile One of the key aims of the Enlaces program in Chile was to address educational exclusion in rural and deprived urban areas by linking primary and secondary schools via basic e-mail services and gateways to the Internet. The program began as a prototype in six schools in Santiago in 1991 and was later scaled up to the national level. By 2004, the program had reached more than 93 percent of the subsidized school population. Close to 80 percent of all classroom teachers had been trained and more than 8,500 schools were part of the program, which now comprises virtually all urban schools and a growing proportion of rural schools. Evaluations by the World Bank, UNESCO, and the U.S.Agency for International Development concur that the Enlaces project is one of the most successful programs in the Chilean Educational Reform. (For more information, see http://www.enlaces.ufro.cl.) Among the factors accounting for its success was an integrated strategy which focused not only on infrastruc- ture, but also attention to teachers and teacher training. This strategy sought to create a social network of educators and pupils facilitated by user-friendly technology and decentralized support, together with respect for the autonomy of participating schools in how they use the program's technologies. With respect to content, hundreds of software titles for all areas of the curriculum have been distributed to schools, and the Ministry of Education has invested heavily in a comprehensive educational portal. Enlaces demonstrates what can be done when there is sufficient political will coupled with the technical expertise and financial resources needed to implement an ICT-based education project. However, the program is not sustainable in isolation and relies on government funds and donations. As of 1996, total project costs for a small primary school with 75 students averaged US$78 per student annually, or roughly 8 percent of Chile's annual recurrent expenditures per student in primary education. (Annual per student costs in large schools were much lower, US$21 per student, or 4 percent of recurrent government expenditures per student). As of 1998, the budget provision for Enlaces was around US$120 million. Central government funding of around US$60 million has been supported by long-term loans provided by the World Bank (US$20 million). Additional support has been provided by Telefónica CTC, the largest telecommunications service provider in Chile, which donated 10 years of Internet service (1998­2008) to more than 4,000 schools (an estimated value of more than US$1 million per year). The Chilean private sector (i.e., mostly parents) and other education projects unrelated to Enlaces have contributed nearly 20 percent of the present hardware in primary schools (K-8), and more than 30 percent of that in secondary schools. Sources: Hinostroza, E. 1993. "Teaching the Learning."; Potashnik, M. 1996. "Computer in the Schools."; Hepp, P. et al. 2004. "Technology in the Schools."; and International Institute for Communications and Develoment. 1998. "ICTs in Developing Countries." 11 E-Development: From Excitement to Effectiveness ing permanent funding and thus ensuring certain threshold before the effect of network sustainability of the project remains an issue. externalities begin to have an impact on addi- tional ICT investment.28Accordingly, the impact Part IV. Success in applying of ICT technologies may be lower in lower-in- ICT depends on macro driv- come countires, a finding supported by data indi- cating that less-advanced economies and regions ers and preconditions are benefiting less from the Internet than already well-off economies and regions. Similarly, ICT Having briefly examined the complexity of e- use in lower-income countries may initially ex- development projects, let us now examine what acerbate internal inequalities. ICT rollout, which makes such projects successful. What are the provide new opportunities to wealthy urban popu- general drivers of e-development at the macro- lations, but not poor rural populations, may en- economic level? What are the challenges to suc- courage income divergence. 29 Unless specific cessful implementation of e-development policies targeting the poor are implemented projects? Some of these difficulties are directly (whether or not they directly involve ICTs), both linked to the preconditions for e-development, income and gender divides within countries may while others are linked to implementation. Iden- grow as a result of the ICT revolution. tifying potential hurdles can help policy makers to avoid the many pitfalls that can cause failure. A simple regression analysis confirms the lesson that general development is key to e-develop- Level of economic development ment (see Annex 1). Roughly 80 percent of the It is an obvious but important point that people variation in number of secure Internet servers living on a dollar or two a day are unlikely to between individual countries can be predicted either afford advanced ICT equipment or have on the basis of GDP per capita alone. It is thus the skills to use it.25 In addition to affordability apparent that the "digital divide" between ad- concerns, general lack of capital and high inter- vanced industrial and developing nations is part est rates in some countries create significant of a broader "development divide," a finding that obstacles to the development of the ICT sector, should temper optimistic expectations of e-de- not to mention the lack of functioning banking velopment as a tool for "leapfrogging" stages of and credit systems. ICT infrastructure and a development. functioning banking system, for example, are crucial preconditions for e-commerce. Addition- Having said that, the same analysis suggests that ally, the ability of ICT to facilitate trade and open countries can significantly influence the devel- new markets will be limited by weak transport opmentimpactofICTsthroughcarefullydesigned infrastructure.26 Investment in ICTs alone is interventions that improve the climate for invest- insufficient for business growth, then.27 ment and project success. The regression tech- nique suggests that improving policies and insti- Another consideration that may lower expecta- tutions to encourage investment while extending tions of e-development is that network externali- access to telecommunications infrastructure can ties come into effect only after a critical mass of dramatically extend use of e-commerce at a ICT users has been reached. The development given level of income per capita. of ICT infrastructure may thus need to reach a 12 Chapter 1: Look Before You Leap Infrastructure Skills Areliableandaffordabletelecommunicationsnet- Another critical precondition and/or driver of suc- work, not to mention a reliable electricity infra- cessful ICT projects is skilled human capital. The structure, has to be in place to harness the po- use of ICT depends on a solid pool of skilled tential of ICT. Lack of infrastructure is one of workers. Adoption of ICT has thus been associ- the most important impediments to greater use ated with considerably increased demand for of ICT identified by government officials, entre- skilled labor.Arecent study of e-business shows preneurs and observers, particularly the lack of that skill intensity of the workforce was one of efficient, low-cost telecommunications services. the two most significant factors influencing the Poor infrastructure performance strongly affects export performance of Indian firms (the other a country's growth prospects, as do high band- was the type of technology used).32 The need width costs. Numerous empirical studies have for human capacity implies that there is a need demonstrated that there is a close correlation be- for technical training, as well as for general edu- tween income growth, on one hand, and the qual- cation and the capacity to commercially exploit ity and quantity of information infrastructure, on the information and knowledge that ICT makes the other. In part this will be because poor infra- available.33 With respect to general education, a structure deters ICT use. recent study found that a one-year increase in average schooling results in a one percentage Accordingly, while one analysis suggests that point increase in PC penetration.34 53 percent of the gap in PC use between the United States and Sub-Saharan African is ac- The capacity of users to exploit local content on counted for by income differentials, fully 41 the Internet and to take part in its production percent of the gap might be attributed to the depends on levels of literacy, education and mas- disparity in telecommunications infrastructure.30 tery of the technologies concerned. For example, The experience of e-government programs also in Ethiopia, a country in which 60 percent of the suggests that ICT infrastructure is at the heart adult population is illiterate and less than 1 per- of successful deployment and sustainability.31 cent of the relevant age group pursues tertiary education, 98 percent of Internet users in the ICT infrastructure is costly to establish and late 1990s had a university degree.35 This bar- maintain, costs that are further aggravated when rier may be sufficiently formidable to deter ICT a population is sparsely distributed over large diffusion, even if the long-term benefits outweigh areas. In such cases, service is usually limited short-term costs. Lower educational achieve- and expensive; ICT costs, particularly Internet ments, particularly in science and technology dis- fees, can be prohibitively high. Given the lim- ciplines, constrain girls and women in particular ited resources of developing countries, e-de- from accessing ICT infrastructure and services.36 velopment projects need to be designed with the understanding that access to ICTs, particu- Institutions larly advanced services, will continue to be of a While existing differences in physical ICT ac- lesser extent and lower quality in poorer coun- cess and skills should be of concern to policy tries for some time to come. Chapter Two dis- makers, having the right institutions in place is cusses policy and regulatory approaches that also essential. Although physical infrastructure should improve the reach of information infra- correlates with much of the variation in basic structure in developing countries. 13 E-Development: From Excitement to Effectiveness Internet use, ICT activity also depends signifi- Part V. The need for a holistic cantly on appropriate legal and regulatory frame- approach to ICT implementa- works, particularly respect for the "rule of law." tion Legal and regulatory reform in the telecommu- Given poor ICT infrastructure rollout, low ICT nications sector can play an important role in skills, a weak institutional environment and lack promotingcompetitionandICTinvestment,caus- of network externalities, firms and individuals in ing ICT prices to drop and extending access to many developing countries may have little incen- more advanced ICT services. Differences in tive to use new technologies. Even when the pre- regulatory quality generally account for a large conditions that affect ICT adoption are met, many part of the gap in technology use between coun- challenges to the successful implementation of tries. One recent paper, for example, estimated e-development projects remain.Available expe- that one-third of the Internet usage gap between rience lends itself to several lessons: in particu- the United Sates and the Middle East and North lar, it appears that successful ICT-enabled Africa region was associated with the difference projects: in regulatory regimes.37 (See chapter 2 for a dis- cussion of the elements of a conducive policy environment.) · are well-suited to the level of a given country's development; Analysis of e-commerce worldwide reveals that · are relevant to the needs of targeted users; it depends significantly on a supportive institu- tional environment, including the availability of · integrate infrastructure, applications and skills development; reliable payment channels, such as credit cards. This finding implies that well-functioning finan- · are developed and implemented within a cial and credit institutions are key drivers of suc- broader process of institutional and business cessful e-commerce applications.38 In China, for process change; example, only 13 percent of online transactions · are designed with awareness of the complex- are paid for online, compared to 42 percent that ity of such change; are paid cash-on-delivery (COD) and 24 per- cent via remittances sent by mail.39 · are coordinated as part of a larger strategy; and · are continuously monitored and evaluated for Legal and regulatory frameworks also ensure feedback. security (i.e., they facilitate digital commerce and ensure secure transactions),40 increase trust (per- Developing a vision for e-development that is haps the most important factor in determining a holistic in approach is the key to effectiveness. willingness to purchase online) and protect pri- Such an approach keeps in mind the impact of vacy. In fact, an institutional environment that an ICT project at the macro level, necessary facilitates the building of transactional integrity cross-sectoral interactions and local specificities. is critical to the development of e-commerce.41 Governments or public sector firms also need to develop appropriate and realistic implementation strategies, ensuring coordination across sectors and appropriate sequencing. Coordination be- 14 Chapter 1: Look Before You Leap tween projects, particularly those that can share Figure 1.4. The focus of e-develop- resources, infrastructure, etc., can lead to cost ment activities changes with the savings.42 level of development The following subsections discuss these lessons Level of Development Low income High income in greater detail, using examples from e-govern- Low infrastructure access Widespread infrastructure access Limited General Skills/Education High level of skills/education ment applications as illustrations. As the illus- Limited Financial Services Widespread financial services trations make clear, thinking through project ob- Focus of Infrastructure Development jectives, context, funding mechanisms and con- Public access to Household access to tent in a holistic manner gives ICT-enabled Basic infrastructure advanced infrastructure Basic ICT services Advanced ICT services projects much better chances of success. industry industry Focus of E-Government ICT suitable to the level of development Central functions Local government Direct G2C ICT-enabledprojectsshouldbeadaptedtothelevel of development of a given country. The business model for e-development will thus differ from countrytocountry,basedontheiruniqueeconomic, libraries of community planning and poverty re- social, political and technical infrastructure and duction literature, and computer and software ICT know-how. Figure 1.4 illustrates how, given training. Although the project aimed to improve a country's stage of development (top arrow), its collaboration between the centers, use of the policy choices and e-development focus--both at Internet for collaboration or program research the infrastructure (middle arrow) and applications was minimal. When potential users were ques- level (bottom arrow), of which e-government is tioned as to why there was such limited use of an example --are likely to change. the networked equipment, one common answer was that other centers were not seen as particu- ICT relevant to user needs larly valuable sources of information.43 ICT applications need to be sufficiently relevant and provide value to targeted users. What infor- Relevant local content implies that the material mation is really useful to local end-users in, say, is "comprehensible" (i.e., content in local lan- rural areas? What, for example, would motivate guages and adapted to local needs) and locally a small-scale farmer in a remote area to plug produced (i.e., applications and content produced into the World Wide Web? In the absence of bylocalindividuals,NGOsorcommunitygroups). sufficiently relevant applications in health, edu- As a sign of how significant a problem this re- cation, governance or employment, rural area mains, 70 percent of pages on the World Wide shop owners, small business firms and individu- Web are still in the English language, suggesting als have little incentive to use ICT technology. a relative dearth of material in the local languages of poor people in developing countries. Encour- One recent failure of a "build it and they will aging community ownership and participation in come" model of computer networking occurred project design can help ensure that e-develop- in Vietnam, where a donor-financed project pro- ment projects are demand driven and will be vided five Centers for Poverty Reduction each appropriate to the needs and preferences of us- two PCs, Internet and email access, electronic 15 E-Development: From Excitement to Effectiveness ers. This is especially important when designing supply when deploying ICT equipment; train- rural information and knowledge systems.44Ad- ing may be needed so that intended users can dressing the need for relevant content also has a actually benefit from the services offered; and, gender dimension. Involving women, as well as in schools, curricula may need to be redesigned men, in content development and project design to use ICT to support problem solving, group leads to locally appropriate content that is valu- learning and research. If only some of these able to both genders. More broadly, ensuring elements are attended to, project failure is likely that ICT programs are inclusive is important to (see Box 1.6). broad-based development (box 1.5). Integrating ICT projects into broader Integrating infrastructure, applica- processes of change tions and skills development Achieving major impact (whether economic, so- When developing a specific ICT project, it is cial or even democratic) with e-government ap- essential to take into account the disparate ele- plications calls for a more substantial, sometimes ments that will affect its performance. For ex- revolutionary, transformation of public adminis- ample, it is necessary to ensure an electricity tration processes.45 Initiatives in India, for ex- Box 1.5 Using ICT policies to rectify racial and gender imbalances Local political and social conditions may impose requirements on the ICT sector in certain countries to enhance ownership by and employment of specific racial and/or gender groups. For example, lack of talented young black SouthAfricans in the ICT sector (and their lack of involvement in ICT business start-ups) caused industry groups to draft an "ICT Empowerment Charter" along the lines of South Africa's Broad-Based Black Economic Em- powermentAct. Originally intended to take effect March 1, 2005, the Charter is a voluntary and inclusive industry initiative which calls for all participating firms to meet mid-term (2010) and long-term (2015) targets for 33 indicators. Should large numbers of ICT firms achieve these goals, the racial and gender balance of equity holdings, management control and professional participation in this sector, traditionally dominated by white males, will have changed profoundly. In South Korea, the government has undertaken an ICT initiative intended to promote higher education and workforce participation among females. A virtual university program, Ewha offers 152 full-credit courses to 8,799 female students across South Korea. The initiative is part of a national program to create fifteen virtual institutions--partnerships between 65 universities and 5 companies, each operating within an existing university system. Ewha is based on the belief that women will reap the greatest benefit from the push toward higher education. (Women today hold 35 percent of high-level IT positions in corporate South Korea.) These institutions have developed new educational programs using various ICTs, such as satellite broadcasting, videoconferencing, video on demand and the Internet, and offer a range of educational courses, from single Internet courses to retraining opportunities, as well as complex projects that make innovative use of new technologies. Sources: ICT Empowerment Charter Working Group, SouthAfrica. www.ictcharter.org.za; ILO. 2001. World Employment Report 2001. Geneva, Switzerland. 16 Chapter 1: Look Before You Leap Box 1.6 How not to deploy computer labs in high schools Starting around 1997, the Dominican Republic began the installation of computer labs in hundreds of high schools throughout the country. Each was equipped with 20 networked computers, productivity software, and a VSAT (very small aperture terminal) Internet connection. The goals of the project were not simply to provide connectiv- ity and hardware, but also to facilitate learning in different subject areas in every high school, regardless of its location. While the effort succeeded in creating labs in virtually every high school in the nation, results have been mixed. In some schools, computers remained in their boxes more than four years after project launch, mostly due to inadequate or absent electrical capacity. In connected schools, while students are reported to show an increased interest in their studies, computers in the labs are generally not being used for educational purposes: unstructured access periods are dominated by chat, games, and Internet surfing. ICT integration into the curriculum is also mixed across subjects and lower than initially hoped. Computer labs provide a resource not only for students but also for community members. However, most labs are closed after school and on weekends, as well as during the summer holidays. Other problems include limited community participation (and little or no preparation for the host school), overlap with other connectivity pro- grams, and assorted technical difficulties. Operating costs are significant and ongoing financing of the labs re- mains an unsolved challenge. Source: http://cyber.law.harvard.edu/bold/devel03/modules/episodeIII.html#case. For more information, see Kirkman et al. 2002. "Do- minican Republic Readiness." ample, have included the computerization of dis- resistance are (i) loss of control and jurisdiction trict offices and the provision of PCs to rural and (ii) lack of clarity concerning agency man- development agencies (District Information Sys- dates. Productivity increases associated with ICT tem of National Informatics Centre, DISNIC, applications can create redundancies, adding an and Computerized Rural Information Systems additional element of tension to project deploy- Project, CRISP). While computerization was ments.47 The potential for staff redundancies achieved in a majority of districts, the project necessarily implies resistance and a correspond- had only a marginal impact on the efficiency of ing need to ensure the buy-in of different stake- these agencies because the administrative re- holders (see box 1.7). Political patronage and forms required to take advantage of computer- the legacy of state planning have created bu- ization stalled.46 (See chapter 5 for a detailed reaucratic and administrative cultures in many discussion of the basic components of e-govern- countries that place a premium on information ment applications.) as a source of power. ICT implementation chal- lenges current hierarchies by demanding hori- Cultural factors and resistance to change also zontal communication between government in- play a role in the success of e-development stitutions. To achieve increased community par- projects. Two factors in particular that cause ticipation, decentralization is required. Corrup- 17 E-Development: From Excitement to Effectiveness tion (with the added cost it imposes on technology in place, regulatory reform can be undertaken diffusion), dependency on government cycles, in parallel with ICTdeployment.Without such political partisanship and bureaucracy can all cre- reforms, countries have faced such problems ate additional obstacles to ICT-enabled projects.48 as redundant efforts and costs; the inability of the ICT sector to thrive in a monopoly tele- ICT projects as part of communications climate; failure to provide a broader strategy "proof of concept" for significant new public As mentioned earlier, there is mixed evidence investments; and lack of internal buy-in and on the contribution of ICT to economic develop- sustained funding on the part of different gov- ment and equitable growth. ICT may help bridge ernment stakeholders.49 the North-South gap or it may exacerbate it; 2) Recognition of the links between different sec- much depends on the strategies that governments tors. For example, in the case of e-commerce, follow to explore the potentialities of ICT. In or- the interdependency of the postal and trans- der to fully take advantage of the opportunities port sectors as well as the need for a devel- created by new technology, an integrated vision oped and well-functioning financial system, must incorporate the following key elements: must be considered. Trade restrictions, more- over, may affect access to technology or the 1) A conducive legal and regulatory policy free circulation of e-commerce goods.50 framework. If such a regime is not already Box 1.7 Local obstacles to information sharing An ICT project in the Indian state of Andhra Pradesh provides a good illustration of the importance of involving stakeholders in the planning, design, implementation and maintenance of computer-based systems. Lack of such involvement can seriously thwart, and even derail, IT initiatives. In 1998, the Government of Andhra Pradesh set up the Andhra Pradesh Value-added Network (APVAN) with a consortium of public sector IT companies from Singapore. APVAN was positioned as India's first value-added network for the delivery of online services. The network was intended to enable businesses, citizens, and the government to interact with one another over electronic networks. McKinsey and Co. was engaged to prepare a business plan for rolling outAPVAN. While spelling out the value propositions for the project, McKinsey made a number of observations on the potential to reduce and relocate existing staff. These observations quickly caused a serious controversy with government employee associations and the project was temporarily shelved. In contrast, the CARD (Computerized Administration in the Registration Department) project introduced com- puters into more than 200 sub-registrar offices to streamline the registration of land sales. Despite subsequent shortcomings, project implementation went smoothly, as channels of communication were kept open with Regis- tration Department employees, who were involved in each stage of the planning and implementation process. Source: Sudan. 2002. "Towards SMART Government." 18 Chapter 1: Look Before You Leap Box 1.8 Indonesia and the need for accountability of ICT expenditures Indonesia currently lacks the fiscal and comprehensive internal management systems that government policymakers need to analyze and report ICT usage throughout the country. Information on the number of PCs, software applications and networks, for example, can only be obtained through laborious investigation of manual records and incongruent electronic data fields. Although the national parliament has stringent internal controls over the budgetary process, its accounting meth- odology does not have a single line item for ICT goods and services. Requests for such goods and services at the planning stage are often simply categorized as "supplemental" or "miscellaneous" expenditures by both the central government and the decentralized governorates. Nor are shared databases maintained to keep critical information needed to monitor, evaluate and control the ICT industry in a transparent and efficient manner. In the area of basic composite ICT information, Indonesia stands apart from its neighbors in South and EastAsia (Singapore, Malaysia, Myanmar, or the Philippines), where information on ICT expenditures and information are readily available. This obstacle to e-development may, however, soon be overcome as a result of the reorganiza- tion of the Indonesian Ministry of Communication and Information and the implementation of the a new treasury system in 2006. 3) The right incentives (e.g. attractive fiscal Continuously monitor and evaluate policy for investment in IT and innovation) ICT projects and institutions that are strong enough to act It is essential to ensure that appropriate evalua- on them. tion methodologies are implemented during the lifecycle of any e-development project, includ- Achieving this integrated version requires an ap- ing management systems that can track ICT propriate institutional framework and the defini- expenditures (See Box 1.8. For an in-depth de- tion of clear responsibilities for implementing an scription of monitoring and evaluation frame- ICT strategy. This may be achieved by creating works, see Chapter 3). a dedicated organization with responsibilities to establish a vision for ICT, and strategies to Conclusions achieve that vision51 ­ possibly within the Minis- try of Telecommunications, or under the prime While e-development and networked computing minister's office. It may also be done through are particularly powerful tools in the struggle for utilizingexistinginstitutions.Whateverthemodel broad-based development, the potential for us- used, it is essential that the different institutions ing ICT to leapfrog stages of development should co-ordinate responsibilities as to minimize con- not be overplayed. E-development solutions can tradicting and inconsistent policies, and unnec- be both costly and risky--the path to successful essary overlap. implementation is filled with obstacles. Before embarking on any initiative, particularly before scaling up an existing project, it is essential to 19 E-Development: From Excitement to Effectiveness pose hard questions about sustainability, Notes replicabilityandscalability. 1Dutta, S., B. Lanvin and F. Paua, eds. 2004. Global Infor- Ensuring the success of e-development programs mation Technology Report 2003­04. Oxford University requires emphasizing the two "I"s, namely, insti- Press., http://www.weforum.org. tutional aspects (e.g., an enabling policy environ- 2In 1987, for example, Nobel laureate Robert Solow said, ment and regulatory framework that promote fair "We see computers everywhere but in the productivity competition; skilled human resources; collabora- statistics." (R. Solow, "We'd Better Watch Out," NewYork Times Book Review, July 12, 1987.) Thirteen years later, tion between institutions; respect for the rule of Solow subsequently declared: "You can see computers in law; leadership; etc.) and infrastructure aspects the productivity statistics." (L. Uchitelle, "Economic View: (e.g., telecommunications, power, hardware, soft- Productivity Finally Shows the Impact of Computers," ware, etc.). One without the other usually leads New York Times, Section 3, March 12, 2000, 4). to failure. 3The Human Development Index is a composite index that measures average achievement in three basic dimensions of human development: a long and healthy life (as measured In addition to focusing on an enabling environ- by life expectancy at birth), knowledge (as measured by ment, governments should begin with smaller the adult literacy rate and the combined primary, second- projects, embarking on larger projects only when ary and tertiary gross enrollment ratio) and a decent stan- evidence of impact becomes available. Indeed, dard of living (as measured by GDP per capita). government strategies for e-development should 4 The Networked Economy Index is a composite of three be"no-regrets" policies:projectsshouldhavecon- components: the enabling environment for ICT; the readi- ness of a key community stakeholders (individuals, busi- trolledcosts(e.g.,e-commercelegislation),bejus- nesses and governments) to use ICT; and the usage of ICT tifiable on grounds unrelated to the presence of among these stakeholders. See Dutta, S., B. Lanvin and F. the Internet (e.g., financial sector reform) or based Paua, eds. 2004. Global Information Technology Report on a careful micro-level analysis of the expected 2003­04. Oxford University Press. return on investment. Given our current level of 5 Piatkowski, M. (International Monetary Fund) World knowledge, blanket support for subsidies, tax in- Bank Seminar, December 7th, 2004, Washington D.C., The Potential of ICT for Development in Transition Econo- centives or government ICT investments cannot mies ­ Technological Leapfrogging or a Growing Digital be justified.52 Policies designed to encourage in- Divide. vestment in the ICT sector should take into ac- 6In 1999, for example, a Paris-based group called Report- count the track record of similar policies in other ers without Frontiers awarded Vietnam the dubious dis- countries and the relative comparative advantages tinction of being among the "Twenty Real Enemies of the of a given country and its labor force. Internet" because of its policy of restricting Internet ac- cess. Today, the Vietnamese government actively makes Internet connections available to large sections of the popu- Despite the examples of difficulties and failures lation through public facilities. (S.R. Chidamber, "AnAnaly- cited in this chapter, e-development and its appli- sis of Vietnam's ICT and Software Services Sector," The cations have a potentially huge role to play in sup- European Journal on Information Systems in Developing Countries 13, no. 9 (2003):1­11). portingsustainableeconomicgrowth.Carefulstra- 7 tegic and implementation planning can build on IDC and Business Software Alliance on-line Newsletter (2002) www.infobalt.lt/docs/aut_klausimai.pdf9 Commit- the enthusiasm and creativity that surround e-de- tee on Vision 2020 for India, 22nd May 2001. India's trade velopment to open up significant opportunities. In in 2020: A Mapping of Relevant Factors: Nagesh Kumar this area, international organizations can play a 8NASSCOM. 1996. The Software Industry in India, 1996: key role by facilitating dialogue and partnerships Strategic Review. New Delhi: NASSCOM and Heeks, R. in e-development (see Chapter 7). 20 Chapter 1: Look Before You Leap 1996. "India's Software Industry". New Delhi: Sage Publi- 18See S. Dutta, B. Lanvin, and F. Paua, eds., Global Infor- cations" 1996. 11 World Employment Report 2001; De- mationTechnology Report 2003­04 (Oxford and NewYork: veloping countries in international division of labour in Oxford University Press). software and services industry: Lessons from Indian expe- 19Ivar Odrats, ed., "IT in PublicAdministration of Estonia: rience. http://www.bib.ulb.ac.be/cdrom/wer_lawtie/back/ Yearbook 2002," trans. Kadri Podra, Estonian Information ind_2.htm Center, Tallinn, Estonia, http://www.ria.ee/english/2002 9C. Qiang, G. Clarke, and N. Halewood, "The Role of ICT Last accessed 15th July in Doing Business," in ICT Trends Report, edited by C. 20World Bank, Chile: New Economy Study, 2004; Yusuf, Qiang (Washington, DC: World Bank, 2005). Innovative East Asia, 2004. 10 K. Lal, "e-Business and Export Behaviour: Evidence 21C. Kenny, "The Internet and Economic Growth in Less- from Indian Firms," Discussion Paper No. 2002/68, United Developed Countries: A Case of Managing Expectations?" Nations University, World Institute for Development Eco- nomics Research, Helsinki, Finland, 2002. The paper iden- OxfordDevelopmentStudies31,no.1(March2003):99-113 tifies and analyzes the factors that influence the export 22J. Grace and C. Kenny, "A Short Review of Information performance of firms in the post-liberalization era of the and Communication Technologies and Basic Education in Indian economy, based on primary data from 51 firms lo- LDCs--What is Useful, What is Sustainable," International cated in the national capital region. Journal of Educational Development 23 (2003):27­36. 11After endogenizing Internet use by using the instrumen- 23 S. Yusuf, Innovative East Asia: The Future of Growth tal variables of national regulation of data services and (New York: Oxford University Press, 2004). Internet provision. G. Clarke and S. Wallsten, "Has the Internet Increased Trade? Evidence from Industrial and 24 See R. Heeks, "Information Technology, Government DevelopingCountries,"WorldBank,Washington,DC,2004. and Development," Report on the IT, Government and Development Workshop (26 November 1998), Manches- 12S. Chowdhury and S. Wolf, "Use of ICTs and the Eco- ter, England, 1999, http:www.man.ac.uk/idpm/ nomic Performance of SMEs in East Africa," Discussion itgovsem.htm; and C. Kenny and C. Qiang, "ICT and Paper No. 2003/06, World Institute of Developing Eco- Broad-Based Development," in ICT and Development nomics Research, United Nations University, Helsinki, Fin- (Washington, DC: Global Information & Communication land, 2003. Technologies Department, World Bank, 2003). 13The so-called NIEs are Hong Kong SAR, South Korea, 25Income per capita is, for example, a significant determi- Singapore and Taiwan Province of China. nant of PC use; recent research has shown that each 14 US$1,000 increase in per capita income is associated with See World Bank, "Chile: New Economy Study," volume II, Report No. 25666-CL (Washington, DC: World Bank, more than a one percentage point increase in the number of PCs per capita. M. Chinn and R. Fairlie, "The Determi- 2004). nants of the Global Digital Divide:ACross-countryAnaly- 15An enterprise cannot, for example, buy one-half of a sis of Computer and Internet Penetration," National Bu- computer, and thus can end up purchasing "too much" ICT reau of Economic Research (NBER),Working Paper 10686, equipment. This "over-investment" shows up as a de- NEBR, Cambridge, MA, USA, 2004. crease in labor productivity because the corresponding out- 26 put is lower than average, given the value of the input (in Kenny, "The Internet and Economic Growth," 2003. this case, the ICT equipment). 27Chowdhury and Wolf, "Use of ICTs," 2003. 16Chowdhury and Wolf, "Use of ICTs," 2003. 28L-H Röller and L. Waverman, "Telecommunications In- 17In the case of Estonia, for example, three jobs are typi- frastructure and Economic Development: A Simultaneous Approach," American Economic Review 91, no. 4 cally created in the broader economy for every person di- (2001):909­23. rectly employed in the software industry; workers in the software industry earn 85 percent more than the national 29Studies do also suggest that where poor populations do average wage; and each software worker generates 15 per- have access to ICT, telephony can play an important role in cent more revenue for the economy than does the average IT incomegenerationandimprovingservicesrelatedtothequality worker. Datamonitor, "The Growth of the Software Indus- of life E. Forestier, J. Grace, and C. Kenny, "Can Informa- try in Estonia," Datamonitor, 2001, http://www.bsa.ee/ tion and Communication Technologies be Pro-poor?" Tele- download.php3?file_id=81. Last accessed 15th July 2005. communications Policy 26, no. 11 (2002):623­46. 21 E-Development: From Excitement to Effectiveness 30See M. Chinn and R. Fairlie, "The Determinants of the r0.unctad.org/ecommerce/docs/edr00_en.htm (last accessed Global Digital Divide," 2004. In Africa as a whole, new 20 July 2005). forms of ICTs (e.g., the Internet, fax, and computers) have 42 touched only 2 percent of low-income households, mostly For example, if two projects are co-located, they could consider sharing a VSAT link. in urban areas. There is also low computer penetration, particularly in government institutions. (M. Pigato, "In- 43G. Boyle, "Putting Context into ICTs in International formation and Communication Technology, Poverty, and Development:An Institutional Networking Project in Viet- Development in Sub-Saharan Africa and South Asia," Af- nam," Journal of International Development volume 14, rica Region Working Paper Series, no. 20, World Bank, issue 1, (2002):101­112. Washington, DC, 2001, http://www.worldbank.org/afr/wps/ wp20.pdf). 44See World Bank. Reaching the Rural Poor - Annexes (Washington, DC: World Bank, 2003), for a case study of a 31R. Schware and A. Deane, "Deploying e-Government Russian e-development project, in which the incorporation Programs: The Strategic Importance of `I' before `E'," Info, of these elements resulted in success. The Journal of Policy, Regulation and Strategy for Tele- communications 5, no. 4 (October 2003): 10­19(10), Em- 45See the Cap Gemini Consulting, "Does e-Government erald Group Publishing Limited, London, UK. Pay Off?" European PublicAdministration Network, http:/ / w w w . e u p a n . o r g / i n d e x . a s p ? o p t i o n = 32Lal, "E-business and Export Behaviour," 2002. documents§ion=details&id=19, n.d. 33See Pigato, "Information and Communication Technol- 46Pigato, "Information and Communication Technology," ogy," 2001. 2001. 34M. Chinn and R. Fairlie, "The Determinants of the Glo- 47See Kenny and Qiang, "ICT and Broad-Based Develop- bal Digital Divide," 2004. ment," 2003. 35Qiang andAyers, "Contribution of ICT to Growth," 2003. 48In one ICT project in the Dominican Republic, for ex- 36 ample, requests for parts had to be signed by 24 people. See For most regions of the world, however, regression analy- Peace Corps Online, Directory: Dominican Republic, Sep- sis suggests that the effect of lower education levels may have only roughly half the impact that differences in regu- tember 15, 2002, http://peacecorpsonline.org/messages/mes- sages/467/2014175.html Lat accessed 15th July 2005. It latory efficiency have on e-development. M. Chinn and R. should be noted, however, that ICT can also be successfully Fairlie, "The Determinants of the Global Digital Divide," 2004. used to counter corruption within government institutions. See also Luc de Wulf (2005), Customs Modernization Hand- 37M. Chinn and R. Fairlie, "The Determinants of the Glo- book, World Bank http://www.thattechnicalbookstore.com/ bal Digital Divide," 2004. b0821357514.htm (last accessed 20 July 2005). 38Firms in the Dominican Republic, for example, have 49Schware, R. and Deane, A. "Deploying e-Government found that residents are not ready to take advantage of e- Programs," 2003. commerce offerings, largely because credit card fraud in the 50 country is the seventh highest in the world. (Kirkman et al., Interestingly, unlike many other empirical studies of eco- nomic growth, Chinn and Fairlie find that openness to in- "The Dominican Republic Readiness for the Networked ternational trade does not appear to be an important factor World," Information Technologies Group, Center for Inter- national Development, Harvard University, Cambridge, in PC use or Internet penetration, after including an explicit measure of regulatory efficiency in their analysis. The fact Massachusetts, 2002.) that other studies find a positive effect of trade openness 39Yusuf, Innovative East Asia, 2004. may thus reflect the omission of a regulatory and/or policy variable from those studies, such as the one included in the 40ITU, "The Application of Information and Communica- regression analysis in annex 1. Chinn and Fairlie, "The tion Technologies in Least-developed Countries for Sus- Determinants of the Global Digital Divide," 2004. tained Economic Growth," ITU, Geneva, Switzerland, 2004. 51Schware, R., "Information and communications technol- 41J. Oxley and B.Yeung, "E-Commerce Readiness: Institu- ogy agencies: functions, structures, and best operational tional Environment and International Competitiveness," practices", 2003 Journal Of International Business Studies 32, no. 4 (2001):705­23. See also UNCTAD (2000), `Building Con- 52World Bank, "Financing Information and Communica- fidence: E-commerce and Development' http:// tion Infrastructure Needs in the Developing World: Public and Private Roles," 2005. 22 Chapter 2 Creating the "Right" Enabling Environment for ICT by Boutheina Guermazi and David Satola1 F or ICTs to deliver on their promise of eco- formation technologies, successful reforms must nomic and social development, it is criti- take into account the need for comprehensive cal that countries adopt enabling legal and changes that cut across traditional technological regulatory environments that support e-develop- and commercial boundaries. In addition, the role ment. "Enabling environment" in this chapter of regulators and regulation itself must be re- means policy, legal, market, and social consider- evaluated. Some areas where regulatory reform ations that interact both at domestic and global will be important are the regulation of communi- levels to create fertile conditions for ICT-led cations services and infrastructure, data privacy growth. The importance of this enabling envi- protection, security, intellectual property rights, ronment was recognized in the Declaration and public infrastructure, Internet governance (in- Action Plan of the first phase of the World Sum- cluding domain name registration), and general mit on the Information Society (WSIS), which principles of competition.4 emphasized that a trustworthy, transparent, and non-discriminatory environment was essential for Based on international experience, the ideal the use and growth of ICTs in the developing frameworkformaximizingthecontributionofICT world.2 to development consists of public policies that apply to different layers of the ICT market (in- In most cases, creating the "right" environment frastructure, applications, and consumer confi- is a daunting task for policymakers.3 While best dence). The basic goal of regulatory reform is to practices are emerging from countries that have create a stable, open, and future-proof environ- successfully crafted policies to facilitate digital ment that encourages confidence in the ICT opportunities, there is no single blueprint that can market.5 A major step towards this goal is to es- be followed in every case. Given the context of tablish clear and transparent governance struc- the convergence of telecommunications and in- tures and respect for the rule of law. Basic prin- 23 E-Development: From Excitement to Effectiveness ciples that support regulatory reform include en- ments of broad stakeholder consultation, trans- couraging market-based approaches and ease parency, and strong local ownership. Unfortu- of market entry; promoting business confidence nately, difficult policy choices that influence the and clarity; enhancing transactional enforceabil- reform process and its implementation are often ity; ensuring interoperability (of systems, stan- not addressed early on, causing delays or unan- dards, networks, etc.); and protecting intellec- ticipated outcomes. tual property and consumer rights. All regula- tory policies should, moreover, be neutral regard- For developing countries, some of the issues cov- ing both the use and type of technology. ered in this chapter (e.g., digital signatures or the security of online transactions) may not ap- The policies undertaken by governments and the pear immediately relevant to their concerns. manner in which they are reflected in law will However, these issues may be encountered much affect how ICT infrastructure and services de- earlier than anticipated in the development pro- velop and are used. Because of the global nature cess. For example, successful operation of oftheinformationandknowledgeeconomy,mini- telekiosks or Internet cafés--both cost-effective mum common international standards have long ways to provide access to the Internet and ad- beenrecognizedasimportant.Suchcommonstan- vanced ICT applications--requires a legal frame- dards contribute to the interoperability of national work that addresses the protection of intellectual legal regimes and develop truly global commerce. propertyrightsandconsumerprivacy.Understand- ably, developing countries are likely to concen- Based on success stories from a wide range of trate first on creating an enabling environment for countries (both developed and developing), this private investment in their basic ICT infrastruc- chapter provides pointers for policymakers on ture, a demanding task in and of itself.Yet as their how to create the requisite environment for pro- ICTnetworksgrowandbegintoprovideadvanced moting ICT-led growth. Such an enabling envi- applicationsthatpromotedevelopment(e.g.,inthe ronment requires not only ICT-specific consid- education and health sectors), these countries will erations, but macro-level improvements in the soon need to expand their policy and regulatory business and political environment, among other frameworks to address the full spectrum of is- factors. This chapter focuses primarily on the sues outlined in this chapter. policy, legal, and regulatory conditions needed to advance the e-development agenda at the na- Part I. The access layer: tional level.6 The chapter follows a three-lay- Creating the enabling environ- eredapproachtotheenablingenvironment,which ment for access to ICT tools emphasizes improving: · access to ICT tools (the access layer); Without adequate access to "the common es- · access to e-development applications (the ap- sentials for plugging into the online age," devel- plication layer); and oping countries risk missing out on the promise of the information revolution.7 This section dis- · consumerconfidenceandtrust(thetrustlayer). cusses the enabling environment needed to im- prove access to ICT infrastructure and IT hard- At each of these layers, the sequencing of re- ware and software, a prerequisite for the propa- form will vary from country to country. All suc- gation of ICT-for-development (ICT4D) appli- cessful reforms, however, share common ele- cations. 24 Chapter 2: Creating the "Right" Enabling Environment for ICT Enabling access to ICT infrastructure Private participation in infrastructure develop- For most developing countries, lack of adequate ment has grown tremendously in recent years in ICT infrastructure remains a major obstacle to both developed and developing countries.9 Given the uptake of ICT. Lack of investment in infra- that public sector financing has shrunk since the structure and networks, coupled with inefficient 1980s, the private sector, both domestic and for- provision of services, undermines the develop- eign, has been called on to assume responsibility ment of networked economies. The lessons ac- for funding infrastructure development. Despite cumulated in this sector indicate that success is a noticeable decline of overall North-South in- principally market driven. However, creating a vestment flows in the last few years (following predictable legal and policy environment is cru- the end of major privatization efforts and spec- cial for attracting investors. A predictable and trum license auctions),10 continued rollout of certain policy framework requires an overall in- physical infrastructure suggests that these flows vestment climate that is friendly to domestic and have been replaced by a combination of South- foreign investors (the macro level) and ICT-spe- South FDI flows, domestic private financing, and cific policies to promote competition and market other sources (see Box 2.1). As the example of entry, expand networks and the boundaries of Vietnam makes clear, however, not all countries service provision, reduce prices, and improve are initially open to establishing a legal environ- service quality (the micro level). ment conducive to foreign investment in the ICT sector (see Box 2.2). Enabling investment climate: Increased for- eign direct investment (FDI) holds a particular Many countries are now revising their regulations promise for ICT in developing countries. FDI on foreign investment in telecommunications to allowsdevelopingcountriesnotonlytorelaxcapi- facilitate capital expansion. These regulatory re- tal constraints to network build-out, but to chan- forms are part of a global wave of telecommuni- nel technology transfer and know-how into their cations sector liberalization, driven by the World economies. Guaranteeing a proper investment Trade Organization (WTO) Basic Telecommuni- climate and establishing investor confidence is cationsAgreement (BTA). Under a binding mul- undoubtedly the first step towards attracting FDI. tilateral framework, liberalization can create a stable environment for investment that benefits While a considerable amount of private capital both the foreign investor and the host country. is available for telecommunications projects, at- Foreign investors are more confident when in- tracting such capital is an extremely competitive vesting because host countries cannot withdraw endeavor. When choosing where to invest, the or change their offers without referring to WTO degree of political stability in the host country rules. By the same token, host countries are bet- and legal and regulatory regimes that guarantee ter off because multilateral rules enhance reci- foreign investment against specific risks (politi- procity and reduce market distortions. cal interference, arbitrary regulation, or regula- tory "capture" by a single enterprise, for ex- Enabling a pro-competitive ICT regulatory ample) are key considerations for investors.8 The framework: For many developing countries, a basic legal environment should include clear con- poorly planned regulatory reform process will tract and intellectual property regimes, as well scare away potential investors and exacerbate as dispute resolution mechanisms for commer- the digital divide. Effective frameworks ensure cial ventures. 25 E-Development: From Excitement to Effectiveness Box 2.1 Growing private investment in telecommunications infrastructure Private investments in telecommunications infrastructure projects in developing countries were valued at US$372 billion during the period 1990­2003. Foreign direct investment represented roughly 60 percent of this sum (ap- proximately US$172 billion). Of the 130 developing countries that received private investments, 53 were low- income countries. The countries of Latin America and the Caribbean, Europe and Central Asia, and East Asia, and the Pacific regions collected the greatest share of capital flows: 48, 21 and 15 percent, respectively, of total FDI. Brazil, Mexico, andArgentina were the largest beneficiaries overall, receiving US$76 billion, US$38 billion and US$24 billion, respectively. Foreign investors acted both alone and in consortium arrangements with domestic private and public investors. The involvement of foreign investors spurred broader interest in the sector, prompting local investors to put money into telecom infrastructure development as well. As investment has slowed in recent years due to the downturn in the telecommunications market, private investors from the South have taken the place of foreign investors from developed countries. Mobile telephony has also become the leading growth sector, overshadowing traditional businesses in fixed and long-distance telephony. Source:World Bank. 2005. Private Participation in Infrastructure (PPI) database; Qiang, Christine and Pierre Guislain. 2005. "Foreign Direct Investment in Telecommunications." World Information and Communication for Development Report 2006. World Bank: Washington, DC. proper competition, guard against market abuse Countries may adopt sector-specific rules or rely by dominant market players and balance the goals more heavily on a general competition law.11 of market efficiency, flexibility and innovation. While a competition law may prove effective in 26 Chapter 2: Creating the "Right" Enabling Environment for ICT Box 2.2 Vietnam's business corporation contracts Under Vietnam's investment law of 1992, as amended in 2000, foreign companies are allowed to provide services to Vietnam's telecommunications market only under a Business Corporation Contract (BCC). A BCC is, in essence, a partnership agreement between a foreign and a Vietnamese party in which private investors provide investment capital and receive a negotiated return on their investment for a prescribed number of years. Foreign investors are not allowed to own equity stakes in Vietnamese telecommunications companies and the Vietnamese party is the only party permitted to hire and manage a workforce.A foreign company must be present in Vietnam for at least two years before entering into BCC negotiations. In most cases, such schemes discourage foreign investors because they have no operational control over their investments. Lack of ownership rights and limits on management control increase investor risk and consequently, increase the cost of capital, reduce its availability, and impede the transfer of management expertise to firms in the host country. Since a BBC arrangement de-links management from investment risks, the incentives for effective, profit-oriented management are also reduced. Unsurprisingly, as the Vietnamese telecommunications market gradually opens, resistance among foreign inves- tors to BBCs is growing. Source: European Union,Asia IT&C Program. 2004. "Promoting Internet Policy and Regulatory Reform in Vietnam:Assessment Report 2004." GIPI Vietnam. some cases, certain specific rules (for example, tional treatment commitments, WTO members those setting the parameters for interconnection) have adopted a Reference Paper on regulatory are likely to be needed, especially in telecommu- principles. The paper is a set of common guide- nications sectors where competition has not yet lines to guarantee effective market access and taken hold. Regulators and policymakers will also foreign investment. These guidelines represent need to revisit the regulatory framework from the regulatory component of the WTO Basic time to time to respond to changes in market Trade Agreement (BTA) and provide conditions. policymakers in developing countries a road map forestablishing(orreforming)aregulatoryframe- A key determinant of an enabling environment work. The Reference Paper compiles in one for ICT is the elimination of barriers to entry and short document the experience of long years of the introduction of competition in the ICT sector regulatory practice. (see Box 2.3). Early evidence of the impact of liberalization As mentioned earlier, the WTO has played a piv- under the BTA shows that growth in telecom- otal role in telecommunications liberalization and munications revenues as a percentage of GDP encouraging regulatory reform in developing is higher in countries that have made GATS com- countries. In addition to market access and na- mitments in telecommunications (see Figure 2.3). 27 E-Development: From Excitement to Effectiveness Box 2.3 Lack of competition leads to high prices Competition in the ICT sector leads to lower prices, as well as improved quality and availability of services. Lower prices for international telephone calls, for example, are highly correlated with the level of competition. In Africa, one of the regions of the world where competition in long-distance telephony is lowest, prices for both international telephone calls and broadband services are much higher than in other regions of the world (see Figures 2.1 and 2.2 below). Figure 2.1 Cost of international calls, Figure 2.2 Cost of broadband services, selected regions of the world, 2003 selected regions of the world, 2003 Source: Global Information and Communication Technology (GICT) Department. 2005. "Connecting Sub-SaharanAfrica:AWorld Bank Group Strategy for ICT Sector Development." World Bank Working Paper, no. 51. GICT, World Bank: Washington, DC. Investors are thus likely to be more willing to its own sector, experienced much lower revenue commit capital and technology in countries with growth. WTO telecommunications commitments, as they are likely to be rewarded with higher revenues. Building strong institutional capacity: In ad- As expected, countries in sub-Saharan Africa dition to substantive rules of the game, proper without WTO basic telecom commitments ini- implementation of policies requires independent tially earned higher telecommunications revenues regulatory institutions that are empowered to en- (as a percentage of GDP), but were overtaken force regulations and suitable processes by which by countries that had made such commitments. regulatory decisions are adopted and enforced Uganda, for example, reformed its telecommu- (seeTable 1.1).Atransparent, participatory regu- nications sector and enjoyed healthy revenue latory process guards against the capture of regu- growth, while Ethiopia, which had not reformed latory agencies by stakeholders and acts as an 28 Chapter 2: Creating the "Right" Enabling Environment for ICT important guarantee for private investment. regulatory efforts. Greater consultation on the While there is no one-size-fits-all model for in- part of regulators can impart greater stability to stitutional organization, the credibility of regula- the sector and generate confidence in the ability tory institutions, including the independence with of regulators to regulate fairly and predictably. which they perform their regulatory roles, is sup- In addition, efficient dispute resolution mecha- ported through clearly defining their competen- nisms are another important element for promot- cies and functional responsibilities vis-à-vis other ing growth and creating a favorable investment sector stakeholders. climate for prospective investors.12 In many developing countries, the creation of an Emerging regulatory approaches for broad- independent telecommunications regulatory band deployment and converged services: A agency has brought about a sea change in the regulatory emphasis on improving access solely relationship between business and government. to traditional telephony would be out of tune with However, mechanisms such as consultations the development potential of modern informa- have not yet become part of these governments' tion and communications technologies. The risk Box 2.4 WTO Reference Paper on regulatory principles Under Article XVIII of the General Agreement on Trade in Services (GATS) of the WTO, parties are allowed to schedule "additional commitments" in addition to market access and national treatment commitments.a In prin- ciple, these additional commitments are binding on the countries that make them and enforceable through WTO dispute procedures. The drafting of the Reference Paper on regulatory topics was driven by a need to guarantee effective competition in the basic telecommunications sector, especially the need to prevent major suppliers from abusing their dominant market positions. WTO member countries that adopt the Reference Paper commit to: · establish a regulatory authority that is independent of all suppliers of telecommunications services and net- works; · adopt measures that prevent and safeguard against anti-competitive practices by major suppliers; · require major suppliers to interconnect with other suppliers at any technically feasible point on a non-discrimi- natory, cost-oriented basis following transparent procedures and subject to dispute settlement by an indepen- dent body; · administer universal service programs in a transparent, non-discriminatory, and competitively neutral manner; and · allocate and assign the use of scarce resources, including the radio spectrum, numbering blocks, and rights of way, in an objective, timely, transparent and non-discriminatory manner. a The article allows WTO members to negotiate commitments with respect to trade in services that are not subject to scheduling under Articles XVI (market access) or XVII (national treatment) of GATS, including commitments regarding qualifications, standards and licensing. These commitments are then inscribed in a member's schedule. Source: WTO. 1996. "Reference Paper." WTO Negotiating Group on Basic Telecommunications, Geneva. 29 E-Development: From Excitement to Effectiveness Figure 2.3 Telecommunications revenues and WTO telecommunications commitments in Sub-Saharan Africa, 1997­2002 Source: Analysys, Harris Wiltshire & Grannis LLP. 2004. Telecommunications Trade Liberalization and the WTO, Final Report for the GICT Department. World Bank. inherent in a narrow, traditional regulatory ap- als, it provides a needed platform for many proach is that it could inadvertently widen the applications and offers a wide range of posi- digital divide. While the basic tenets of an en- tive externalities which have the potential to abling environment in the pre-broadband era support and accelerate development (e.g., in remain valid for today's environment, coun- health, education and commerce). tries need to adapt their legal and regulatory frameworks to make them better suited to sup- In parallel with the emergence of broadband port broadband services, given that most e- services, the convergence of communications, applications require higher bandwidth and per- computing, and media brought about by digital manent Internet connections. technologies has revolutionized not only the telecommunications sector, but has also blurred There is a growing consensus that broadband13 lines between technology and the economic is "[of] strategic importance to all countries sectors and industries built around them. Con- because of its ability to accelerate the contri- verged licensing, for example, encourages bution of ICT to economic growth, and facili- market entry by a full range of operators, in- tate innovation."14 Broadband not only satis- cluding small-scale and medium entrepreneurs, fies communication needs between individu- and gives these operators sufficient flexibility 30 Chapter 2: Creating the "Right" Enabling Environment for ICT Box 2.5 Morocco: Effective regulation attracts investment The case of Morocco demonstrates the importance of an effective regulatory framework for attracting foreign investors and improving connectivity. Because of the confidence of foreign investors, the auction of a second GSM license in 1999 stimulated the country's mobile market and acted as a catalyst for neighboring countries (Algeria, Tunisia, Mali, Mauritania), which followed Morocco's lead in awarding competitive GSM licenses. The NationalAgency of Telecommunications Regulation (ANRT), the new Moroccan regulatory agency, emerged as a world-class regulator, setting the standard in the Middle East and North Africa region for transparency and appropriate design and auction of GSM licenses. Morocco's mobile sector has since achieved spectacular development. From being the country with the lowest teledensity in the region, Morocco has become the country with the highest teledensity. (The number of mobile subscribers grew from 150,000 in 1999 to over 8 million by year-end 2004.) TheANRT is now being encouraged by the World Bank to build on this success and ensure continuous, effective regulation of the sector in the context of improved competition and new technologies. Sources: ITU. 2002. "The Role of Effective Regulation: Morocco Case Study." ITU: Geneva.; and B. Wellenius, C. Rosotto andA. Lewin. 2004. "Morocco: Developing Competition in Telecommunications." CITPO Working Paper, GICT Department, World Bank: Washing- ton, DC. to embrace technological developments and nologies, including new approaches to spectrum tailor their services to market demand. management. To cite one possibility, allowing unlicensed utilization of 2.4 MHz spectrum for Regulators and policy makers should seek only locations with low-density traffic, especially in that level of regulation necessary to promote rural and/or remote areas, could facilitate the the rapid growth of new services and applica- growth of school and rural community networks. tions and to minimize barriers to entry. Glo- The most appropriate regulatory approach may bally, the trend is to minimize licensing hurdles differ from country to country. In countries where (by establishing general authorization regimes) the infrastructure is already in place, one of the and to adopt technological neutrality--allow- challenges for policy makers and regulators is to ing for greater competition between different deal with legacy regulation and existing access delivery platforms and greater end-user ac- platforms and established models when design- cess. Many countries are accordingly moving ing policies to encourage competition and encour- away from service-specific licensing regimes age the use of alternative infrastructures. One to embrace converged licensing approaches, area of growing concern for both regulators and relieving investors from restrictive and burden- policy makers is how to deal with technologies some licensing rules.15 like Voice over Internet Protocol (VoIP), which challenge existing business models. Early at- New regulatory approaches, for example, need tempts to ban the service have largely been in- to be crafted to harness the power of radio tech- 31 E-Development: From Excitement to Effectiveness Table 1.1 List of possible impediments to regulatory effectiveness effective, with a gray market flourishing in many Addressing access gaps: Going beyond the developing countries. There is even a growing market: Evidence across the world demon- recognition on the part of policymakers that this strates that the market has been the main driver application offers the benefit of cheaper access for improved access to ICT. In many areas, how- (see Box 2.6). ever, the upfront investment needed may be too hightobejustifiedonpurelycommercialgrounds. 32 Chapter 2: Creating the "Right" Enabling Environment for ICT Box 2.6 VOIP in call centers Togo recently overcame the "bifocal" approach to VOIP and became the first African country to establish a VOIP call center. The innovative call center allows entrepreneurs to tap into the rapidly growing, lucrative trend of call center outsourcing. The driving forces behind such outsourcing are low labor costs, better-quality Internet services and government support. Given the potential for growth in outsourcing and adequate access to ICT, call centers could potentially be a new business for developing countries. Source: Jacques Rostenne. 2005. "Togo: First VOIP Call Center in Africa." Balancing AcT, no. 47. Available at http://www.balancingact- africa.com/news/back/balancing-act47.html; and ITU.2004/2005. Trends in Telecom Reform: Licensing in an Era of Convergence. ITU, p.15. Table 2.2 Minimum subsidy auctions for public rural telephones, selected countries, 2004 Source: Navas, Juan. 2005. "Universal Access and Output-Based Aid in Telecommunications and ICT." GICT, World Bank: Washington, DC. Especially in areas that require significant invest- Among the possible approaches to funding in- ment, incur high operating costs and feature lim- vestments in remote and poorer areas is a uni- ited or uncertain demand, there may be a role versal access fund. The purpose of such funds for complementary government initiatives that is to collect potential subsidy resources (whether fill the access gap.16 from within the sector, the government or out- side sources) into a central, independent account Some form of incentives or funding support may that is managed on a non-discriminatory, trans- need to be considered for more remote, unserved parent basis and distributed according to clear locations with low-income populations. One ap- criteria and procedures. Allocation of the funds proach is to have coverage requirements linked can be achieved through minimum-subsidy auc- tolicenseobligations.Anotherapproachistooffer tions (see Table 2.2 and Box 2.7 for examples). explicit financial incentives for servicing loca- This approach has many advantages in terms of tions that are "beyond the market." Such areas flexibility and avoids unwarranted favoritism to- need to be carefully identified, so that limited ward incumbent players. subsidy or incentive programs do not crowd out private investment in areas where greater policy An access gap also exists between dial-up and and regulatory flexibility could enable market broadband users of the Internet. The question of forces to provide increased access on their own. whether similar approaches would be justified to 33 E-Development: From Excitement to Effectiveness Box 2.7 Output-based subsidies in Chile The impact of public support can be maximized by leveraging competitive private investment through minimal, well-targeted ("smart") subsidies allocated under an output-based aid (OBA) scheme. Such an OBA system has been used in Chile to finance rural universal service obligations. Chile first created a rural universal service fund in 1994 to provide subsidies to private investors to provide rural pay phones. Chile is now a leading example of how cost-effective solutions can reduce access gaps in basic telecommunications in developing countries: the fund reduced the proportion of the population without access to a telephone from 15 to 1 percent in five short years. Subsidies were allocated through competitive tenders and financed by the national budget. In the period 1995­ 2000, the telecom regulator Subsecretaria de Telecommunicaciones (SUBTEL) held auctions for 7,850 localities, specifying a maximum amount of subsidy for each locality. Operators and service providers were invited to bid for the amount of subsidy they needed to build pay phones in these localities, provided that the subsidy did not exceed the maximum specified amount. Based on lessons learned from this program, the government is now applying the same scheme to bring Internet access to 750 towns in rural Chile. An estimated investment of US$38.7 million will require a government subsidy of US$9.0 million, meaning that the private sector will provide US$2.6 dollars for every US$1 dollar of government funding. The towns slated to receive Internet access have been selected based on their poverty level and lack of current service. Source: Bjorn Wellenius. 2001. "Closing the Gap inAccess to Rural Communications: Chile, 1995­2002." infoDev Working Paper, World Bank: Washington, DC. encourage broadband deployment is a hot sub- sign of market failure.17 Rather, public funding is ject in policy discussions today. Some argue that needed because of the strategic nature of broad- it is too early, and that countries should wait for band for economic development and the need to the normal uptake of technology. Some coun- speed up deployment rather than wait for the tries, however, are considering direct interven- market to fully mature. It should be noted that tion in the broadband market and devising Public while direct funding of broadband deployment Private Partnership (PPP) schemes to speed up has been provided in many cases, alternatives the roll out of the broadband networks. include demand aggregation and ensuring that a government will be a principal user of broad- Different rationales are presented to defend the band services (e.g., via e-government applica- role of public funding. Some argue that direct tions). funding is needed to correct market failure re- sulting from the fact that investment in back- A key lesson emerging from different initiatives bone infrastructure requires high sunk costs. Oth- being attempted today is that public support for ers argue that broadband enjoys the fastest take- the expansion of coverage and use of broadband up rate of all communications services and that services should not pre-empt private sector ini- a delay in the availability of broadband for rural tiatives or hinder competition. Promoting access users should not be taken to be an automatic to rural and underserved areas by extending back- 34 Chapter 2: Creating the "Right" Enabling Environment for ICT bone infrastructure is, of course, contingent on If a government opts for third-party management, the existence of a proper regulatory and policy the award of a management contract should be framework. One of the challenges of govern- based on open, transparent procedures. The third ments is to prevent monopoly control over the party should, moreover, be required to meet speci- telecommunications backbone network. Some fied operating requirements and provide open countries have opted to transfer management of access to the network. Public-private partner- this network to a third company in order to pro- ships that involve community investment in and mote open access. In most cases, such compa- ownership of local infrastructure that is managed nies provide only wholesale services and are by professional private-sector partners have prevented from offering retail services to end- proven effective in developing rural telecommu- users.18 nications infrastructure in a number of countries Table 2.3 Alternatives for supporting the deployment of broadband services Source: Ecorys Research and Consulting. 2005. Best Practice Options for Improving and Extending Access to Electronic Communications in Lithuania, a publication for GICT. p.41. Available at http://www.worldbank.org/ict. 35 E-Development: From Excitement to Effectiveness Box 2.8 Locally owned broadband networks Andhra Pradesh is the first state government of India to finance a statewide broadband project. The fiber optic network will link 23 districts, 210,000 villages and 40,000 government offices. The project promises to provide effective e-government services to rural areas, increase the capacity of the private sector and provide the lowest broadband tariffs in India. Total estimated cost of the network is about US$90 million and will be funded by a public-private partnership. The consortium includes entities with complementary strengths, including a broadband provider, the Railway Corporation and cable network providers. The state government is a key player in the project, providing an equity investment of US$5.5 million, right-of-way permissions, and serving as the anchor client (with a fixed annual usage fee). In this case, the network operator is expected to provide both wholesale and retail services. Source: Fiber Optics Weekly update. "Andha Pradesh to be connected with fiber this year." January 7, 2005. Available at http:// www.findarticles.com/p/articles/mi_m0NVN/is_1_25/ai_n8699107.Accessed July 2005. (e.g., the NTCA experience in the US) and can IT-related products can be very high (see Table also be used in areas with regional autonomy. 2.4), constituting an impediment to the develop- ment of e-business. Enabling other "access tools" Adequate access to ICT infrastructure, although On a global level, many countries are considering a major first step, does not guarantee a country's joining theWTO InformationTechnologyAgree- capacity to participate fully in the global digital ment (ITA) negotiated during the Singapore Min- economy. InAfrica, for instance, Internet growth isterial Meeting in 1997. The ITA seeks to move in the near future could be limited by the market to zero duties on IT products such as computers penetration of personal computers (there are only and telecommunications equipment. 1.05 PCs per 100 inhabitants in Africa).19 Cur- rently, computers remain unaffordable to most In addition to reducing customs duties on com- households in developing countries. In the case puters, countries can also implement fiscal in- of India, the cost of a PC is equivalent to two centives to encourage wider ownership of PCs. year's average per capita income. Korea, for instance, launched a subsidy scheme that enabled one million households to buy a PC While an enabling legal and regulatory environ- for under US$900. The economic rationales for ment cannot guarantee a computer in every such initiatives remain questionable and the im- home, general taxation laws and import duties plications of such subsidy schemes remain to be can help control end-user costs. Many coun- tested. Other countries especially in the Middle triesstillmaintaintaxstructuresthatinhibitgrowth East and North Africa region have encouraged of the IT sector. Vietnam, for instance, requires public-privateinitiativesinvolvinglocalbanks,PC hardware manufacturers to pay a VAT tax larger vendors, and telecom operators to increase PC than the price they can charge buyers for com- ownership amongst households (see Box 2.8).21 ponents.20 For many countries, import duties on 36 Chapter 2: Creating the "Right" Enabling Environment for ICT Table 2.4. Tariffs and taxes on computer hardware and software, selected African countries, 2003 Source: U.S. Office of Technology and Electronic Commerce (USOTEC). 2003. "Africa: Tariffs and Taxes on Computer Hardware and Software." USOTEC, International TradeAdministration, U.S. Department of Commerce: Washington, DC. In many cases, in order to enable access, gov- ment, promising increased productivity and in- ernments have opted to support community rather creased access to the global market.23 E-com- individual PC access. Multi-purpose telecenters, merce generates many important opportunities, for instance, offer consumers access to numer- includingbetteravailabilityofinformation,global ous ICTapplications, including public telephony, distribution and customer service, reduced trans- fax, Internet, tele-education, and telemedicine. actions costs, lower barriers to entry, and new International organizations, including UNESCO, sources of revenue. the World Bank and the ITU, have initiated pilot telecenter projects in a number of countries, pro- Commerce can also have important impacts on viding both facilities and technical support. The individual economic sectors, such as finance and sustainabilityandscalabilityofsuchinitiativescan, tourism, as well as on macroeconomic perfor- however, prove to be an issue. manceandpolicies.Accordingtoonerecentstudy, e-commerce can cut distribution costs by 5 per- Part II. The applications cent; companies using e-commerce in the study layer: Creating the enabling achieved efficiency gains valued at 0.75 percent of GDP.24 The projected growth of business con- environment for improved e- ducted over the Internet is impressive.According development applications to the United Nations Conference on Trade and Development (UNCTAD), the number of E-business has changed the way business is con- websites using secure socket layer protocol (SSL, ducted at the international level and is becoming a a protocol used mostly for e-commerce, e-pay- driving force of the global economy.22 E-business mentsande-bankingtransactions)grewmorethan also offers the potential for economic develop- 55 percent between 2003 and 2004.25 37 E-Development: From Excitement to Effectiveness Box 2.9 The family computer initiative of Tunisia A"one-computer-per-family initiative" was launched in Tunisia by presidential decision in November 2000. The initiative aimed to enable low-income families to purchase computers at reasonable prices (less than 1,000 Tuni- sian Dinars, or US$750) via loans provided by the national solidarity bank. The bank offers soft loans (supported by the Ministry of Finance) at an interest rate of 5 percent; terms include a possible grace period of over 3 months. The local press reports that Phase I of the initiative has largely met its initial target of connecting 10,000 families per year.Additional elements could expand the current initiative by: · opening the computer supply to an international competitive bidding process, thus procuring cheaper comput- ers. (The initiative began by trying to link two policy goals: improving PC penetration and supporting the nascent local IT industry. Roughly 48 percent of computers sold in Tunisia are made and/or assembled lo- cally.); and · giving end-users a choice of ISP (in most cases the PCs came bundled with a pre-determined Internet service package.). A decision of the Council of Ministers of December 2004 initiated Phase II of the initiative, which intends to provide 20,000 PCs per year. This phase will use an open competitive process and hopes to offer consumers a product that is 10 to 15 percent cheaper. Sources: Babnet Tunisie. 2005. "Ordinateur familial: Rude et...douloureuse sera la concurrence." Available at http://www.babnet.net/ cadredetail.asp?id=2549. Accessed July 2005.; and Serene Zawaydeh. 2003. "Tunisia Internet & Datacomm Landscape Report." Arab Advisors Group, Strategic Research Service:Amman, Jordan. The lack of an enabling framework to support e- proaches are sometimes subject to the overrid- business is a significant roadblock to a country's ing principles that parties may choose their own fuller participation in the global economy. Many technological methods, and that no electronic sig- countries have not yet adapted their legal frame- nature can be denied effect solely on the grounds works (designed for physical, paper-based com- that it is not supported by a cryptographic sys- mercial transactions) to an environment where tem or does not comply with an accredited or transactions are conducted over electronic plat- otherwise favored scheme. This flexible frame- forms. Electronic transactions raise a number of work is reflected in the EU Directive on Elec- legal issues unique to the "virtual" world, rang- tronic Signatures, for example.27 ing from acceptance of digital signatures to con- tract formation to the admissibility of electronic Model laws, conventions, and regional laws from evidence to jurisdiction, to name a few.26 The a variety of sources contribute to the emerging emerging legal framework is based on a mix of body of international best practices available to industry standard-setting, voluntary accreditation developing countries. Too often, however, there of certificate authorities, and possibly some gov- is a tendency to adopt international precedent ernment approval of technologies that will have (whether a model law, directive, or other prece- a presumption of legal validity. But these ap- dent) wholesale, without adapting it to local dy- 38 Chapter 2: Creating the "Right" Enabling Environment for ICT namics. Certainly there is value in learning from ing services. The absence of digital certification the experience of others, but adopting model laws laws and the low level of credit card penetration verbatim, without a holistic approach to regula- inArab countries are major factors that discour- tory reform, can be as ineffective to the growth age banks from going online. In the case of Jor- of ICT4D as reform that does not take the inter- dan, the total transaction volume of Visa credit national dimension into account at all. cards in 2004 was estimated at US$258 million, of which online payments accounted for only In the East Asia and Pacific region, research on US$2.5 million, not even 1 percent of the total.29 23 countries shows that harmonization of legal frameworks to ensure cross-border Part III. The trust layer: interoperability is necessary for applications as- Creating the enabling envi- sociated with the Internet (i.e., e-commerce); ronment for improved con- isolated activities of individual countries were ineffective in addressing this challenge.28 Even sumer confidence and trust with regulatory reform, if the financial system is not sophisticated enough to support electronic Thedevelopmentofadigitalenvironmentispredi- transactions such as inter-bank electronic pay- cated on the security of electronic networks and ments and bank credit cards, a country will find communications. In the converged world of ICT it difficult to reap the benefits of e-business. In infrastructure, digitzation of information into bits the Middle East, for example, only 18 percent of of data has given rise to new online applications banks (most of which are foreign) offer e-bank- and efficiencies, whether these transactions are Box 2.10 Cybercafes in Algeria Given the scarce diffusion of personal computers inAlgeria (less that 1 percent of the population owns a PC)a and the high relative costs of Internet subscriptions,b people predominantly access the Internet at cybercafés. In 1999, the Government of Algeria launched an initiative to create 100 cybercafés in the capital. Three years later, the number of cybercafés had jumped to 4,000. The rapid growth of cybercafés between 1998 and 2000 resulted from the gradual liberalization of the telecommunications sector. Reforms simplified the licensing process and made it extremely affordable (US$13) to obtain authorization to provide Internet service. The telecommunications reform has generated more than 120,000 Internet-related jobs in the last four years, many of which are in cybercafés, multi-service kiosks, and sales points. As of December 2004, Algeria had 29 active ISPs and more than 500,000 estimated Internet users, of which 50,000 were ADSL subscribers. Broad- band Internet access has been available since November 2003. aIn 1999, the number of PCs inAlgeria reached 180,000, a penetration rate of 0.60 percent. Between 1999 and 2001, this number increased by 20,000 PCs annually and is expected to reach 650,000 by 2008, a penetration rate of 1.89 percent. bThe cost of a full-day Internet connection can reach US$463 per month. Source: Serene Zawaydeh. 2004. "Algeria Internet & Datacomm Landscape Report." Arab Advisors Group, Strategic Research Service: Amman, Jordan. 39 E-Development: From Excitement to Effectiveness Box 2.11 Chile moves from a paper-based to online tax system In 1998, Chile's Internal Taxation Service (SII) launched an online taxation system. Its aims were to (a) reduce the cost and increase the accuracy of tax collection; (b) equip Chile's tax authority with the resources it needed for the foreseeable future; and (c) offer taxpayers throughout the country better service, along with swift and easy access to vital tax information. Three years after project launch, the online taxation system has racked up impressive statistics. Over 400,000 taxpayers have checked their assessments online, some 183,548 sworn returns and 89,355 income tax returns have been received, and the Chilean exchequer has collected US$1.943 billion in taxes. Managers at SII are now preparing the online system to process a potential 1.8 million tax returns per annum, plus 950,000 VAT returns every month. E-governement applications often require changes in the legal code in order to fully utilize their potential. In Chile, the popularity of the online tax system spurred citizen demand for legal changes that would facilitate the transfer of information between SII and taxpayers. The government responded by speeding an amendment to the tax code through parliament; the change authorizes taxpayers to present their annual reports, accounts and tax returns on media other than paper. Source: World Bank. 2005. "Chilean Tax System Online," abstract, E*Government. GSPR net (Governance and Public Sector Reform Sites). Washington, D.C., n.d. Available at http://www1.worldbank.org/publicsector/egov/chile_taxcs.htm. Accessed at July 2005. commercial (traditional e-commerce) or between thieves steal personal and financial data from citizens and a government (e-government). data brokers, banks and retailers and use the sto- However, data in digital format, as well as the len data to engage in illicit activities. It is not only networks and storage devices that use this data, the consumer who loses from "breaches" of are increasingly vulnerable to theft and unautho- personal privacy on the Internet; according to e- rized use. Securing the integrity of data and in- Marketer, companies lost US$5.5 billion in online frastructure is thus imperative to build user con- sales in 2001 due to poor security and could lose fidence.30 During any activity carried out over more than US$24 billion by 2006.32 the Internet, a user "opens a window on his pri- vacy." Lack of privacy protection means that InApril, 2005, the UNDPAsia Pacific Develop- the online market will not reach its full potential. ment Information Programme (APDIP) pub- lished a summary analysis of a recent regional Promoting confidence in the online world (e.g., survey on Internet governance priorities for the by protecting consumer privacy and preventing Asia Pacific region. Survey results revealed an unsolicited e-mail) is needed to create trust and overwhelming, near universal concern over vi- increase the use of digital networks. Research rus attacks, online fraud, cyber-crime, and indicates, for example, that many people are still spam.33 More than 90 percent of respondents reluctant to conduct business online.31 Identity from all stakeholder groups and from almost all 40 Chapter 2: Creating the "Right" Enabling Environment for ICT countries surveyed regarded the solution to and manage cybersecurity risks. Such programs these problems as somewhat important, im- are generally a combination of bottom-up, indus- portant, or very important. These issues by far try-led programs, and top-down, government-led evoked the strongest sense of concern among initiatives. All such initiatives focus on the pro- those surveyed. cess of sharing information on security issues among various actors and stakeholders; they do The following subsections will examine six ma- not, however, focus on the institutional arrange- jor issues that affect the trust and confidence of ments for this process. One key issue that public digital networks: network security, consumer pro- policy makers must consider is how information tection, privacy, cyber-crime, protection of intel- about potential threats should be escalated and lectual property rights, and dispute resolution. addressed. Thus, the establishment of a well- functioning collaborative information-sharing Protecting critical infrastructure framework is essential to infrastructure security In an environment where more and more "pub- at both national and international levels.35 lic" services are provided over networks that are privately owned and operated, governments must Implementation of a national CERT and related address how best to protect critical information Computer Incident Response Teams (CISRT) infrastructures.34 Many countries are develop- in key government agencies not only includes ing cybersecurity policies and programs, includ- training and emergency alert and response ser- ing the creation of national Computer Emergency vices, it also provides risk analysis to ensure con- Response Teams (CERT). These programs are tinuity of critical government systems and appli- part of multi-stakeholder information-sharing ef- cations. Responsibility for critical information forts aimed at creating the capacity to assess infrastructure protection (CIIP) programs should Box 2.12 Tunisia launches e-commerce without credit cards Arecent study of the ICT sector in Tunisia revealed that while the financial system is no longer a major roadblock to the effective use of ICT, there is still important room for improvement. An early success was the introduction of the e-dinar, a rechargeable pre-paid card available for purchase at most post offices in denominations of 20 to 500 dinars. This innovative mechanism allowed Tunisia to initiate e-commerce without the use of regular credit cards. Only recently did the Tunisian Agency for the Internet launch a Secure Socket Layer (SSL)-based secure- payment server called e-Tijara for users of MasterCard and VISA credit cards (the server is operated by Agence Tunisienne de l'InternetATI in cooperation with major Tunisian banks). Tunisia now needs to exploit existing global network externalities. Currently, international financial transactions are made more costly and more difficult by relying solely on the government's own certification agency. In addition, the e-dinar initiative, which proved to be a very beneficial first step, needs to be phased out in favor of a wider use of credit cards (which yield superior outcomes for the retail market). Source: Catherine L. Mann. 2004. "Information Technology and e-Commerce in Tunisia: Domestic and International Challenges and the Role of the Financial System." Available at http://tunis.usembassy.gov/wwwftunisia_report.pdf. Accessed July 2005. 41 E-Development: From Excitement to Effectiveness be given to government agencies or other bodies countries use the EU consumer protection guide- that will give this issue the attention and the prior- lines as the basis for their own consumer pro- ity it requires. Any CIIP program should identify tection legislation.36 The approach to consumer critical infrastructures, assess the vulnerabilities protection varies among countries. In the United of key systems and raise awareness of security States, for example, the government relies on a concerns. A permanent structure should then be hands-off approach that focuses on industry self- created to coordinate program development and regulation, while countries of the European Union implementation, a process that should involve the have adopted laws and regulations that limit the government and the private sector.Acomplemen- purposes for which companies can use personal tary approach to reduce cybersecurity risks is to data. Data collection in Europe, for example, develop corporate risk management capabilities cannot proceed unless the data subject has un- in both public and private institutions. ambiguously given his or her consent (with cer- tain exceptions).37 Current variations in laws Any cybersecurity program must take a multi- among countries is prompting policy makers to faceted approach to information security. In ad- contemplate harmonizing such standards. dition to setting standards and building the ca- pacity of government agencies, adequate poli- Data privacy protection cies and regulation should be devised to promote Creating trust and confidence is not only about a safe and trusted environment for electronic protecting consumer privacy, it also extends to transactions. protecting the privacy of individuals against un- reasonable government intrusions. The online en- Consumer protection vironment poses particular issues with respect Many countries are in the process of crafting to unauthorized use and manipulation of data. guidelines for protecting consumers who partici- Moreover, legitimate public order, security and pateinonlinetransactions.Atagloballevel,many related government concerns require investiga- Box 2.13 Ghana banned from e-commerce: The cost of late reform An FBI investigation of global credit card internet fraud revealed that over 5 million of online shopping fraud was detected to have generated from Ghana. The report shows that even if credit card usage is not very common in Ghana, the offenders managed to hack into credit card accounts in Ghana to conduct online transactions. Ghana is in the process of updating its legal environment to respond to such fraudulent activities. The lack of laws protecting against cyber fraud simply means that perpetrators of such crimes can still get away. The implications for the lack of reform can be very costly for Ghana. First as a result of the FBI report, Internet shopping was banned for Ghana, credit card holders in Ghana can no longer use their cards to buy online. The implications for the banks can also be onerous as the combination of lack of an adequate regime for compliance with security procedure and for deterrence of cyber fraud threatens to scare away potential business with wider economic implications for the country. Source: "GISP calls on Ghanaian Govt to help reserve Internet shopping ban Balancing Act." Balancing Act's News Update 247 of 3 March 2005.Available at http://www.balancingact-africa.com/news/back/balancing-act_247.html.Accessed July 2005. 42 Chapter 2: Creating the "Right" Enabling Environment for ICT tion and disclosure of such data. In many juris- Protection of intellectual dictions, privacy protection has been assured as property rights a basic right, with the need or wish of an online It is axiomatic that the protection of intellectual user to maintain anonymous communications property rights (IPRs) is part of an enabling respected. The legal framework thus needs to legal and regulatory framework.41 The UN strike a delicate balance between protecting pri- Working Group on Internet Governance has vacy and preserving a government's right to pro- noted that the Internet poses new possibilities tect the public interest against illegal and crimi- for low-cost, global dissemination of informa- nal use of cyberspace. tion, but also makes protected property more vulnerable to unauthorized use. Since the mid-1990s, the EU has used a general directive on personal data privacy protection.38 There is no dispute that protection of IPRs can More recently, it adopted special privacy rules provide incentives for growth and development. applicable to electronic communications. 39As What has emerged in the development debate is the case with the EU directive, data privacy over the last decade is how property rights can protection frameworks often require the estab- be exploited, by whom and for whose benefit.42 lishment of institutional mechanisms to regulate This debate revolves around whether the pro- compliance with privacy statutes. tection of IPRs should benefit a few rights hold- ers (primarily from developing countries), or Cyber-crimes whether a balance can be struck that both pro- Laws establishing penalties for unauthorized use vides necessary incentives (i.e., protecting intel- of data, computers, and networks are often re- lectual property) for innovation while at the same ferred to as "cybercrime" laws.40 While some time does not exclude potential users in less de- aspects of these legal frameworks deal with veloped countries (i.e., granting access). To crime, others deal with tort or civil law issues. some extent, the debate has centered around the Collectively, legal frameworks and laws provide use of free and/or Open Source software, which a range of civil and criminal penalties and en- some development specialists see as a tool to forcement procedures. In civil or tort law, pen- promote development while avoiding transfer alties are applied in a range of situations, includ- payments (via software copyright license and ing liability for copyright and trademark infringe- royalty payments) to existing rights holders. ment, financial loss, compromise of data, viola- tion of network integrity, content violations, and Alternative dispute resolution43 false or misleading advertising. In the criminal Competitive markets inevitably produce disputes, area, penalties are levied for such transgressions and competitive telecommunications markets are as unauthorized access to or interference with no exception. These disputes may involve fail- systems (computers or networks), unauthorized ures to fulfill contractual obligations, non-com- interception of or interference with data, misuse pliance with regulatory requirements or a wide of devices (e.g., unauthorized eavesdropping), range of other issues. Successful dispute reso- fraud, forgery, and conspiracy. On the proce- lution is increasingly important to attract invest- dural side, "cyberlaws" generally include provi- ment, spur competition and develop the global sions for the discovery or production of elec- ICT sector. Dispute resolution mechanisms, tronic evidence. moreover, need to be as speedy as the networks and technologies that they serve. 43 E-Development: From Excitement to Effectiveness Disputes in which service providers have enough Ultimately, the test of successful dispute resolu- power in the market to resist liberalization, or tion, as of regulation in general, is its impact on even abuse their power, are particularly relevant investment, growth, and development in the sec- for regulators, especially when such disputes dis- tor. Successful dispute resolution is important for tort the functioning of competitive markets. In- all countries that seek to facilitate the rapid dif- terconnection provides many examples of this fusion of new communications infrastructure and type of dispute, such as when a service provider ICT services. It is particularly crucial for coun- with exclusive control over essential infrastruc- tries that have historically not experienced high ture facilities fails to reach a reasonable agree- ICT investment and growth, as rapid and effec- ment to interconnect with competitors or to pro- tive dispute resolution helps such countries bridge vide access to its network facilities. the digital divide. In the Internet's early years, the ethos behind dis- Conclusion pute resolution, including domain name disputes, was based on informal procedures and commu- Given the interdependent nature of the global nity consensus. These informal procedures have information society, cross-national common stan- sinceevolvedintomoreformal(ifstillalternative) dards are needed to achieve interoperability, both processes, including the referral of domain dis- of legal frameworks and physical ICT networks. pute resolution and related intellectual property This chapter focused primarily on the role of rights issues to the World Intellectual Property governments and the actions they can take to Organization (WIPO).44 New domain name dis- create appropriate policy, legal, and regulatory pute resolution rules and procedures have also conditions to advance the e-development agenda. been established by the Internet Corporation for While many of the issues explored in the chap- Assigned Names and Numbers (ICANN).45 The ter may appear more relevant to highly devel- Internet itself has spawned new technological oped countries, which rely on highly evolved and approachestoresolvingdisputes,includingso-called sophisticatedcommunicationsnetworks,services, "online dispute resolution" (ODR), for use in both and broadband applications to provide economic the online and physical worlds. and social services, contemporary technology makes it possible for developing nations to rap- Policy makers and regulators should use mini- idly deploy sophisticated ICT networks and ap- mal but well-focused regulatory intervention to plications. This chapter therefore attempted to create an environment where industry players present the full spectrum of policy, legal and regu- have incentives to resolve disputes constructively. latory issues that enable ICT-led growth, giving This framework should also recognize that dis- policy makers an idea of the progression of is- pute prevention is as important as dispute reso- sues that they will eventually address as their lution. Reducing contentiousness and reliance on ICT networks and capabilities grow. destructive dispute processes enhances prospects for investment and growth. Use of consensus- building measures by policy makers and regula- tors can engage parties in the sector and identify mutually beneficial commercial opportunities. 44 Chapter 2: Creating the "Right" Enabling Environment for ICT Notes 10Qiang, C. and Guislain P. 2005. "Foreign Direct Invest- ment inTelecommunications." World Information and Com- munication for Development Report 2006. World Bank: 1 The authors wish to thank Juan Manuel Galarza Tohen, Washington, DC. Zaid Safdar, Rachele Gianfranchi and Isabel Neto for their research input. 11Different countries have chosen different models, with varyingdegreesofsuccess.SeeD.GeradinandM.Kerf.2003. 2 See World Summit on the Information Society (WSIS). Controlling Market Power in Telecommunications: Striking 2003. "Declaration of Principles" and "Plan of Action." theRightBalanceBetweenAntitrustandSector-SpecificRules WSIS, International Telecommunications Union: Geneva, and Institutions. New York: Oxford University Press. Switzerland. 12See, World Bank, ITU. 2005. Dispute Settlement in Tele- 3 Indeed, the World Bank has acknowledged that "policy communications: Current Practices and Future Directions. reform is hard work." World Bank. 2004. "Operations Washington, DC. Evaluation Department Report 2003." World Bank: Wash- ington, DC. 13There is no single definition of broadband. The notion is a moving target and differs from country to country. At a 4 Depending on the context of a given country, the use of minimum, broadband means a permanent connection and competition policy or the exercise of regulatory forbear- transmission capacity with sufficient bandwidth to permit ance in the presence of active market forces may be appro- combined provision of voice, data and video. priate to spur competition. 14OECD. 2003. "Broadband Driving Growth: Policy Re- 5"Future-proofed" implies an environment that makes it sponses." DSTI/CCP92003, Final. OECD: Paris. Also see easy to introduce new technologies and services. Laws ITU. 2002. The Birth of Broadband. drafted today, if based solely on today's technology, may prove inadequate for new technological innovations. 15Examples include member states of the European Union, India, South Africa, Tanzania and Zambia. 6 The WSIS Declaration of Principles and Action Plan deals with an enabling environment at both the national and 16Navas-Sabater, J., Dymond, A., and Juntunen, N. 2002. international level. At the international level, these docu- Telecommunications and Information Services for the Poor: ments address Internet governance. Although not the focus Toward a Strategy for Universal Access.World Bank:Wash- of this paper, clearly Internet governance will involve both ington, D.C. an international and national level. To the extent that such 17Leighton, W. A. 2001. Broadband Deployment and the governance deals with national-level concerns (e.g., build- Digital Divide, A Primer. OECD Policy Analysis. ing consultative mechanisms to ensure management of core Internet resources and developing national capacity to par- 18The city of Amsterdam, for example, has taken the re- ticipate in national and international governance mecha- sponsibility for setting up an independent legal entity, nisms), this chapter addresses the topic. For a broader Citynet Amsterdam, that will own the city network. Pri- discussion of Internet governance, see "Working Papers" vate partners have been invited to supply the infrastruc- prepared by the Working Group on Internet Governance ture equipment and operate the network. Peter Smith and (WGIG) in preparation for the WSIS Summit in 2005, avail- Hien Tu Thiu, Summary of selected Municipal Backbone able at http://www.wgig.org/working-papers.html. (July initiative, a GICT mimeo August 2004. 2005). 19ITU database. 2005. 7ITU. 2002. World Telecommunications Development Re- 20 port: Reinventing Telecoms. Geneva: ITU, p.20. Elmer, L. 2002. "Vietnam's ICT Enabling Environment: Policy, Infrastructure and Applications." USAID: Wash- 8See H. Singh and K.W. Jun. 1995. "Some New Evidence ington, DC. on Determinants of Foreign Direct Investment in Develop- 21 ing Countries." Policy Research Working Paper, No. 1531. In cases like Egypt,Algeria and Tunisia local banks offer World Bank: Washington, DC. soft consumer loans for the purchase of home computers. Algeria had introduced "Ostratic," a family PC initiative in 9Global Information and Communication Technologies De- July 2005. SeeAbderrafic Khanifsa. 2005. "Ordi-densite." partment (GICT). 2005. "Financing Information and Com- IT-mag. July 2005.Available at "http://www.itmag-dz.com/ munication Infrastructure Needs in the Developing World: article.php3?id_article=248&. Accessed July 2005. Public and Private Roles." GICT, World Bank: Washing- ton, DC. 45 E-Development: From Excitement to Effectiveness 22E-business refers to e-commerce, e-banking, e-insurance 33Summary Analysis of the ORDIG Survey on Internet Gov- and any other economic activity conducted over the Internet. ernancePrioritiesinAsia-PacificAvailableathttp://igov.apdip.net/ ORDIG.Survey.Report.pdf. Accessed July 2005. 23 There is a vast growing literature on the development di- mensionofe-commerce.See,forexample,A.GoldsteinandD. 34SeeM.DunnandI.Wigert.2004.InternationalCIIPHand- O'Connor. 2002. "E-commerce for Development: Prospects book2004:AnInventoryandAnalysisofProtectionPoliciesin and Policy Issues." Development Centre Studies, OECD De- Fourteen Countries. edited by Andreas Wenger and Jan velopmentCenter,OECD:Paris.;andOECD.1999. TheEco- Metzger. Swiss Federal Institute of Technology, Zurich. nomic and Social Impact of Electronic Commerce: Prelimi- 35T. Glaessner, T. Kellerman, and V. McNevin. 2004. "Elec- nary Findings and Research Agenda. Paris: OECD. tronic Safety and Soundness: Securing Finance in a New 24Cisco Systems and University of Texas. 2001."Measur- Age." World Bank Working Paper, no. 26.The World Bank: ing the Internet Economy." University of Texas, Austin. Washington, DC. Available at http://www.smartecon.com/articles/ 36See OECD. 1980. "Guidelines on the Protection of Pri- internet_economy.pdf. Accessed July2005. vacy and Transborder Flows of Personal Data (Privacy 25 UNCTAD. 2004. E-Commerce and Development Re- Guidelines)." OECD: Paris.; and OECD. 2003. "Privacy port 2004. New York and Geneva: UNCTAD. Online: Policy and Practical Guidance." OECD: Paris. 26 Digital signatures is used to refer to generic electronic, 37 See "Working Papers" prepared by the Working Group digital means of authenticating the identity of a party to an on Internet Governance (WGIG) in preparation for the electronic transaction. While it is recognized that the term WSIS Summit in 2005, http://www.wgig.org/working- "digital signature" is most commonly associated with key papers.html; and Dispute Resolution in the Telecommuni- public-private infrastructure, it is intended to be technol- cations Sector: Current Practices and Future Directions; A ogy neutral in this text. Joint Study Undertaken with the International Telecom- munication Union, infra note 12. 27 Directive 1999/93/EC of 13 December 1999 on Elec- tronic Signatures. 38EU. 1995. "Directive 1995/46/EC of 24 October 1995 on Personal Data Privacy Protection." Official Journal of the 28The study also showed that e-commerce laws adopted by European Communities. Brussels. anumberofcountriesintheregion,basedontheUNCITRAL model law of 1996, did not enable cross-border 39EU. 2002. "Directive 2002/58/EC of 12 July 2002 on interoperability. (Satola, D., Sreenivasan, R. and Pavlasova, Privacy and Electronic Communications." Official Journal L. 2004. "Benchmarking Regional e-Commerce inAsia and of the European Communities. Brussels. the Pacific andAssessment of Related RegionalActivities." 40See, for example, G. Sadowsky et al. 2004. Information in Harmonization of Legal and Regulatory Systems for E- Commerce in Asia and the Pacific: Current Challenges and Technology Security Handbook. Washington, DC: infoDev, World Bank and Global Internet Policy Initiative.; and Dunn Capacity Building Needs. United Nations: New York. and Wigert. 2004. International CIIP Handbook. 29 Arab Advisor Group. 2005. "An Analysis of e-Com- 41 merce Adoption in Jordan and the Gulf Region based on IPR law distinguishes between three types of intellectual property: trademark, copyright and patent. Reported Figures from Visa International." Arab Advisor Group: Amman, Jordan. 42 See "Working Papers" prepared by the Working Group 30This fact was explicitly recognized in the WSIS Declara- on Internet Governance (WGIG) in preparation for the WSIS Summit in 2005, http://www.wgig.org/working- tion of Principles, which states that, "Strengthening the papers.html. Accessed July 2005. trust framework, including information security and net- work security, authentication, privacy and consumer pro- 43This section is adapted from Dispute Resolution in the tection, is a prerequisite for the development of the Infor- Telecommunications Sector, infra note 12. mation Society and for building confidence among users of ICTs." (WSIS. 2003. "Declaration of Principles.") 44See, for example, the alternative dispute resolution pro- cedures of the WIPO Arbitration and Mediation Center, 31 According to the U.S. Federal Trade Commission, for Geneva Switzerland, n.d., http://arbiter.wipo.int/center/ example, identity theft has ranked as the top consumer index.html. Accessed July 2005. fraud compliant for the past five years. The cost of iden- tity theft including its impact on business, is estimated to 45See ICANN. 2005. "Domain Name Dispute Resolution exceed US$52 billion. Christopher Caldwell. 2005. "The Policies." ICANN: Marian Del Rey, California. Available price of privacy is high." Financial Times.April 16/17 p. 7. at http://www.icann.org/udrp#udrp. Accessed July 2005. 32 Op.cit 46 Chapter 3 E-Strategies for Development Efficient e-strategies require strong monitoring and evaluation by Bruno Lanvin The "Plan of Action" of the World Summit on · lack of data and measurement tools that do- the Information Society (WSIS) calls for more nors, analysts, and policy makers could use e-strategies as a way to build information soci- to evaluate the development impact of re- eties on a global scale. However, the energy to sources invested in ICTs, particularly in e- pursue "e-agendas" sometimes appears to be di- strategies. minishing, as some of donors and aid recipients come to regard e-strategies as a distraction from This chapter will attempt to show the critical role other, more fundamental development objectives. monitoring and evaluation (M&E) efforts in the Indeed, it is striking that internationally agreed design and implementation of e-strategies, rely- development objectives such as the Millennium ing on recent work in this area by theWorld Bank. Development Goals (MDGs) make so little ref- It does not attempt to define a "good" e-strat- erence to information and communication tech- egy, how it should be sequenced, or how re- nologies (ICTs) and their application in such sec- sources should be allocated among its various tors as health, education, governance, and more components. Rather, it seeks to identify ways in generally, poverty reduction. which upstream linkages (i.e., with national de- velopment objectives) and downstream account- This chapter attempts to explore two possible ability (i.e., measuring results with proper M&E reasons for the apparent reduced interest in na- tools) can enhance the validity and efficacy of tional strategies for e-development, namely: e-strategies. It is the author's firm belief that the · absence of a well-structured body of evidence exploration of proper M&E methodology for e- strategies will generate a few lessons about the linking e-strategies both to broad development measurement of broader development goals. goals (e.g., the MDGs) and national devel- opment objectives; and 47 E-Development: From Excitement to Effectiveness Box 3.1 An operational definition of e-strategies Despite the fact that the WSIS "Action Plan" mentions e-strategies, the plan (as well as other basic WSIS documents) does not provide a definition of the term. This remarkable absence of an agreed definition, which affects most of the e-strategy literature, indicates that the practice of such strategies has preceded their conceptualization. E-strategies are sometimes considered plans for applying ICTs to national development or shorthand for policies and strategies that use ICTs to promote national development. In this context, an e-strategy is a national strategy (although the definition can be adapted mutatis mutandis to other geographic or institu- tional contexts, leading to sub-regional or regional e-strategies). The formulation, or design, of an e-strategy takes the priority development objectives of a particular country as a starting point. This means that development objectives, or "d-goals," must be defined and adopted prior to e- strategy objectives, or "e-goals." Although most definitions of e-strategies include references to both ICTs and development, the reality is that such plans, particularly their architecture and components, demonstrate only a loose relationship between the two. For example, ICT is considered both a component of e-strategies and one of its objectives. This conceptual ambiguity becomes more striking when local champions of an e-strategy are close to the ICT field, as many staff from ministries of telecommunications or similar structures have technical and/or engineering backgrounds. Why analysts have shied away from defining e-strategies is fear of promoting a "one-size-fits-all" approach. This fear is reinforced by the fact that most of the early e-strategies were formulated and implemented in more advanced countries (typically, members of the OECD), triggering additional caution about exporting Northern thinking to Southern realities. Existing knowledge about e-strategies has now reached a higher level of maturity. Best practices have started to emerge, and common bottlenecks and stumbling blocks are more easily identified. Based on the experiences of developing countries, the following operational definition of e-strategies is proposed here: an e-strategy is a set of coordinated actions and policies that seek to accelerate the social, economic, and political development of a given country (or region) through the use of telecommunications, information networks, and the technologies associated with them. This definition will, most likely, be refined in the future through exchanges between analysts and practitioners in the field. E-strategies can be a a major risk, for many countries. The first risk is risky challenge that individual e-strategies will be launched in the absence of a common framework, which will make it difficult to evaluate their impact, com- At the end of the first phase of the WSIS in pare their achievements, and consolidate them December 2003, political leaders made a com- at sub-regional or regional levels. The second mitment to develop national e-strategies by the risk is that errors of the past might be repeated: time of the second WSIS meeting in November over the past decade, many countries have spent 2005.1 This task is a major challenge, as well as significant time, energy, and resources to design 48 Chapter 3: E-Strategies for Development e-strategies which often remained blueprints, or quencing of strategy objectives. For instance, white elephants, because no systematic set of if an e-strategy includes distance education indicators had been established to monitor and initiatives, it is important that such activities evaluate their implementation. (and their outputs) be connected not only to broader e-strategy objectives (e.g., promot- It is therefore of paramount importance that ing e-literacy or enhancing the use of ICTs in monitoring and evaluation ("M&E") should not education), but also to d-strategy objectives be an ex-post facto component of e-strategies, (e.g., promoting general educational goals or but a vital part of their design and implementa- developing general ICT usage) and more tion. Developing M&E components of an e-strat- generic policy objectives (e.g., diversifying a egy ensures that the strategy will be explicit, re- traditional economy). The sequence of deci- alistic, and that its implementation will be regu- sion making involved in selecting M&E indi- larly assessed and realigned. Such assessments cators is illustrated in Figure 3.1. allow scarce resources to be used efficiently, par- ticularly given the opportunity cost of deploying E-strategies versus such resources in other poverty reduction inter- information societies ventions, such as healthcare or non-ICT infra- An increasing amount of international effort has structure projects. been devoted to building information societies over the past few years.2 Nevertheless, there is Prerequisite #1. E-Strategies limited awareness among development special- should fit into the bigger de- ists and national leaders about the potential role velopment picture of ICT in the fight against poverty.3 Despite the significant cross-sectoral intellectual effort that mobilized the Millennium Declaration, ICTs ap- No e-strategy can be a substitute for a develop- pear in the document either as a second thought ment strategy (d-strategy). From an M&E point or a relatively minor tool to reach the MDGs. In of view, this reality has important practical con- spite of the myriad of findings regarding the de- sequences, including: velopment impact of ICT projects in the field, · Formulation. Certain indicators (especially such evidence has not yet been aggregated in a those that measure "impact") must be for- way that can easily convince decision makers at mulated at a level of decision making higher the policy level. To a large extent, the case for than that of the e-strategy. In other words, ICT for development (ICT4D) still needs to be impact indicators must be derived from a made.4 M&E indicators and processes can play country's overall development strategy (d- a crucial role in educating policy makers about strategy) or even its socio-economic policy. the potential of ICTs. This role will not, how- Designers and promoters of e-strategies ever, be fully realized unless the following objec- should thus refrain from re-inventing the tives become clear development priorities at both wheel and focus on making existing M&E the national and international levels: indicators a fully integrated component of · M&E integration. Designers of e-strategies their own efforts. shouldmakeM&Etoolsandindicatorsascom- · Linkages. M&E indicators should be related patible as possible with those established for to each other in a way that reflects the se- general development objectives and targets. 49 E-Development: From Excitement to Effectiveness Figure 3.1 Sequence of decision making in an e-strategy -- an example This implies a search for homogenous termi- proving indicator quality will be to strengthen nology or, more importantly, the need to estab- local statistical and data collection capacities.6 lish causal linkages between objectives and · M&E compatibility. As mentioned above, indicators. Such linkages enhance the ability M&E instruments attached to e-strategies of M&E indicators to garner international sup- should be made as compatible as possible with portandbenefitfrombestpracticesinthefield.5 existing M&E instruments for traditional d- · Indicator quality. Every effort to enhance strategies. Compatability is necessary to (a) the quality, coverage, and detail of ICT and achieve consistency in pursuing overall na- e-economy indicators should be pursued. Ma- tional policy objectives and (b) obtain the sup- jor gaps currently exist between data on ap- port of those parts of government and civil plications and usage. Indicators today do not society that might otherwise see e-strategies measure much beyond physical teledensity, as a fad or a distraction from more funda- connectivity, equipment, and information traf- mental development objectives. fic flows. In most cases, the first step in im- 50 Chapter 3: E-Strategies for Development E-readiness versus over, both access and usage depend heavily on access and usage the legal, regulatory, economic, and social frame- The M&E component of an e-strategy should works within which information and information reflect the fact that ICT is only a tool, not an end, technology are used. They are also dependent of development. In other words, the number of on whether government, business, schools, and telephone lines, personal computers, or even individuals are interested and able to access and Internet hosts available in a given country are not use ICTs. These elements are generally under- the ultimate indicators of whether or not an e- stood as components of "e-readiness." strategy has been successful. On the other hand, while the economic and social value that people E-Readiness: Most business strategies begin derive from greater use of ICTs is clearly a better with a review or assessment of the current state indicator of such success, this value is much more of a business, focusing on such key elements as complex to measure, monitor, and evaluate. the customer base, operations, and product line. A business strategy also describes the past Although usage may be a better indicator than achievements of a business and highlights areas access, there is no usage without access. More- of relative strength, weakness, and opportunity. Figure 3.2 The relationship between "d" and "e" strategies 51 E-Development: From Excitement to Effectiveness The assessment of how well (or badly) a busi- Access and usage: Access (both physical and ness is operating will drive the degree of future economic) is only one dimension of the digital change. A similar approach is required for the divide.8 In fact, "access" encompasses a num- development of national e-strategies. Under- ber of conditions, including whether or not the standing where a country stands with regard to connectivity and equipment provided to busi- key elements of its ICT development agenda is nesses, local governments, schools, hospitals, the basis of a national e-strategy. Some 137 coun- community access points, and individuals will be tries have already conducted e-readiness assess- used in a productive and sustainable fashion that ments.7 contributestolocalandinternationaldevelopment objectives. E-readiness assessments provide policy makers with two key pieces of information: Measuring e-readiness, access and usage: · What to do. E-readiness assessments de- From an M&E point of view, it is important to link evaluation indicators to e-readiness, access termine the themes or sectors that will be the and usage--the three categories against which focus of a country's e-strategy. Often these the probable success of an e-strategy can be themes and sectors are identified through rated. In many respects, the credibility and effi- comparisons with other, similar countries. ciency of e-strategies in fact will depend on hav- · How much of it to do. E-readiness assess- ing a strong M&E spine. Possible indicators for ments help a country decide how far to pur- these three components are listed below. sue each key objective. In other words, once a country has decided what to do, it must Readiness: decide how much of it to do (set specific tar- · legal, regulatory, and overall institutional gets). Such assessments also provide baseline framework (e.g., rule of law, international data against which the progress of a national property rights regimes, trade and investment e-strategy can be measured. openness, regulatory framework, competition framework, etc.); Country comparisons play an important role in selecting strategic ICT priorities and establish- · society's support (at all levels) for innovation, ing growth targets. If a comparator country is reform and ICT; considerably more ready in a given area (e.g., · human resources (education in general, e-lit- ICT infrastructure), strategists may choose to eracy in particular, etc.); emphasize this area. Such comparisons also pro- vide a foundation for growth targets. For ex- · perceptions of security and privacy9; and ample, if a comparator country has expanded its · digital divide issues (e.g. rural/urban dispari- infrastructure (as measured by teledensity) at a ties). rate of X percent per year, strategists may chose to establish the same or a slightly more ambi- Availability/Access: tious target for their own ICT infrastructure de- · infrastructure (e.g., telecom) and network velopment. Depending on the specific context penetration; and of different countries, an e-readiness strategy will give a different emphasis to such issues as · equipment (e.g., computers in business, ad- security, privacy and consumer protection. ministrations, schools, homes, etc.). 52 Chapter 3: E-Strategies for Development Usage: Prerequisite #2. E-strategies · applications (e.g., e-government, e-business, need a strong monitoring and e-education, e-health); evaluation component · specificusagemodalities(e.g.,communityac- cess points); and Inordertofacilitateongoingassessmentsofe-strat- egies and ensure that such assessments are inter- · specific sectoral or policy objectives (e.g., ex- nationally comparable, the World Bank recently port competitiveness). launched the E-strategies Monitoring and Evalu- ationToolkit(METER,seefigure3.3).Thistoolkit The more such indicators are compatible with in- is organized as a series of modules on the back- ternationally agreed objectives and targets (such ground, methodology, and themes of a national e- as those used to measure progress in achieving strategy.11 The M&E framework of the toolkit ad- the MDGs),10 the easier it will be to generate in- dresses the process of how an e-strategy is actu- ternational support for particular e-strategies, allyformulated,includingthedevelopmentofpolicy benchmarknationaleffortsvis-à-visthoseofother goals,strategicpriorities,andkeyinitiatives. countriesandencourageforeigndirectinvestment. Figure 3.3 Structure of World Bank METER Toolkit Source: Adamali, Lanvin and Schware. 2005. Monitoring and Evaluation Toolkit for E-strategies Results. Washington, DC: GICT Department, World Bank. 53 E-Development: From Excitement to Effectiveness Each thematic or sectoral module of the METER of resource requirements links the strategy and toolkit is based on a common format and con- its implementation and constitutes the founda- sists of the following elements: rationale, defini- tion on which all elements of the strategy de- tion, overview, M&E tables, and assumptions and pend.). Finally, the sixth level identifies the as- risks. M&E tables form the heart of each mod- sumptions and risks on which the e-strategy is ule and are designed to be applied to selected based, setting the parameters for measuring its strategic interventions undertaken under the success or failure. This level offers a means theme considered. Matrices from past interven- by which risk-mitigation measures can be de- tions are used as examples. veloped and, where possible, incorporated into the e-strategy itself. The choice of themes is driven by: (a) common strategicprioritiesofdevelopingnationsand(b) the Integrating M&E into a complexity of the M&E challenge (i.e., where logical framework possible, tables are developed for areas that are M&E applies to all levels of the e-strategy pyra- more challenging to monitor and evaluate than mid.Eachlevelofthispyramidwillrequirediffer- others). No formal value judgment is attached to ent types of indicators (see Figure 3.4). For ex- the selection process. However, there is an im- ample, policy objectives, which are typically plicit acceptance that such priorities are at least broader and longer term, have traditionally been useful; no tables are developed for initiatives that measured in rather unquantified ways. One of the the authors think potentially ineffective. ambitions of the METER toolkit is to offer simple ways to attach indicators to such objectives.12 A simple framework to monitor and Strategic priorities have proved more amenable assess e-strategies to quantification, although such quantification has Based on the Logframe Handbook developed often remained limited to broad aggregates (e.g., by the World Bank (2001), the METER toolkit percentage of the national population that has uses a simple pyramid framework to consider reached a certain level of ICT education), instead the inter-relationship between policy, strategy, of society-wide indicators. By the time the imple- and the implementation of an e-strategy (see mentation layers of key initiatives and specific figure 3.4). At the top level (apex of the pyra- actions are reached, M&E indicators are easier mid), the overall development policy of a spe- to design and use, referring respectively to out- cific country will determine the strategic priori- puts (e.g., number of computers installed in class- ties of its e-strategy (second level). At the third rooms) and deliverables (e.g., the number of com- and fourth levels, the implementation of the e- puters installed and connected in a certain num- strategy is divided into "key initiatives" and "ac- ber of schools in a specific region). tions" (which are specific to one area of re- sponsibility, such as individual institutional or Whatever the level of the e-strategy pyramid, geographic goals). each indicator is the potential basis of an M&E component. An efficient M&E approach will, The fifth level considers the inputs and resources however, also account for local specificities. The required to implement the e-strategy, whether thematic and sectoral modules of the METER these resources are institutional structures, staff, toolkit provide countries practical ways to exer- or financial resources (a clear understanding cise such selectivity. 54 Chapter 3: E-Strategies for Development Figure 3.4 Logframe pyramid for a national e-strategy with M&E indicators Source: Adamali, Lanvin and Schware. 2005. Monitoring and Evaluation Toolkit for E-strategies Results. Washington, DC: GICT Department, World Bank. Monitoring and evaluation and evaluate progress at the various levels of as a strategic tool the logframe pyramid and their expected results. As mentioned earlier, the way in which an M&E The institutional and strategic context refers to model and its indicators are incorporated into an the means by which these tools are best adapted e-strategy will influence the strategy's feasibil- to local constraints, thus encouraging "buy-in" ity and, hence, its credibility and wider applica- on the part of the various stakeholders involved. tion. It is therefore important that an M&E sys- tem be designed so that it is comprehensible and Policy goals and impact indicators usable by domestic participants (e.g., the gov- At the top of the strategy pyramid is the policy ernment, ministries, enterprises and civil society), or vision that the e-strategy ultimately attempts as well as by external stakeholders (e.g., inves- to fulfill. The indicators by which such policy tors, donors, partners). Understood in this con- goals are measured are generally development- text, M&E ceases to be a mere component of e- focused, pertaining to a country's economy and strategies and becomes a powerful instrument society as a whole. For example, a policy that to make such strategies more meaningful and seeks to expand a country's ICT sector to make convincing to those who will implement it. it a leading factor in economic growth may choose to measure this objective by growth in When designing the M&E component of an e- GDP, total employment, or total productivity. strategy, methodological and institutional issues Indicators at this level are considered impact are paramount. The term methodology refers indicators. mainly to the tools that will be used to monitor 55 E-Development: From Excitement to Effectiveness Impact indicators are often the most difficult to andprofessionaleducationinstitutionsorthenum- assess due to: ber of people employed by the high-tech sector · Time horizons. Impact indicators are often (the latter indicator could be segmented by do- mesticorforeignfirmstoprovidemeaningfuldata only applicable after a considerable time lag, for FDI-related strategic objectives.). Outcome often years after the e-strategy has been indicators are easier to monitor than impact indi- launched. Due to this time delay, such indica- cators, as they are likely to show results over a tors are seldom monitored on a regular basis. shorter time horizon than impact indicators. Cau- · Unclear causal links. Establishing causal- sality is thus somewhat easier to determine. ity between e-strategy interventions and the However, it remains important to assess to what changes in an impact indicator is difficult; degree interventions are responsible for a cer- many other factors come into play, making it tain outcome and what the outcome would have hard to establish whether or to what degree been had the intervention not occurred. In the an ICT intervention is responsible for change above example, the stock of locally trained ICT in an impact indicator. For example, GDP professionals may only increase some time after growth is clearly driven by a vast array of the strategy is initiated, yet such a delay should factors, of which the ICT sector is just one. not exceed more than a few years. Strategic priorities and Key initiatives and output indicators outcome indicators To meet strategic objectives, a number of dis- Converting a policy or vision into tangible change tinct initiatives are undertaken. For each initia- on the ground requires choosing which initiatives tive, an e-strategy should identify specific a key to undertake and establishing goals for each par- deliverable, or output indicator. For example, ticular initiative. This process also requires es- increasing the number of qualified ICT workers tablishing indicators to track achievement of the willrequireavarietyofinitiatives,allofwhichwill core objectives and clarify the tangible outcomes. generate outputs or products measured in terms For example, if a country identifies growth of its of quantity and quality. If we take the example of ICT sector a policy goal, it will have to make an objective such as `increasing the stock of ICT choices among a number of potentially viable professionals'(see Table 3.1 below), required in- strategic objectives, such as: terventions may include the following : · develop ICT infrastructure; · develop high-bandwidth technology parks; · improving the capacity of ICT-focused learn- inginstitutions; · encourage foreign direct investment (FDI) in the ICT sector; and · increasing demand for ICT education and training; and · increase the stock of locally trained ICT pro- fessionals. · improving the quality of ICT education at the tertiary and vocational levels. Should a country choose to increase the stock of ICT professionals, it will require outcome indi- In addition to establishing output indicators, as- cators to assess its progress towards this objec- sessing the success or failure of these initiatives tive. These indicators could include, for example, may require measuring the capacity, demand, and the number of people graduating from tertiary quality of ICT-focused education.13 56 Chapter 3: E-Strategies for Development Table 3.1 Output indicators for increasing the stock of ICT professionals Aside from measuring the quantity and quality efficiently. Ultimately, this helps ensure that a of outputs, initiatives should be assessed on how strategy meets its intended goals. effectively they have been undertaken, both dur- ing and immediately after implementation. This Actions and interim process entails conducting periodic assessments deliverable indicators of distinct initiatives, allowing the implementa- An e-strategy should present an overview of the tion team to understand areas of comparative actions involved in each initiative, as well as key strength on which the e-strategy can build fur- milestones by which the progress of such ac- ther and, hopefully, incorporating these compara- tions can be gauged.14 At this layer, indicators tive advantages into other elements of the strat- are interim deliverables, or sub-products, gen- egy. Periodic assessments also allow the team erated by each key task of the initiative. Such to address areas of relative weakness and make indicators track the progress of the project necessary adjustments, perhaps even bringing through its various stages and have shorter them to an early close. Mid-stream evaluation completion timeframes than impact, outcome, or plays a key role in ensuring that a strategy is output indicators. For example, building the ca- implemented well and that resources are spent pacity of ICT learning institutions requires a num- 57 E-Development: From Excitement to Effectiveness ber of interrelated activities. These activities may well as in a specific area such as e-education or comprise a single initiative or be part of separate e-health). Financial resources are, of course, initiatives aimed at a larger capacity-building ob- another key input. A clear understanding of re- jective. Depending on how a project is struc- quired financing and the source of this financing tured, activity indicators could include: is the basis for implementation. · assessing the capacity needs of higher edu- Assessing the outputs of an e-strategy and, there- cational and technical institutions, complet- fore, its success, cannot be done in absolute terms. ing X percent of institutional assessments by It also requires integrating the resources dedi- monthA; cated to the strategy into the indicators them- · establishing a program to provide grant fund- selves. For example, performance measures for ing of amount $X to educational institutions an ICT business incubator may include the num- by month B; ber of firms launched that are financially sus- · disbursing X percent of grant facility funds to tainable after a certain number of years. How- eligible institutions by month C; ever, these indicators should also assess how many financially sustainable businesses were · defining recruitment criteria for staff; and launched for a given amount of money invested. · staffing X percent of institutions by month D. The definition of required resources facilitates Many initiatives undertaken as part of national communication with regard to the e-strategy. e-strategies are related to creating institutions or Many e-strategy initiatives will have little prece- building the capacity of those that exist. For dent to go by, making it difficult for stakeholders example, an ICT infrastructure component may to grasp the scale of required activities. Finan- focus on establishing a regulatory agency to en- cial resource requirements, however, are the most sure an open and competitive telecommunica- basic means by which a variety of stakeholders tions market. Monitoring and evaluating the suc- can understand the scope of an e-strategy. cess of this initiative should focus on the key elements of creating and operating a well-func- Assumptions and risks tioning organization. These elements can range, ICT development is dependent on a number of for example, from choosing and/or developing a factors over which the formulators of a national physical location for the institution to its staffing e-strategy have little control. Many of these fac- to the sustainability of its financing. tors relate to the political, economic and social environment in which the strategy exists. These Resources and input indicators environmental factors are often prerequisites, or The resources required to undertake e-strategy assumptions, that strategists take for granted projects and, ultimately, meet strategic and policy when developing targets and goals. The most objectives, should be specified in the strategy. general assumption is that a country will remain These input indicators take a variety of forms politically stable. and can include institutional structures (e.g., mechanisms required to implement initiatives or A change in assumptions on which a strategy is supervise the strategy) and staff (often highly based will require re-evaluating its goals. Such skilled professionals with expertise in ICTs as a re-evaluation need not be negative. Astrategy 58 Chapter 3: E-Strategies for Development Box 3.1 M&E requirements and costs The coordination required for monitoring and evaluation costs money, time, and energy. It also creates new sources of conflict, such as turf battles and competition for power within organizations. In many respects, any coordination attempt initially exacerbates the difficulties it hopes to address. This may even be its only tangible result, unless an M&E effort receives adequate human, financial, and institutional resources. Direct costs. The institutional visibility and perceived neutrality of an M&E team is important. The team may not require sizeable financial resources, apart from remuneration of staff. However, assigning junior or low-level staff to certain tasks may diminish the impact (and institutional commitment) of M&E efforts. M&E should not be an additional task thrown on management and staff; it should be assigned to a small but dedicated staff whose status should be firmly established at the initial stages of e-strategy implementation. Training of relevant personnel is also crucial to the success of M&E efforts. The cost of such training can be significant and should not be underestimated. Specific equipment and tools (e.g., software) and, in some cases, external expertise, may also need to be acquired. When analyzing the cost-benefit ratio of such acquisitions, relevant authorities should consider possible externalities and economies of scale (e.g., it may be possible to share equipment for other management tasks). Indirect (and hidden) costs. Achieving the buy-in of all relevant stakeholders in an M&E effort requires significant time, communication and training. Information and training sessions, for example, will need to be organized both at the level of ministries and specific departments. In many cases, the cost incurred will diminish over time as practices start to sink in and attitudes change. The use of on-line tools (e.g., self­training, shared information resources and M&E instruments) should minimize such costs. One of the major sources of indirect costs (and benefits) of a strong M&E effort is the re-engineering or re-sequencing of strategic tasks that such an effort will identify. that focuses on ICT sector development for ex- tion that the government will be a major source port purposes, for example, may assume an ex- of demand for locally developed ICT products port market of a certain size with revenues of and services. Reductions or delays in e-govern- $X million. Should the market suddenly boom, ment initiatives will therefore adversely impact however, the country may revise its revenue tar- the development of the sector. gets upward. Similarly, the ICT sector is dependent to a large While many assumptions on which an e-strat- extent on the establishment and enforcement of egy is based are outside the control of the strat- an intellectual property rights (IPR) regime to egy, this is not always the case at the component safeguard investments in knowledge-intensive level. For example, ICT sector development ini- products. Creation of an IPR regime may thus tiatives may be dependent on the advancement become a component of legislative reform. How- of e-government programs, based on the assump- ever, policy makers may choose to make the 59 E-Development: From Excitement to Effectiveness development and enforcement of an IPR regime In general, as one moves down the strategy pyra- a component of an ICT sector strategy, thereby mid from the apex to the base of the logframe wielding better control over the outcome of re- pyramid (see figure 3.4), the location of M&E lated initiatives and internalizing the risks associ- activities should move closer to the agencies re- ated with them. sponsible for project implementation. In some cases, there may be an existing agency that can Incorporating activities on which the success of take primary responsibility for M&E-related ac- an e-strategy is dependent into the strategy it- tivities, while in others, a team may have to be self is one way to mitigate risk. However, the established for this purpose. Selecting the agency ability to do this is usually limited and such an that will take lead responsibility, or alternatively, approach is inadvisable, as the strategy will be- deciding where to locate a new M&E team, come excessively fragmented. Risk mitigation should be done in a way that balances owner- measures such as monitoring progress or change ship, access and capacity. in certain key areas on which the success of the · Ownership. M&E activities are conducted strategy depends may be all that can reasonably to inform and guide e-strategy decision mak- be done. ing and implementation and to encourage the accountability and transparency of public in- The institutional and strategic stitutions. Agencies responsible for the context of monitoring and implementation of e-strategy objectives evaluation should view M&E information-gathering and analysis as an integral component of their M&E mechanisms and institutions work and develop a sense of ownership for All major initiatives of a national e-strategy must that component. Should M&E be conducted be clearly defined in the strategy. The strategy by an external agency, there is a risk that should also specify which agencies will take lead the agency will be perceived as an external responsibility for each project and estimate the auditor. It may then face resistance that resources required to complete the projects. will impair its ability to gather data and in- Unambiguously stating implementation respon- formation and, even worse, encourage par- sibilities and resource requirements in a strat- ties responsible for implementation not to act egy increases the probability that the projects on M&E findings. The benefit of being able will actually be implemented. Alternatively, lack to make adjustments and improvements to of clarity regarding project responsibility and an e-strategy mid-stream would therefore budgets reduces the chances of strategy imple- be lost. mentation. · Access to data. The ability to conduct good M&E is dependent on access to data. Gath- The same reasoning applies to M&E activities. ering and analyzing national data can be ef- An e-strategy should clearly define the roles, fectively done by a national organization. responsibilities and financing of planned M&E (This applies more to policy and strategic efforts. The choice of institutions that will take objectives, that is, to impact and outcome primary responsibility for the M&E effort de- data). Some of this data may be the respon- pends on the layer of strategy being addressed sibility of a National Statistical Office (NSO) and existing national M&E capacity. or a line ministry. For example, an NSO may 60 Chapter 3: E-Strategies for Development Table 3.2 Responsibility for M&E at each level of the logframe pyramid have data on the growth of the ICT sector (a should not see the team as a remote judge and policy objective), while a ministry of educa- censor. On the other hand, if the team is too close tion may have information on the number of to implementation tasks, it runs a distinct risk of locally trained ICT professionals (strategic becoming both judge and juror and will lose its objective). Lower down the pyramid, relevant credibility. M&Edataismorelikelytoresideintheproject team responsible for implementation. To perform efficiently, an M&E team also needs · Capacity leverage. The most efficient means to derive its legitimacy from the highest levels of government. This means that it must be supported to conduct M&E activities may be to lever- above the level of specific ministers involved in age the capacity of established M&E agen- the strategy.16 It will also need to exercise its cies and institutions, such as National Statis- responsibilities in a visible and transparent man- tical Offices (NSOs). However, depending ner. The pre-existing institutional framework of on the country, little data may exist on ICT a given country and the work habits of its gov- access and use and analytic capabilities in ernment, business and civil society will largely this area may not be developed.15 determine whether a centrally-located govern- ment unit is created or a more flexible network It is clear that the institutional location of the of individuals involved in the e-strategy is estab- team responsible for formulating and discharg- lished. Whatever the case, the work of the M&E ing M&E responsibilities will have a significant team must be based on highest technical and impact on its ability to do so. On one hand, the methodological standards. operational entities involved in the e-strategy 61 E-Development: From Excitement to Effectiveness Conclusion Papers (PRSPs) mentioning ICTs. See OECD. 2004. "Role of Infrastructure in Economic Growth and Poverty Reduc- tion--Lessons Learned from PRSPs of 33 Countries." DCD/ Considered a central part of national develop- DAC/POVNET(2004)16, OECD, Development Co-opera- ment strategies, e-strategies have the potential tion Directorate, DAC, Paris. to stimulate many changes in the way govern- 4See, for example, K. McNamara. 2004. Information and ments, businesses and other stakeholders func- Communication Technologies, Poverty and Development-- tion and contribute to growth, competitiveness Learning from Experience. Washington, DC: infoDev, GICT Department, World Bank. and development. However, to achieve their po- 5 tential, e-strategies must not be designed (or Not to mention the significant impact that causal linkages would have on the ability of countries to benchmark their implemented) in isolation from other strategies efforts against one another. and policies that address fundamental develop- 6Capacity building at the local and national level is a prior- ment priorities (e.g. health and education). ity. Considering the expected cost of such efforts, coordi- Rather, they should be conceived as a means to nation at the international level (such as that advocated by pursue such development objectives, including members of the "Partnership on Measuring ICT for Devel- those of transparency and good governance. opment" launched during the June 2004 UNCTAD XI meeting) is likely to attract increasing attention. Finally, such strategies must incorporate moni- 7In a number of cases, one can consider such efforts exces- toring and evaluation components at the earliest sive or, at the very least, redundant: 55 countries have been assessed for e-readiness at least 5 times and 10 countries, at stages of design and implementation. Only M&E least 8 times. See bridges.org. 2005. "E-ReadinessAssess- will allow a country to measure progress made, ment: Who is Doing What Where." Updated February 28, assess the efficiency with which resources are 2005, Cape Town, SouthAfrica and Washington, DC, http:/ /www.bridges.org/ereadiness/where.html. One of the posi- being used and take corrective action as required. tive outcomes of the over-abundance of assessments is a E-strategies conceived within this context will significant improvement in the approaches and methods take full advantage of local and global digital used, especially with respect to the specific characteristics opportunities, as well as international experience and needs of developing countries. Such improvements were necessary to address concerns about "one-size-fits-all" and and best practice, to address the major challenges "e-readiness for the sake of e-readiness" policies. See, for of development and poverty. example, Choucri et al. 2003. "E-readiness for What?" MIT Working Paper, MIT, Cambridge, Massachusetts. The pa- Notes per points out that: "A wide range of studies on e-Readi- ness, undertaken over the past several years, constitutes the `first generation' in our understanding of e-Readiness. 1 Article 8 of the WSIS "Plan of Action" states that the These are pioneering efforts and have begun to chart un- "[d]evelopment of national e-strategies...should be encour- known terrain. Their contributions are commendable. But, aged by all countries by 2005." See WSIS, "Action Plan," as with all pioneering efforts, these studies are fraught with WSIS, International Telecommunications Union, Geneva, uncertainties and ambiguities in both theory and practice Switzerland, 2003. and lack robust foundations for empirical analysis.As such, they provide little guidance for business and government, 2 Chief among these efforts are the European Union's "e- thus obscuring the realities as well as the opportunities. Europe Initiative," the G-8 Digital Opportunity Task Force For example, current e-Readiness studies and attendant (DOT Force), the United Nations ICT Task Force indices assume a fixed, one-size-fits-all set of requirements, (UNICTTF), and the process surrounding the World Sum- regardless of the characteristics of individual countries or mit on Information Society (WSIS). the demands for specific applications. Most e-Readiness studies provide little information on how their indices were 3 A recent survey carried out by the Development Assis- constructed and why, or how they might be adjusted to tance Committee (DAC) of the OECD underlined the re- analyze particular e-Business opportunities." markably small proportion of Poverty Reduction Strategy 62 Chapter 3: E-Strategies for Development 8 Digital divide here refers to disparities among various missions (UNECLAC, UNESCWA, UNESCAP, UNECA), groups of the national population, for example, between the U.N. ICT Task Force and the World Bank. See the urban and rural areas. website of the UNCTAD E-commerce Branch, "Measur- ing the Information Society: ICT Indicators for Develop- 9 Security concerns have received increasing attention in ment," UNCTAD, Geneva, http://measuring-ict.unctad.org. the recent past. Such concerns are no longer restricted to digital signatures, encryption, consumer protection or in- 16The issue of `e-leadership'is addressed in the next chapter. tellectual property issues. Topics such as cyber-crime, iden- tity theft, phishing and spam are progressively finding their way into e-strategies. E-security is thus expected to be addressed as a separate item in future editions of the World Bank toolkit for evaluating the results of e-strategies (METER, see figure 3.3). 10In order to reach the targets set by the MDGs, countries can either increase the resources they allocate to specific objectives, or increase the efficiency with which they use available resources. At the core of the discussion about ICTs and the MDGs is the question of whether ICTs can assist countries to achieve the MDGs more efficiently. 11 See annex 2 for a list of the 50 national and regional e- strategies that were reviewed by the authors of the METER toolkit. 12If a country adopts a policy objective (e.g., "to become a knowledge society within twenty years" or "to stimulate the growth of the national ICT sector") various strategic goals will need to be articulated to assess progress towards this objective. Such goals could include, for example, pro- viding primary education to 80 percent of a class age by a certain date or generating a certain percentage of national income through the ICT sector by a certain date. 13 Appropriate indicators will be both quantitative and qualitative. 14 This is particularly important in the case of ICTs, as manyproposedinitiativeswillbeunfamiliartopolicymakers and reviewers. Details of the actions required to imple- ment such initiatives will make the initiatives more tangible and, therefore, comprehensible. 15 Building the capacity of National Statistical Offices is clearly a priority for future M&E activities related to e- strategies. This objective is complementary to the current efforts of such institutions as the ITU and World Bank to maintain worldwide databases on connectivity and ICTs. Capacity-building efforts will require significant financing. One way to optimize the use of resources and available knowledge is to enhance coordination and cooperation among various multilateral agencies. This is precisely the purpose of the "Partnership on Measuring ICT for Devel- opment" that was launched during the UNCTAD XI meet- ing in June 2004 by the ITU, OECD, UNCTAD, UNESCO's Institute for Statistics, the U.N. Regional Com- 63 Chapter 4 The Elusive Quest for E-Leadership What can we learn from the champions?1 by Bruno Lanvin T he search for internationally replicable sets the loss of particular interests by in- best practices in e-strategies2 often leads creased collective benefits to the community. to two central questions: What is the Any agenda for change should expect to meet single most important success factor in design- resistance at all levels, which will be propor- ing and implementing e-strategies? What is the tional to the interest and/or powers affected main obstacle that prevents e-strategies from by the implied changes; and (fully) succeeding? When asked these two ques- · The presence of a leader is also critical be- tions, a remarkably broad majority of decision cause the fast pace of technological evolution makers, managers and implementers involved in increases the uncertainty of e-strategies. This e-strategies gave the same response: leadership.3 implies that many stakeholders and e-strategy players will be expected to take a leap in the Among the factors that explain the importance dark. Under such circumstances, a leader has of leadership in the design and implementation the responsibility for articulating a vision that of e-strategies are: is credible and inspiring in its principles and · No specialist in any one policy area or social priorities, even if its details, modalities and sector naturally emerges as a leader recog- implementation change over time. nized by all organizations involved in an e- strategy.4 Strong leadership is thus neces- For all these reasons, the e-agenda is a conten- sary to transcend the unavoidable differences tious one, making e-leadership a vital ingredient of views (and possible conflicts) among these for success. The concept of e-leadership has, in component organizations; fact, emerged more from practice than theory. · Leadership is also vitally important to over- Over the last decade or so, a certain number of countries, regions and cities become success sto- rule possible resistance to change and, more ries in e-readiness and e-competitiveness. When importantly, to communicate a vision that off- 65 E-Development: From Excitement to Effectiveness one attempts to identify what these success sto- government leaders in at least three major ways. ries have in common, the recipe for success It has (i) changed the functions and roles of gov- seems to be an e-leader. ernment,6 (ii) empowered new segments of so- cieties, and (iii) globalized the policy agenda. How is an e-leader different from a leader? On one hand, ICTs have been instrumental in changing the ways in which governments and administrations operate. Informatization, decen- An e-leader is either a leader who has proved tralization and the advent of e-government all able to adapt to the challenges of the `e-world', reflect the impact of ICTs on how governments or someone who has emerged as a leader be- function. On the other hand, the information revo- cause he or she helped a community address the lution has encouraged and enabled governments challenges of the `e-world'. Both kinds of e- to accept new roles. In addition to traditional leaders have contributed to driving the e-agenda. government roles in such spheres as economic In some countries, such leadership has been pro- and social policy, education, diplomacy, defense vided mainly by institutions (e.g., Singapore, UK, and justice, ICTs have prompted governments Tunisia); in others, largely by consensus (e.g., to articulate a vision of major socio-economic Finland, Switzerland, Ireland), and in still others, change and to facilitate this change by example. by personal engagement (e.g., Estonia, Bolivia, At the same time, civil society has become an Mozambique, Senegal). Certain border cases organized player in local and global issues, glo- have combined these elements (e.g., USA, balization has become a major force in world France, Italy). affairs and new market efficiencies have arisen. The elements of this new context of governance With few exceptions, however, the process that are summarized in Figure 4.1. led to the emergence of an e-leader has gener- ally been heuristic, providing few easily identifi- able best practices. Much of what e-leaders IT has deeply changed the way in which gov- have learned appears to have been learned on ernment functions, for example, through office the job, with experience progressively becoming automation and the growing ubiquity of Web- their best asset. For this reason, the present chap- based services. The advent of e-government and ter relies on a series of interviews that were con- e-procurement, in particular, has allowed greater ducted with internationally recognized e-leaders, transparency and accountability across govern- thatis,individualswho,bychoiceorfortune,have mental agencies. To some extent, these applica- played a significant role in moving their respec- tions have even pushed governments and their tive countries and regions along the path to suc- leaders closer to "real time" management, that cessful ICT sectors, information services and e- is, indirect, but more continuous, management, strategies of various kinds.5 frequently intermediated by IT. One danger of this management is that governments may be IT affects both the functions tempted to make online services (which citizens and roles of government can use and appreciate immediately) a priority, instead of longer-term and less visible efforts to The advent of information-intensive societies and increase government efficiency via back-office networked economies has affected the roles of 66 Chapter 4: The Elusive Quest for E-Leadership Table 4.1 The relationship of ICT to the role and functions of government Source: Lanvin, "Leaders and Facilitators," 2003. re-engineering. Leaders of e-strategies have to to mobilize financial and human resources for maintain an appropriate balance between these the ICT sector. Government leaders have ac- two sets of objectives. cordingly established ICT as a national priority, provided a national vision of network readiness, IT has had an even more significant impact on launched large ICT projects and accelerated the the role of leaders (and, consequently, e-lead- adoption of ICTs by government departments. It ers) by changing the roles of governments. In is the ability of e-leaders to combine these two all types of economic systems, governments roles--leading and facilitating--that allows them around the world have tried to directly influence to become "champions." the determinants of ICT supply and demand. Governments exert such influence less and less Using a two-dimensional graph (see figure 4.2 as producers (or buyers), and more and more as below) in which the vertical axis denotes grow- facilitators, seeking to create the proper envi- ing leadership and the horizontal axis, growing ronment for innovation and growth in ICTs and facilitation, one can ideally represent five areas 67 E-Development: From Excitement to Effectiveness in which governmental e-leadership has a criti- development were often publicly subsidized, or cal role to play. These roles (and corresponding carried out through large public projects, both sets of activities) are to provide access (G1), an civil and military.7 More recently, public projects enabling environment (G2), an ICT-friendly edu- have continued to be important in China, Korea cation policy (G3), vision (G4) and e-government (broadband roll-out), Malaysia (Multimedia Su- applications (G5). per Corridor) and Singapore (Singapore One), although such projects often involve public-pri- Access (G1) vate partnerships. Where large government ini- In the past, building fixed infrastructure has gen- tiatives are undertaken, they generally span the erally been the responsibility of national mo- whole spectrum of ICT environment, ICT readi- nopolies. Often, these monopolies also produced ness and ICT usage. terminals and various switching equipment for the telecommunications network. Research and Table 4.2 New Roles for Governments Source: Lanvin, "Leaders and Facilitators," 2003. 68 Chapter 4: The Elusive Quest for E-Leadership and connected. Constant changes in technolo- "Theideale-leader?Theyounger gies and applications also require that life-long learning and vocational training capacity be es- the better, as a young person won't tablished. Although most enterprises consider see a dichotomy between the terms education policy to be an "environmental" or e- "leader" and "e-leader. It will be only readiness measure, the business sector can en- a matter of time until the young joy significant benefits from this policy should, generation, which grew up with for example, a country adopt a national policy of equipping and connecting schools. computers and the Internet, will be in leadership positions. For them, this Vision (G4) won't be an issue anymore. Mean- Large public initiatives in the area of ICT, as while, one can qualify who is willing well as governments' ability to provide a soci- to adapt to the challenges presented ety-wide vision of ICT development, differ from by technological innovation." traditionalpublicinfrastructureprogramsfinanced by governments (G1). In the area of ICT, the Markus Kummer, former E-Envoy role of governments as "vision providers" can- of the Swiss Government not be underestimated. It is the nature of the budget allocation process to pit different minis- tries and departments against each other. It is Enabling environment (G2) thus important that ICT be established as a pri- Providing a macro-economic, legal and regula- ority at the highest levels of decision making, not tory environment conducive to economic growth simply at the level of an IT ministry.8 Providing and development is a traditional responsibility of an overall vision of ICT development (G4) over- governments (see chapter 2). In the digital age, laps other, more traditional roles of governments, however, these functions imply new responsi- such as ensuring social justice and equity through bilities specific to the ICT sector, such as spec- universal service programs.9 trum management. "Environmental" tasks thus have significant spillover effects on e-readiness. Their effects on usage are not necessarily tan- gible in the absence of e-government applica- " What is the ideal profile of an e- tions. leader? Experience? Position? Ori- Education policy (G3) gins? Training? Profile?. . . These Providing the right amount and quality of human things are not important. What is resources for a network-ready economy is really important is that he/she be closely linked to the long-standing involvement open and ready to change him/ of governments in education. In this area, the herself, that he/she should be curi- emergence of a digital economy requires origi- nal approaches. For instance, changes in basic ous and interested to learn." and advanced education curricula (see chapter Mart Laar, former Prime Minister of Estonia 6) require that schools be adequately equipped 69 E-Development: From Excitement to Effectiveness Another new aspect of this group of governmen- tal responsibilities is the growing importance of "Onethingonelearnstodointhe global issues. Governments increasingly find it private sector is to observe closely difficult to address ICT issues without consider- ing their global underpinnings. This is the case what your competitors are doing, and for intellectual property (e.g., WIPO and WTO to be quick in adopting emerging best treaties and agreements), Internet governance practices. In Italy, the implementa- (ICANN) and norms and standards (e.g., ISO, tion of various components of a ITU, W3C). Last but not least, over the last few national e-strategy benefited from years, governments have taken a leading role in formulating international plans of action to bridge knowledge ... of the experiences of the digital divide and create digital opportunities several other European countries, for all.10Although such broad initiatives are not such as the United Kingdom (espe- expected to generate massive amounts of exter- cially with regard to the importance nal financing in the immediate future, their im- portance should not be underestimated, as inter- of stimulating usage, rather than just national initiatives often constitute the "think increasing the number of government tanks" that generate the guiding principles on online services) and France (for which future actions and international agreements example, facilitating students' ability are based. to acquire a computer)." E-government (G5) Lucio Stanca, Italian Minister of The last group of new governmental responsibili- Innovation andTechnology ties is very closely linked to e-usage objectives. By promoting the use of ICTs in its own services (i.e., e-government), a government can acquire both experience and credibility, while leading through example. By focusing initially on activi- ties that can generate significant savings, govern- " E-leadershipisthecapacitytosee ments have been able to broaden the legitimacy the potential of ICT for development of ICTs and generate important externalities. For example,onlineprocurement,tradefacilitationand and the capacity to use it both as tool customs automation not only generate resources, for change and as a tool to deliver but enhance transparency in specific government better services to the large majority. It operations, thus contributing to the fight against is the commitment to advance even corruption, This specific externality may even when the constraints are very large. It encourage foreign investors to participate in a country's network readiness efforts. Offering is also the ability to create a common government services online with some degree of vision between all stakeholders." interactivity also strengthens the democratic pro- cess by engaging individuals and civil society in Lidia Brito, former Minister of Higher Education and Research, Mozambique public-sector activities and reforms. 70 Chapter 4: The Elusive Quest for E-Leadership The international dimensions of outsourcing, "E-leadershipisnotfundamentally however, have significant economic and social consequences. Efficient e-leaders must be able different from leadership. Since ICT to master both dimensions. For example, a few is only a tool and not an end in itself, years ago a leader (whether in business or gov- the objective of an e-leader must be ernment) could joke about his or her ignorance to use ICT to generate change. In the of information technologies. Today, the concept of an "e-illiterate" leader would no longer be public sector, such change could acceptable. mean a change of model; in the business sector, it could mean a IT contributes to the global- change of product, for example.An ization of national policies e-leader is hence a person who can drive such a change; to do so, he/ Because information is the most internationally she must have a clear idea of the mobile factor of production, and because infor- mation networks have a natural (almost organic) change to be implemented (some tendency to spread across national borders, ICTs would call it a vision), and be able to have contributed to a rapid acceleration of glo- communicate the reasons why such balization, resulting in a growing inter-relation- a change is desirable." ship between domestic and regional and/or glo- bal policy issues. This phenomenon has necessi- Lucio Stanca, Italian Minister of tated a reshuffling of policy agendas in all coun- tries. Outsourcing, for example, began with in- formation-intensive services such as call centers, but rapidly spread to other economic sectors.12 IT changes the In such a complex political and intellectual frame- structures of power work, no up-to-date textbook can guide the ac- tions of leaders and managers. Rather, the abil- It has been expected that increasing reliance on ICT networks by both private and public or- ganizations would empower younger people. " The public sector is a much more Extensive social science and business litera- complex environment, with a differ- ture has, in fact, focused on the nature, extent and consequences of this power shift.11 Much ent time scale. In the public sector of the academic debate has focused on power, is not enough, a leader needs whether or not the `e' in e-development was to invest time and effort to convince displacing the locus of leadership. Such a pos- rather than just instruct and com- sibility has important consequences both at the mand. Negotiating skills are key." micro- and macro-economic level. For example, the development of virtual teams across national Lucio Stanca, Italian Minister of borders requires specific management abilities. Innovation andTechnology 71 E-Development: From Excitement to Effectiveness What have e-leaders brought to the e-agenda so "E-reformsdependongoodcoordi- far? In their own judgment, and that of a number of observers, their input has been critically im- nation, which is not possible when portant in three major areas: vision, change man- the coordinator does not have agement and communication. enough authority." Vision Mart Laar, former Prime Minister of Estonia In the face of globalization, as well as significant changes in citizens' everyday lives (e.g., employ- ment uncertainties, cultural changes, etc.), a ity of e-leaders to look around and find inspira- leader is currently expected to provide future- tion in the examples of others, as well as their looking guidance and adhere to clear principles, ability to make and explain decisions against the providing citizens a minimum level of predict- background of global trends, has become the key ability, and thus psychological comfort, on which to their effectiveness. to base their own decisions. Such a role is par- ticularly important whenever change accelerates. Driving the e-agenda In the field of ICT and information-intensive ser- In some cases, traditional leaders have proved vices, change is a way of life.As the intensity of capable of becoming e-leaders. In other cases, ICT usage continues to increase total output, e-leaders have emerged from other circles to employment and affect virtually all aspects of replace or complement existing leadership. In still other situations, countries and e-strategies are waiting for a leader to emerge. "Anationale-strategyalwaysre- flects the underlying political struc- tures of a country. In a centralized " To a large extent, this kind of country with a strong executive leadership can only be established office, the decision of a political through experience, and experience leader to put a new issue such as a includes success and failure, excite- national e-strategy on the political ment and frustration. With hindsight, agenda can make a difference. maybe, I would have invested more There are many success stories in time in politics in the early stages of countries where political leaders my ministry. It took me time to have embraced ICTs and adapted realize that technical competence government policy to the new tech- was only a part of the equation." nological environment." Lucio Stanca, Italian Minister of Markus Kummer, former E-Envoy Innovation andTechnology of the Swiss Government 72 Chapter 4: The Elusive Quest for E-Leadership people's daily lives, it is vital that a leader be able to formulate an overall vision of e-develop- "Ishouldhavebeenstrongerin ment. Such visions should, however, refrain from organizing and controlling the project portraying all benefits as future-oriented and all changes as positive and beneficial. Successful management ... IT-projects start to e-leaders have been able to generate visible and live their own life and create delays positive change in the short term as they worked due to bad management." to bring about longer-term structural changes, but they have never ignored the downside of the Errki Liikanen, former EU Commissioner vision that they were proposing.13 for Enterprise and Information Society Managing change One major difference between the field of ICT interact. It is a law of nature and of organiza- and that of most other human endeavors is the tions that when changes occurs, resistance to pace of change, from fundamental research to change also occurs. Such resistance can come it's the application of this research in everyday from the top (where people's authority, ability to life. It is hence no surprise that applying the po- control and legitimacy is challenged) or lower tential of ICTs to any area of human activity will hierarchical layers (where people may encoun- result in significant and cumulative changes in ter higher levels of job insecurity, such as when the way individuals and communities operate and new skills must be acquired or more efficient processes are implemented). In such situations, it is the role of an e-leader to articulate a set of "Incountrieswithdecentralized core values that help various stakeholders un- derstand the cost and benefits of such changes.14 government structures, there are many different levels of decision making. Switzerland, for example, has a strong tradition of subsidiarity " We can learn a lot from civil soci- and delegating decision-making ety. Their increasing importance in power to the lowest possible level. A international cooperation to a large national e-strategy will therefore extent is due to their networking have to include all levels of decision techniques through the Internet. making in order to be successful. Their distributed decision-making This bottom-up cooperation, based process and their culture of dialogue on a shared political approach, is not can be seen in many ways as new necessarily fast, but it has led to partnership models that can inspire good results." all of us." Markus Kummer, former E-Envoy Markus Kummer, former E-Envoy of the Swiss Government of the Swiss Government 73 E-Development: From Excitement to Effectiveness Can e-leadership be taught? "Agoode-leadermustbeableto assess risks and opportunities and Based on practical experience, it appears that the answer to this question is a qualified yes. By be an enthusiastic agent of change. and large, successful e-leaders have all embraced He must also be a good communi- the objectives of conveying a vision, overseeing cator, a good listener, and have the its implementation as a change management pro- ability to be respected by his gov- cess and communicating the vision to relevant stakeholders. These three dimensions lend them- ernment colleagues, his fellow selves well to the identification of best practices politicians (in cities, regions) and and knowledge sharing. Other fundamental prin- the private sector, whose role is key ciples outlined earlier, such as linking an e-agenda in the ICT field." to a nation's fundamental development agenda Lucio Stanca, Italian Minister of Innovation andTechnology "Commontoallattemptstodefine the term is the notion that e-leader- One pitfall that e-leaders should avoid when managing change is to ignore or underestimate ship is about operating in a new the inertia and rigidities of the public sector. Co- environment and adapting leadership ordination remains essential, however, e-leaders techniques to that environment ... must also have sufficient power and authority to The good e-leader makes the best implement decisions across multiple government possible use of the opportunities departments. offered by ICTs. The key words in Communicating with and this regard are sharing of information engaging civil society and knowledge and empowering From an institutional point of view, most modern subordinates to cooperate actively nations are significantly more complex than tra- and efficiently in these emerging new ditional nation-states. On one hand, local gov- ernments have taken on growing importance in structures, which are networks the management of national objectives. On the rather than the traditional hierarchi- other, civil society as a whole, including the pri- cal leadership structures ... the vate sector, has accepted--sometimes de- successful e-leader is more a coach manded--increasing responsibility in formulat- or mentor, someone who convinces ing and pursuing national objectives. E-leaders therefore must communicate their vision across rather than gives instructions and multiple layers of society, often in very different tells subordinates what to do." institutional, cultural and political contexts.15 Markus Kummer, former E-Envoy of the Swiss Government 74 Chapter 4: The Elusive Quest for E-Leadership and avoiding excessive involvement in technol- ogy issues, relate as much to traditional leader- " ane-leaderneedsmostlytobea ship as to e-leadership and can also be codified person willing to learn, sometimes to and disseminated as knowledge:16 unlearn and learn again, because ICT Other aspects of e-leadership are, however, less brings major changes in the work amenable to codification and have to be learned culture, transparency, accountability, on the job. Successful e-leaders are not shy about and the capacity to reach citizens. An recognizing their mistakes and are eager to cor- e-leader must also be capable of rect them when they can. Many e-leaders inter- viewed for this chapter noted that there was no inspiring people and taking actions substitute for experience, observing that failure that convince more and more people was often the only way to learn. These leaders to support the processes of change. were eager to listen to others'point of view, while We need leaders with different kinds remaining enthusiastic about their own tasks. In addition, they sought to adapt their approaches of experience, in different positions, to local conditions and to grasp opportunities coming from all sectors of society when they arose, rather than to force change. and from different professional pro- files, because e-strategies should be Conclusions people-centered and an important tool for the development of the society in The fundamentals of e-leadership are not radi- cally different from those of leadership in gen- general." eral. Certain differences exist, however, regard- Lidia Brito, former Minister of Higher Education ing the relevant chain of command and ways of and Research of Mozambiquet reaching out to specific stakeholders. Common points and differences between the two types of leadership are summarized in table 4.1. Table 4.1 Circumstances and tactics of leaders and e-leaders 75 E-Development: From Excitement to Effectiveness The experience of e-leaders interviewed for this chapter offers several practical lessons in e- " Leadership is the critical factor in leadership: the public sector [due to] lack of · The ability to listen is a key to efficiency. E- market pressure or market incen- strategies are complex and multi-sectorial tives. The adoption of ICT requires endeavors, in which no leader can claim ex- haustive knowledge or competence. Gath- major changes in administration and ering advice from government (central and processes. Without strong leader- local), business (large and small) and civil ship, the bureaucracy always fights society is essential to allow e-leaders to back and defends the administrative make strategic choices and maximize the possibilities of buy-in by all stake holders; legacy. ICT projects will then end up maximizing costs and minimizing · There is no "one-size-fits-all" approach to e-leadership. Fresh thinking will always help, benefits." and it may need to come from outside the Errki Liikanen, former European Commissioner government. Governments may find inspi- for Enterprise and Information Society ration abroad in best practices or in the ex- periences of civil society, various govern- ment agencies and local governments at home; · Last but not least, e-leaders should not un- · Linking local objectives to global trends and derestimate the elements that have allowed concerns safeguards against parochialism successful information societies to thrive: and obsolescence. Developing countries and strong independent regulators, competition the international community may find it par- (which drives prices down and enhances ac- ticularly important to explore possible link- cess) and private-public partnerships. ages between national e-objectives and in- ternationally agreed development objectives In the end, e-leaders will be judged more on such as the MDGs; what they have done than what they have en- couraged. To a large extent, e-leaders must lead · Technological neutrality and technological by example. No e-leader has put it more clearly knowledge are not incompatible. E-leaders than Errki Liikanen, former European Commis- have to be e-literate, but they must stay sioner for Enterprise and the Information Soci- above the fray by encouraging e-strategies ety, "If the top is not working in the way they and not e-tactics. There is more than one teach, no change will take place." technological response to any socioeconomic objective; e-leaders should not attempt to second-guess the market or base their deci- sions on technical solutions that may soon be outdated; and 76 Chapter 4: The Elusive Quest for E-Leadership Notes roles have been defined and accepted. The roles of govern- ments correspond to the missions with which governments have been entrusted by a democratic process, or which 1`Champions' refers here to the governments recognized as they themselves have selected or a higher authority has having succeeded in turning ICT into an instrument of re- given them. For example, promoting social justice would be form, growth and development. The term also conveys a a role, whereas tax collection would be a function. For a meaning of advocacy, referring to the ability of individuals lengthier discussion of these issues, see the following ar- at higher levels of government to `champion' such objec- ticle, on which this sub-section is based: B. Lanvin, "Lead- tives, and convince various stakeholders of the value of ers and Facilitators--The New Roles of Governments," in their vision of what an information society should be. Vari- Global Information Technology Report 2002­2003 ous countries have adopted different approaches about cre- (Geneva: World Economic Forum, infoDev and INSEAD, ating such leadership, some creating `e-envoys', others 2003). pusuing a `Central Information Officer" approach, whereby a personality - often nominated from the private sector- is 7 As in the case of DARPANet, a U.S. Department of given high visibility and, sometimes, significant powers to Defense project that laid the groundwork for the Internet. promote a national e-strategy. One could valuably argue 8 The same analysis applies to all levels of government, that, to implement e-strategies, leadership is required at including local (e.g., regions, states, municipalities) and su- many different levels of implementation. This chapter fo- pra-national. The success of the European Union in launch- cuses on the critical role that top government leaders have ing certain technology programs (e.g., Eureka) has often played and can play in that context. been attributed to its ability to transcend such internal 2See Chapter 3. budgetary obstacles. 3 The surprising part of this reaction was the response to 9When pursuing such objectives, governments must keep the second question. Respondents did not answer "lack of track of recent technological developments, as such devel- leadership," but "leadership." In other words, leadership is opments may significantly affect the relative cost of the considered a given. On one hand, the presence of support- solutions selected. For example, mobile telephony and WiFi ive leadership is a critical factor in the success of certain e- have considerably enhanced the possibilities for providing strategies. On the other hand, the failure of some e-strate- telecommunications access to rural areas. gies can be explained by unsupportive leadership, rather 10More noteworthy initiatives include the G-8's Digital than the absence of leadership. This point will be discussed Opportunity Task Force (DOT Force), which was created later in this chapter. by the Okinawa Summit of 2000, and the World Economic 4 E-strategies are by nature multidimensional and Forum's Digital Divide Initiative, which was initiated a few multisectoral. They typically combine one or several policy months earlier. Multilateral institutions (e.g., the ITU, goals (e.g., building a competitive knowledge society) with UNDP, World Bank) have also contributed to this effort, social and economic goals (e.g., stimulating the involve- either through their regular work or through special bodies, ment a less densely populated region in a national economy such as the United Nations ICT Task Force. or enhancing the trade competitiveness of a given country). 11See, for example, B.Avolio, S. Kahai and G. Dodge, "E- Such strategies also involve a number of sectors, including Leadership: Implications for Theory, Research and Prac- education, health, justice, telecommunications, transport tice," Leadership Quarterly 11, no. 4 (2000):615­68; R. and tourism. See chapter 3 for more details. Hargrove, E-Leader:ReinventingLeadershipinaConnected 5E-leaders interviewed for this chapter include Mart Laars, Economy (Cambridge, Massachusetts: Persesus Publish- former Prime Minister of Estonia; Lidia Brito, former Min- ing, 2000); and D.Q. Mills, E-Leadership: Guiding Your ister of Higher Education and Research of Mozambique; Business to Success in the New Economy (Paramus, New Lucio Stanca, Minister of Innovation of Italy; Erkki Jersey: Prentice Hall Press, 2001). Liikanen, former EU Commissioner for Enterprise and In- 12Discussions about the values conveyed by the proposed formation Society , currently President of the Central Bank European constitutional treaty (especially in countries in of Finland; and Markus Kummer, former "E-Envoy" of which a national popular debate took place, such as France Switzerland. and the Netherlands) are one of the most recent examples 6 A fundamental difference exists between the functions of this spill-over effect. and roles of governments. The functions of governments correspond to what is delivered by governments once their 77 E-Development: From Excitement to Effectiveness 13In some cases, changes in the e-side of societies are com- pounded by other rapid changes: being an e-leader in a transition economy of Eastern or Central Europe in the 1990s was certainly not an easy task. On the other hand, an "e-vision" in this region has the power to transcend some of the debates on societal change, especially if it is linked to an "upgrading process," such as joining the European Union. In such a context, the importance of the so-called "Lisbon approach" (with its e-Europe component) should not be underestimated. The experiences of Estonia or of the Slo- vak Republic come to mind in this respect. 14 "Recognizing that people who need to cooperate are often separated by a gulf of potential divergent interests and potential mistrust, the best one can do is try to identify and promote a set of values to which most of the organiza- tion seems willing to conform." D.Q. Mills, E-Leadership, 2001. 15 Communicating e-objectives and e-strategies is not lim- ited to articulating the pros and cons of specific ICT appli- cations and relating them to social and economic objectives, it sometimes requires addressing much more fundamental concerns, such as the fear of "Big Brother" (government intrusions on individual privacy). Concern over the misuse of private data, for example, caused France to create the Commission national de l'informatique et des libertés in 1978. The Commission has since been replicated in a sig- nificant number of other countries. (The Loi relative à l'informatique, aux fichiers et aux libertés, which under- pins the work of the Commission was significantly up- dated in August 2004, see http://www.cnil.fr/ index.php?id=301) (last accessed 28 July 2005). 16During the Spring of 2005, the World Bank Institute and a core group of external partners (private and public) orga- nized a workshop around the issue of capacity building in e-leadership. Initial responses have been highly positive, making it likely that efforts will be pursued along those lines. 78 Chapter 5 The Basic Building Blocks of e-Government by Randeep Sudan E lectronic government (e-government) is In developing countries, the problems of poverty, broadly understood as the use of ICTs hunger, deprivation and disease are so pressing by government to enhance the range and that e-government almost seems to be a luxury quality of government information and services that poor nations can ill-afford. As Bill Gates, provided to clients in an efficient, cost-effective Chairman of Microsoft Corporation, asked a andconvenientmanner,whilemakinggovernment conference on the digital divide in 2000, "Do processes more accountable, responsive and people have a clear view of what it means to transparent.1 The "e" in e-government is expected live on $1 a day?"2 To a poor person struggling to eventually wither away as "government" rather for existence, ICTs are at best irrelevant. When than technology is at the core of e-government. it comes to governments, public funds are both scarce and fungible. A dollar spent on ICT can E-government applications can be useful tools well be spent on providing food or tackling dis- for improving governance and the quality of life ease. of citizens. Although not a digital-age panacea for government ills, e-government potentially of- ICTs are not merely expensive, they are also fers a number of compelling benefits, including complex. The record of e-government projects better-quality government services, increased in both developed and developing countries has citizen satisfaction, higher efficiency, reduced thus been mixed. A survey conducted by Rich- costs, a lower administrative burden, shorter pro- ard Heeks of the University of Manchester in cessing times and reduced rent-seeking on the 2003 found that 35 percent of e-government ini- part of government employees. Such benefits can tiatives were total failures in developing and tran- far exceed the costs of e-government applica- sitional countries, 50 percent were partial fail- tions and can thus justify corresponding invest- ures and only 15 percent were successes.3 While ments in technology, provided that such projects the methodology used to arrive at these figures are carefully identified and implemented. can be questioned, it must be noted that the e- 79 E-Development: From Excitement to Effectiveness government landscape includes impressive E-government readiness achievements, but also monumental failures. While embarking on e-government many devel- Recent news stories on e-government projects oping countries are keen to know what are the in developed countries reveal that failures are key areas that they should be focusing on to also not uncommon in advanced industrial na- achieve success. One approach is to look at e- tions.Thee-UniversityprojectintheUnitedKing- readiness frameworks and focus on those as- dom, for example, a joint venture between the pects that would make them more e-ready. government, universities and Sun Microsystems, was shelved in 2004 after spending £50 million A number of e-readiness frameworks compare for a mere 900 students.4 The House of Com- countries in terms of indicators that are aggre- mons Select Committee on Work and Pensions, gated into one overall value, which is then used in its assessment of an IT and telephony system for rankings and comparisons. The Global In- of the Child SupportAgency (UK) observed that formation Technology Report (GITR) 2004­ the IT solution was "clearly over-spec, over-bud- 2005, for instance, ranked Singapore as the top get and overdue".5 The Irish government made networked economy according to a "Networked an investment of 50 million to introduce e-vot- Readiness Index." Other public indices devel- ing for local and European elections in June 2004, oped to measure ICT development include the but abandoned the idea after a report of the In- World Bank Institute's Knowledge Assessment dependent Commission on Electronic Voting Methodology and the Knowledge Economy In- raised doubts about the software.6 The U.S. dex; Orbicom's index of "Infostates"; the Econo- Federal Bureau of Investigation spent $170 mil- mist Intelligence Unit's e-readiness rankings and lion on a Virtual Case File System before it was the ITU's Digital Access Index. determined that the system met only 10 percent of the FBI's own requirements for searching and While most e-readiness frameworks deal with accessing documents across all of its offices.7 ICT development, the UN has constructed a composite index specifically for "e-government While these examples should make us cautious, readiness" that combines indices for the Web, it would be wrong to dismiss e-government as telecommunications infrastructure and human prohibitively expensive or pointless. Chile is re- capital. Based on these indices, the United States ported to have achieved savings of 7 to 10 per- is most e-government ready, followed closely by cent on government purchases by using an e- Denmark, the United Kingdom, Sweden and the procurement application.8 In the Indian state of Republic of Korea. Andhra Pradesh, use of the e-Seva (e-Services) network allows citizens to access multiple gov- The methodology for measuring e-government ernment services across one counter.As ofApril readiness against a set of quantifiable, compa- 2005, transactions on e-Seva averaged 3 million rable variables suffers from a number of short- a month.9 In contrast to Ireland, Brazil success- comings. Leadership, organizational capacity, e- fully introduced an electronic voting system, de- government architecture, financial resources, ploying 406,000 electronic voting machines in public-private partnerships and the regulatory October 2002 to register the votes of 115 million environment are important elements in our view citizens.10 for e-government success, but are not captured 80 Chapter 5: The Basic Building Blocks of E-Government by measures of Web presence, telecommunica- tunity that has not been adequately seized by tions infrastructure and human capital. It is diffi- governments, for providing better access to in- cult to measure and rank leadership for example, formation and services to citizens. across countries in any meaningful way. Simi- larly, measuring organizational capability in pre- A "whole of government" cise terms is very challenging. E-government approach readiness frameworks while useful in focusing attention on some important parameters for suc- Governments are typically organized as a series cess miss out on a range of other elements that of vertical silos in the shape of individual minis- do not lend themselves to quantitative measure- tries, departments and directorates. Citizens and ment. We therefore present in this paper some businessesconsequentlymustdealwithadaunting of the basic building blocks for e-government that array of government entities, each with its own are often missed as part of readiness frame- hierarchy, procedures and processes. ICTs po- works. tentially offer the possibility of dealing with gov- ernment as a single entity by cutting across di- As developing countries begin adopting e-gov- verse organizational boundaries. To achieve such ernment, there is a tendency to focus on a few integration, a "whole of government" perspec- showcase applications that visibly demonstrate tive must be kept in view when developing e- success and spur increased use of ICTs in indi- government applications. It is also important to vidual departments. A few quick projects, even have a cross cutting approach to economize on on a limited scale, can have a good demonstra- investments in services, infrastructure and ap- tion effect and provide a launching pad for more plications development. ambitious projects. While such an opportunistic approach has much to commend itself in the short When the state government of Andhra Pradesh term, it is also important for e-government initia- (India) decided to use electoral registration as a tives to focus on certain overarching issues cru- platform for a citizen database in the mid-1990s, cial to long-term success. it entrusted the work of digitizing the data to in- dividual districts without defining a proper frame- This paper accordingly focuses on three key as- work to standardize data across the state. In the pects of e-government. Firstly it spells out the absence of proper standards for capturing caste importance of taking a "whole of government" data for example, each district adopted a differ- cross-cutting approach while dealing with e-gov- ent approach and the government ended up with ernment, as often a narrow sectoral perspective more than 28,000 caste categories in its data- can result in unnecessary duplication and waste. base, when there were only 457 castes in the Secondly, the paper examines the entry points state. The cleaning up of this database proved to for developing countries with regard to e-gov- be a tedious and expensive exercise. Similarly in ernment. It dwells on some of the limitations of the absence of centralized coordination, when evolutionary approaches and demonstrates how the state's Revenue Department began to build leap-frogging is possible. Finally, it focuses at- a citizen database, the Department of Health was tention on the immense potential of m-govern- building a comparable database in parallel. The ment in developing countries, where the rapid Planning and Forests Departments were likewise proliferation of mobile phones offers an oppor- found to be simultaneously digitizing maps of the 81 E-Development: From Excitement to Effectiveness state for GIS applications. Using common base tal Chief Information Officer (CIO) and/or ICT maps instead, would have been far more eco- agencies to perform the multiple organizational nomical. tasks needed to successfully deploy e-govern- ment applications, including: When developing vertical e-government appli- · ICT strategies and policies; cations within individual departments, it is there- fore important to think horizontally and organize · ICT governance; IT governance structures accordingly. Some of · ICT architecture, standards and the cross-cutting issues that need to be addressed interoperability frameworks; include, the legal and regulatory framework, or- · Shared infrastructure and services; ganizational structures for e-government, devel- opment of IT architecture, interoperability frame- · Unified procurement; and works, provision of shared services and infra- · Strategiesforcommonbusinessapplications.12 structure, monitoring and evaluation systems and financing models including public-private part- The examples that follow illustrate the range of nerships. Legal and regulatory frameworks are organizational structures that have been used to explored in detail in chapter 2. This chapter will implement e-government solutions. focus on other "whole of government" issues that are relevant to e-government applications. Australia. Australia created a National Office for the Information Economy (NOIE) in 1997. Organizational structures The office was reorganized and renamed the E-government is a major transformational exer- AustralianGovernmentInformationManagement cise in change management. The European Com- Office (AGIMO) in March 2004. At that time, mission argues that strong political leadership is functionsrelatingtopolicy,researchandprograms needed for e-government applications "in order were transferred to the Department of Commu- to overcome resistance and barriers, to change nications, Information Technology and the Arts mindsets, to push through organizational change, (DCITA). An Office for the Information to sustain investment, and to keep the long-term Economy was created within the DCITA to perspective in mind while insisting on concrete present Australia's views on the information deliverables in the short term."11 As the quality economy in international forums and to manage of political leadership is a given, it is important research and analysis. that developing countries establish organizational structures for guiding and facilitating the process AGIMO is headed by a CIO and focuses on of e-government. promoting and coordinating the use of ICTs to deliver government programs and services. The It is of course difficult to prescribe an organiza- agency reports to the Minister for Communica- tional framework that will work in all countries. tions, Information Technology and the Arts and However, a central coordinating agency can use is tasked with developing standards to integrate scarce resources efficiently, avoid duplication of services across agencies, developing e-procure- effort and provide government departments and ment processes and managing the AusTender agencies with technical advice on e-government. system. The office promotes "whole of govern- Many countries have established a governmen- ment" telecommunications arrangements and 82 Chapter 5: The Basic Building Blocks of E-Government volume software sourcing arrangements, is cur- · defining architecture, requirements, and stan- rently developing an e-government authentica- dards, as well as being the intelligent cus- tion framework and manages Gatekeeper, the tomer, for common government infrastruc- Government's accreditation system for certify- ture and services; ing digital signatures.13 · providing leadership and guidance to the gov- ernment IT community; and While NOIE originally combined all three func- tions of policy, standards, and implementation · acting as the Central Sponsor for Informa- support, these functions have now been split be- tion Assurance.14 tween two agencies: policy issues being trans- ferred to the DCITA, and the remaining func- Hong Kong. Hong Kong established the Of- tions to AGIMO. fice of the Government Chief Information Of- ficer (OGCIO) in July 2004, which centralized Singapore. Singapore established an Infocomm responsibility for governmental IT projects. The Development Authority (IDA) as a statutory OGCIO was created by merging the functions board when it merged the National Computer of the former Information Technology Services Board and the TelecommunicationsAuthority of Department and the IT-related divisions of the Singapore in December 1999. IDA functions Communications and Technology Branch of the under the Ministry of Information, Communica- Commerce, Industry and Technology Bureau. tions and the Arts and is divided into five clus- The 640-strong OGCIO now deals with ITpolicy, ters that focus respectively on policy and com- strategy formulation and the implementation of petition development, industry, technology, gov- pan-government IT initiatives. Hong Kong has ernment systems, and corporate development. also established a high-level e-government Steer- While the policy function remains with the Min- ing Committee, chaired by the Finance Secre- istry, IDA is now responsible for setting stan- tary, to coordinate interagency implementation.15 dards and providing implementation support. South Korea. In January 2001, South Korea United Kingdom. The UK previously established formed a Special Committee for e-Government an Office of E-Envoy, which has now been under the Presidential Commission on Govern- transitioned to an E-Government Unit. The Head ment Innovation. The committee is charged with of e-Government is accountable to the Minister coordinating interagency collaboration across for the Cabinet Office and reports directly to the government and has oversight over major e-gov- Cabinet Secretary. The country also has an e- ernment initiatives. It reports directly to the Presi- Minister, who is responsible for e-government dent and by virtue of this connection, exercises policy, while issues relating to standards and fa- great influence across various units of govern- cilitation are vested in the E-Government Unit, ment. which is tasked with: Institutional approaches · fulfilling public service agreement targets for The institutional framework within which the ICT electronic service delivery of the existing agency is embedded is extremely important. In Cabinet Office; some countries the ICT agency reports to the · defininganddrivingimplementationofagov- Ministry dealing with ICT. Typically the Minis- ernment-wide information systems strategy; try for ICT is one among the many ministries in 83 E-Development: From Excitement to Effectiveness the government. Any attempt to impose stan- Enterprise architecture consists of four broad dards or influence budgets and procurement by components: business architecture, information the Ministry/ICT agency is immediately per- architecture, solutions architecture and techni- ceived as a threat to the hegemony of individual cal architecture. ministries. In the absence of institutional mecha- nisms to draw on support from political leader- Business architecture. Developing an enter- ship at the top, this can result in severely emas- prise-wide architecture for government involves culating the effectiveness of the ICT agency. taking a detailed look at how a government is The potential benefits from a "whole of gov- organized and identifying the various functions it ernment" approach cannot be realized in this performs. Such a functional analysis simplifies scenario. thecomplexityofgovernmentbybreakingitdown into its component elements. This process can Countries like South Korea and Sri Lanka have be useful in re-engineering processes and devel- established institutional frameworks whereby the oping applications that cater to the same func- organization dealing with ICT has an organic link tion in more than one department or agency. with the office of the President/Prime Minister. Budgetary codes are often also aligned with func- In the case of the US, the Office of Electronic tions as part of this process. Government is part of the Office of Manage- ment and Budget16 and consequently exercises Information architecture. At the next level, clear oversight with regard to ICT across the information flows in the government must be federal government through budgetary mecha- mapped. The mapping exercise determines the nisms. type and ownership of data elements in use and provides a basis for deciding how to network At the risk of being prescriptive, it is important and store this data. For example, if there is a that institutional mechanisms be put in place to need for synchronous access to a common da- ensure that there are strong linkages between tabase from geographically dispersed locations, the ICT agency and the top political leadership data must be centralized. as also with processes for budgetary control, in order to make the organization effective. Solutions architecture. At the third level, e- government specialists design meta-data reposi- E-government architecture tories and define the components that can be One of the key lessons from the implementation reused across government. For instance the of e-government initiatives is the need to avoid CORE.gov initiative in the US allows sharing an "agency-centric" or "silo" approach to the of components that have been tested, approved use of ICTs.Avoiding such an approach requires and certified for reuse and enhancement.17 The an overarching architecture that can guide the adoption of service-oriented architectures development of applications across various min- (SOAs) requires a deep understanding of busi- istries, departments and government agencies. ness processes within and across agency lines The absence of such an architecture can lead to so as to decompose them into services and then sub-optimal results and, often, conflicting and design and build services for reuse. This ap- incompatible applications. proach is consistent with the principle that pub- lic funds should be spent only once to develop a 84 Chapter 5: The Basic Building Blocks of E-Government piece of software. An application for comput- organisationalboundaries,butalsointerworkwith erization of salaries of government employees partner organisations that may well have differ- for example, can be re-used by human resource ent internal organisation[s] and operations."19 systems in different government departments or agencies. Technical platforms built on open standards can greatly facilitate the integration and Technical architecture. Finally, at the fourth interoperability of applications across govern- level, e-government specialists develop the tech- ment. For example, the Finnish government nical standards for hardware, software, networks proactively sends pre-filled tax proposals to citi- and security to ensure system interoperability. zens by post.Ataxpayer has roughly one month Data dictionaries also must be defined to ensure in which to respond. The computerized tax sys- data interoperability. tem requires a high degree of integration of the back offices of various agencies, including 136 The full benefits of ICT can often be derived tax offices, 5 ministries and central agencies, 20 only upon re-engineering of existing processes banks and other financial institutions, 20 social rather than by their mere automation. An Enter- insurance agencies and pension foundations, priseArchitecture for e-government can play an about 100,000 stable employers (and an equal important role in this regard. It was found by a number of occasional employers), 10 trade study done jointly by McKinsey & Co. and the unions, and 150 foundations, universities and re- London School of Economics that use of IT alone search institutes.20 by manufacturing companies did not yield sig- nificant benefits unless accompanied by sound The European Union has developed a European management practices.18 This conclusion is Interoperability Framework for pan-European e- equally valid for e-government. government services that deals with organiza- tional, semantic and technical interoperability.21 Developing an e-government architecture can be The German government has adopted a Stan- a complex and challenging exercise. While devel- dards and Architecture for e-Government Ap- oping countries will require considerable time and plications (SAGA) document for influencing the effort to develop the overall architecture for e- adoption of interoperability standards by vendors government, there is an immediate need for them and government technical staff. The UK has to define and commit to an interoperability frame- developed a sophisticated e-government work for technical architecture. Interoperability Framework (e-GIF), which sets out the technical policies and standards to en- Interoperability frameworks sure interoperability of systems that deliver e- An interoperability framework must not only be services. Compliance with e-GIF is mandated established, but adhered to by the different gov- widely across the U.K. public sector. The United ernment entities that participate in e-government States has introduced a Federal Enterprise Ar- applications. According to the European Com- chitecture that includes both a data and a techni- mission, "interoperability is not just a technical cal reference model for ensuring interoperability issue of linking up computer networks: it also of applications developed by different parts of concerns organisational issues, such as coordi- the federal government. nating processes that not only span intra- 85 E-Development: From Excitement to Effectiveness A number of approaches have been adopted for approach would be all but unthinkable for most ensuring compliance with interoperability frame- governments. The price of e-government ser- works. In some cases as mentioned earlier, fi- vices is also difficult to determine through mar- nancing of e-government applications is central- ket mechanisms, as there is no real competition ized and, consequently, the ICT agency over- for such services. sees adherence to common standards. In a some- what different approach the E-Government Unit A number of governments have developed evalu- of the UK, has established an e-GIF Accredita- ation systems to address these concerns. The tionAuthority. AustralianGovernmentInformationManagement Office, for example, has developed a demand The Authority is operated by the National Com- and value assessment methodology for assisting puting Centre and its subsidiary, the Institute of agencies to develop transparent and auditable ITTraining, under contract to the E-Government assessments of proposed online government pro- Unit. The e-GIF Accreditation Authority takes grams. Demand assessment starts with the end- up accreditation of both public and private sec- user, determining the nature of citizens' needs tor organizations, and also undertakes certifica- and how they can best be served. It moves on to tion of skills.22 There is a view that this approach quantifying demand and defining a clear strat- has not been as effective and there is a need to egy to respond to this demand. Value assess- place the E-Government Unit under the Chan- ment typically centers on costs and benefits, in- cellor of the Exchequer to ensure that every cluding intangible benefits and the implications project is compliant with e-GIF.23 for governance. Prioritizing e-government The Gartner Group defines the public value of applications IT as "measures that demonstrate how IT-re- Given the financial constraints faced by devel- lated changes and investments contribute over oping countries it is important that resources spent time to improved constituent service level, op- on e-government are spent in the most judicious erational efficiency and political return."24 These manner. This requires an objective methodology returns include elements such as greater citizen for prioritizing e-government applications across participation,bridgingthedigitaldivide,economic different ministries and departments. impact, greater government accountability and more effective policymaking.25 IT investments in the private sector are justified using quantitative methods, such as the payback The United States uses a Performance Refer- period, net present value, internal rate of return ence Model (PRM) as part of its Federal Enter- and economic value-added. It is difficult, how- prise Architecture. The PRM mandates strict ever, to use these methods in government. The measurement criteria, including at least one indi- outcomes and benefits of government projects cator from four measurement areas: mission and are not merely financial--they often produce business results, customer results, processes and positive externalities, such as improved educa- activities, and technology. tion,technologyadoptionandhigheremployment, which also should be measured. While the pri- Mostmethodologiesforprioritizinge-government vate sector can envision employee layoffs as a projects have been designed for use in devel- result of deploying ICT applications, such an oped countries yet should be adaptable to the 86 Chapter 5: The Basic Building Blocks of E-Government needsofdevelopingcountries.Anobjectivemeth- Kingdom. In the late 1990s, the state adopted odology for prioritizing e-government projects Vision 2020, which identified information tech- can help focus governments in these countries nology as an engine of growth and a means of on the results and outcomes of public investments improving governance. One of the first projects in such projects. of the state government was to establish a state- wide area network that connected state head- Provision of shared services quarters with key government offices in 23 dis- and infrastructure tricts. UTL, a private-sector company, was en- Developing countries can save scarce resources trusted with the project on a BOOT (Build Own by taking a "whole of government" approach to Operate Transfer) model. shared services and infrastructure. The advan- tages of this approach lie in the aggregated econo- At the end of the project period, the state gov- mies of scale and the ability to negotiate from a ernment decided to leverage its own need for stronger position. Cost economies in shared ser- bandwidth to facilitate a state-of­the-art network vices can be significant in high volume transac- that would provide high speed connectivity across tion areas such as finance, accounting and HR. the state, including for its 21,000 villages. The A good example of shared services in govern- all-IP network would offer a bandwidth of 10 ment is the Queensland Shared Services Initia- Gbps between state headquarters and the dis- tive inAustralia26 which adopts a "whole of gov- tricts, 1 Gbps between the districts and 1,127 ernment" approach to services that include Fi- mandals at the next administrative level, and at nance, Procurement, Human Resources, Docu- least 100 Mbps to each of the 21,000 villages in ment and Records Management, and Property the state. The shift to an all-IP network was ex- and Facilities Management. pected to dramatically reduce costs for broad- band services. Sharing of infrastructure assets including net- works, data centers and e-services gateways can In order to catalyze the network, the state gov- also minimize public investments in ICT.Acom- ernment offered to become an anchor client of mon e-services Gateway for example, can pro- the network for a fixed annual fee. It also took vide cryptography services for authentication and an equity stake in the network and offered free authorization. The Gateway can also provide rights of way to the company that built the fiber payment services that can avoid the complexity optic network.27 The bidding process was con- of implementing individual payment mechanisms ducted in a way that minimized the government's by each government department. contribution to equity, reduced the cost of band- width and maximized coverage and rollout speed. New approaches are emerging that leverage At the end of the bidding, it was established that government requirements for ICT infrastructure the network would cost US$90 million, of which to achieve larger e-society objectives, while mini- government would contribute US$5.7 million in mizing government costs. The state government equity and pay a fixed annual fee of US$2.8 mil- of Andhra Pradesh provides an illustrative ex- lion for bandwidth for its 40,000 offices. The cost ample of this approach. Andhra Pradesh is one of bandwidth for citizens would be as low as of the larger states in India, with a population of US$7 per quarter for downloading 100 megabits 80 million and an area bigger than the United of data. 87 E-Development: From Excitement to Effectiveness The outcome of the bidding process brought to- The boundaries between the public and private gether companies with complementary sectors are blurring, allowing for numerous part- strengths.28 Interestingly, when BSNL, a gov- nership possibilities. For example, the service of ernment-controlledtelecommunicationscompany providing a certificate of residence in Austria with the most extensive fiber optic network in involves partnerships with the private sector, in- the region, was first approached about the project, cludingAustria's largest mobile phone provider it quoted an annual cost of US$2.3 billion for (Mobilkom), for user authentication.34 In Den- such a network.29 mark, a citizen's portal was developed and is operated by a private company that is fully owned Public-private partnerships by the central organization of Danish municipali- Many developed countries are making substan- ties.35 In India, the government portal of the state tial investments on e-government applications. of Andhra Pradesh was created as a joint ven- In the United States, for example, government ture between Tata Consulting Services (TCS) spending on IT in fiscal year 2004 was esti- and the state government.36 mated at US$59.1 billion30. According to IDC, by 2008 Europe will spend US$4.2 billion each In the United States, the State of Arizona has year on e-government projects.31 The UK will, successfully partnered with IBM (with Ezgov, for example, increase IT spending on e-gov- KPMG Consulting and Qwest as sub-contrac- ernment from US$828 million in 2004 to almost tors) to create a state portal. IBM met part of US$1.2 billion by 2008. Germany's expenditure the upfront cost and provided support for infra- on e-government will grow from US$985 mil- structure and application development. In return, lion to more than US$1.4 billion over the same the company receives subscription fees, conve- period.32 And Hong Kong has spent an aver- nience fees and transaction fees from e-govern- age of US$589 million on e-government for the ment services provided through the portal.37 last three years.33 Hong Kong used a public-private-partnership for its Electronic Service Delivery (ESD) Scheme. Developing countries lack sufficient resources The private-sector operator is responsible for to adequately fund e-government initiatives and developing, financing, operating and maintaining also lack in-house expertise and project man- the ESD system, while the government is re- agement skills. These countries should therefore quired to pay transaction fees to the operator actively explore possibilities for working in syn- after transactions cross a certain threshold level. ergy with the private sector when implementing The private-sector operator is also permitted to e-government projects. Public-private partner- use the ESD information infrastructure to gen- ships can leverage limited government funds to erate revenues from advertising and private sec- achieve far greater impact, apart from improv- tor e-commerce. The model minimizes the busi- ing the viability and reducing the risks of such ness risk for government and provides clear in- initiatives. Of course, governments must care- centives for the private sector operator to offer fully negotiate the terms of public-private part- enhanced quality services, as well as to promote nerships to avoid special privileges accruing to their wider use.38 the private sector, while at the same time pro- viding private partners with adequate incentives. Applications in e-procurement offer many ex- amples of public-private partnerships. The Chil- 88 Chapter 5: The Basic Building Blocks of E-Government ean model of Chile Compra, for example, is op- Table 5.1 (following page) illustrates a monitor- erated by a consortium that includes Sonda, ing and evaluation framework for e-services. Microsoft and Hewlett Packard39. Mexico was Since e-services relate to different government an early adopter of online procurement in 1996, departments and agencies, the framework adopts with CompraNet40. It is now looking at revamp- a pan-government view. While it is important to ing the system, based on a business model that have sectoral/departmental mechanisms for allows the private sector operator to charge user monitoring and evaluation in place, it is also im- fees in return for its investment. portant to have a more macro level perspective when it comes to dealing with the e-government Public-private partnerships can be facilitated by agenda. adopting a "whole of government" framework for such partnerships. The US `E-Government The framework also underscores the importance Act of 2002' for instance provides for "share-in- of institutional arrangements for making the savings" initiatives and even an employee ex- CIO's office effective so that it becomes easier change program with the private sector. The to acquire and act on information relating to dif- government of Québec has created a new state ferent government entities in a timely and effec- entity that specializes in public-private partner- tive manner. ships: the Agence des partenariats public-privé du Québec.41 Created in May 2005, the Agency Open source software advises the government on public-private part- This paper has taken the position that a "whole nerships and offers its expertise to public bodies of government" approach is important while deal- to conduct PPP feasibility studies, select part- ing with e-government. However, it is equally ners and negotiate, conclude and manage part- important not to go over-board with such an ap- nership contracts. proach and over centralize decision making. We would like to illustrate this point using the ex- Monitoring and evaluation ample of open source software. A monitoring and evaluation (M&E) framework must be a integral part of the design and imple- Open source software (OSS) refers to software mentation of any e-strategy (see chapter 3), not programs whose source code is made available an ex-post facto "add-on" merely to analyze the for use or modification by users or other devel- success or failure of an e-government program. opers. The distribution of open source software Elements of a monitoring and evaluation frame- must comply with certain criteria that guarantee work can often be incorporated into the design its transparency and non-proprietary exploita- of an e-government application. For example, the tion.43 Open source software is perceived to of- number and type of transactions taking place on fer significant potential cost savings, greater flex- a government portal can be captured in real time, ibility and the prospect of a more rapid scaling together with feedback from users on the qual- up of applications. ity of online services. Another approach is to create a third party to oversee quality standards. Significantly, a number of commercial OSS pro- China, for example, has experimented with third- viders have emerged, including Red Hat, SuSE, party supervision of e-government projects.42 MySQL, Sleepycat and Sophos.At the other end of the spectrum, companies like Microsoft have 89 E-Development: From Excitement to Effectiveness Table 5.1 lllustrative monitoring and evaluation framework for delivery of e-government services 90 Chapter 5: The Basic Building Blocks of E-Government launchedaSharedSourceInitiativetoenableshar- service companies. In less than three years ing of proprietary source code with customers, ADULLACT has rallied a number of local au- partners and governments. thorities to its goal of encouraging the adoption and development of open source software by lo- OSS is being increasingly used by governments cal authorities. The server running its develop- ofdevelopingnations.Chile,forexample,hasbeen ment environment is available free at deployingopensourceextensivelyinschoolswith www.adullact.net. The number of projects devel- the Edulinux system.44 The Extremadura region oped by the ADULLACT community now ex- of Spain has been promoting Linex, a local soft- ceeds 160. ware bundle consisting of an operating system, desktop software and other applications.45 The "ADULLACT was an initiative taken by a group French government agency ATICA (Information of local authorities, not a requirement superim- and Communication Technologies Agency) rec- posed by national policy.This has been a key fac- ommends OSS for at least some applications be- tor in further aggregation and growth."50 A flex- ing developed for government.46 The European ible and pragmatic approach needs to be adopted Commission has included a preference for OSS while going about e-government so as not to quell as part of its e-Europe policy47, although this pref- innovation and enterprise. erence has proven controversial. (The EU's pub- licprocurementdirectivesrequiretechnologyneu- The U.K. policy on the use of open source soft- trality in purchasing decisions).48 warewithingovernmentprovidesapossiblemodel for developing nations. According to the policy, Venezuela however, presents an example of a the "U.K. Government will consider OSS solu- highly centralized approach to the use of OSS by tions alongside proprietary ones in IT procure- mandating its use in public administration since ments. Contracts will be awarded on a value for December 2004.49 Venezuela's approach of pre- money basis."51 Similarly,Australia's strategy for scribing OSS by government fiat in our view is e-government service encourages "trials of open perhaps not the best one. Developing countries source software within the framework of fit-for- need to carefully balance the benefits of OSS purpose and value-for-money,"52 while recogniz- (openness,flexibilityandsourcecodeavailability) ing that OSS offers opportunities for innovation, with its challenges (OSS skills and support) by cost savings, greater sharing of IT systems and creatinganenvironmentthatlevelstheplayingfield improved interoperability. This is a far more sen- between commercial and open source software. sible approach as compared to a "whole of gov- ernment" requirement mandating OSS adoption. OSS will have greater chances of acceptance as a grass-roots movement, than as the implementa- Launching e-Government tion of a grand scheme.Take the case of an initia- tive started in France by the Association of De- Evolutionary approach velopers and Users of Open Source Software in Developing countries often grapple with where Administrations and Local Communities to begin with e-government. One approach has (ADULLACT). Founded in 2002, ADULLACT been to look at e-government as an evolutionary currentlyencompassesmorethan80localauthori- process: governments can begin their journeys ties in France, 20 associations and more than 50 with simple applications and move to more com- 91 E-Development: From Excitement to Effectiveness plex applications through a series of phases. One Entry point examples of the most widely used frameworks for under- Evolutionary models of e-government do not standinge-governmentevolutionisthefour-phase adequately capture the complexities of the real model developed by the Gartner Group (a re- world. Priorities, conditions and constraints dif- search and consulting firm specializing in ICT): fer between countries, making it simplistic to re- presence, interaction, transaction and transfor- duce e-government to a uni-dimensional process. mation.53 Each successive phase involves in- As the examples below demonstrate, e-govern- creasing cost and complexity. ment entry points vary considerably across coun- tries and do not strictly follow the evolutionary AttheriskofsimplifyingtheGartnermodel,while path discussed above. It is possible for develop- the presence phase involves providing informa- ing countries to leapfrog into higher stages of e- tion through web sites, the interaction phase al- government without going through the evolution lows for the downloading and submission of defined by such models. forms.54 The transaction phase graduates to ser- vices like electronic payments and the transfor- Often, a good e-government entry point is a de- mation phase is "characterized by redefining the partment that is widely perceived to be corrupt delivery of government services by providing a and inefficient. Corruption thrives on the mo- single point of contact to constituents that makes nopoly enjoyed by government functionaries to government organization totally transparent to dispense certain services and influence, delay or citizens."55 stall decision-making processes.59 E-government can minimize contact between citizens and gov- The benchmarking survey of online public ser- ernment functionaries and introduce speed and vices in the European Union classifies online transparency into decision making, effectively public services into the four stages of informa- reducing, if not eliminating, corruption. Unfortu- tion, one-way interaction (downloadable forms), nately, evidence suggests that corruption can two-way interaction and transaction (full elec- continue to thrive despite computerization (see tronic case handling).56 The survey found that in box 5.1). the case of the European Union, only 40 percent of the public services were fully transactional The examples below drawn from different coun- online.57 The United Nations Global E-Govern- tries illustrate e-government entry points in in- ment Readiness Report 2004 uses a five-stage creasing order of sophistication and complexity. typology of emerging presence, enhanced pres- ence, interactive presence, transactional pres- Mexico. Mexico used the Internet to achieve ence and networked presence.58 better citizen participation in its planning process, undertaking a major public consultation exercise These models of the phases of e-government for the drafting of the country's 2001­2006 Na- assume a linear progression towards more so- tional Development Plan. A formal mechanism phisticated services.Technological development, was put in place to ascertain citizen's opinions, "disruptive" technologies and the possibilities of proposals and expectations on 110 national is- forging partnerships to leapfrog certain phases sues. The Web page set up for this purpose ex- can, however, complicate the calculus of such a tended the possibilities of participation, spurred progression. the registration of opinions and permitted the 92 Chapter 5: The Basic Building Blocks of E-Government Box 5.1 Computerization and corruption The Government of Andhra Pradesh launched its CARD (Computer-aided Administration of the Registration Department) initiative in 1998. Prior to computerization, employees of the department were known to drive citizens to private `Document Writers' by continuous requests for additional information to seemingly address `errors' in documents. The `Document Writers' wrote property sale and related agreements on official stamp paper, secured the registration of documents for their clients and collected bribes on behalf of the staff of the Sub- Registrar's office. Citizens were kept in the dark about the correct registration and stamp duties to be paid by them and had to depend on the `Document Writers'for this information. Following computerization it was found that while the time to register a document came down from eight to three days, there was no impact on informa- tion transparency, staff behavior and the payment of bribes to secure document registration. Source: Jonathan Caseley, "Public Sector Reform and Corruption: CARD Façade in Andhra Pradesh", Economic and Political Weekly, 2004, Vol.39, Issue 11, pages 1151-1156. submission of 43,000 proposals from Mexicans easier for farmers to obtain copies of the Record living abroad.60 of Rights, Tenancy and Crops (RTC), enabling them to sell and inherit land and take advantage Argentina. Argentina used the Web to introduce of agricultural credit. Savings in bribes previously greater transparency in the devolution of public paid to village accountants to issue RTCs was funds. The 1999 Fiscal Responsibility Law of estimated at over US$18.3 million annually,61 Argentina requires that citizens have access to while government investment in the project was information on the administration of public funds. only US$4.2 million. TheArgentinean government accordingly set up the CRISTAL website in February 2000 (http:// Ghana. GCNet is an electronic trade documen- www.cristal.gov.ar) for this purpose. Informa- tation system that processes approvals for im- tion is provided not only on the funds allocated to ports and exports. Led by the Ministry of Trade different programs, but on how these funds are and Industry, GCNet was formed in November administered. The site had initial problems stem- 2000 and is designed along the lines of ming from inadequate information, but was re- Singapore's TradeNet, only less sophisticated. launched and attracted greater usage. The site is subject to external audit by ForaTransparencio, GCNet is a joint venture company with equity of a body of 15 non-governmental organizations. US$5.3 million in which Société Général de Sur- veillance S.A., a private company, holds the Karnataka (India). Karnataka is one of the majority (60 percent) of shares. Other share- southern states of India, known best by its capi- holders include the Customs Excise and Preven- tal city of Bangalore. The government of tive Services (20 percent), the Ghana Shippers Karnataka's first major success in e-government Council (10 percent) and two local banks (each was the Bhoomi project, which computerized 20 with 5 percent).62 GCNet has succeeded in im- million records of land ownership pertaining to proving the efficiency of trade in Ghana. For 6.7 million farmers. The project made it much example, the average clearance times at the KIA 93 E-Development: From Excitement to Effectiveness airport have dropped from 3 days to 4 hours, and m-Government the time required to review customs documen- tation, from 24 hours to 10 minutes. The market penetration of mobile phones is growing rapidly in developing countries and far Catalonia (Spain). In 2002, the government of exceeds PC penetration. In such a scenario, Catalonia established ".Cat," a public company there is a distinct opportunity for developing owned by the government and a consortium of countries to use mobile platforms to deliver gov- 800 local authorities.All government interactions ernment services ("m-government"). These with citizens are conducted through the .Cat por- services can increase the productivity and ef- tal (http://www.cat365.net), which serves as the fectiveness of public sector personnel, improve one point of contact between citizens and the the delivery of government information and ser- government. Cat uses customer relationship vices, increase channels for public interaction management (CRM) software and benchmarks and lower costs. the quality of services delivered to citizens. The government of Hong Kong, for example, is South Korea. In 1997, the South Korean gov- sponsoring the domestic Wireless Technology ernment began reforming its public procurement Industry Association to create new m-govern- system, which was widely regarded as corrupt, ment initiatives. Among such applications in complicated, lacking accountability and non- Hong Kong are those that allow citizens to book transparent. The results of the e-procurement appointments to obtain or replace a smart ID system that was introduced have been extremely card and search available timeslots to file mar- encouraging. On an investment of US$80 mil- riage notices. Other m-government services lion (since 2002), the government generated sav- currently available in Hong Kong include ings estimated at US$2.8 billion in 2004. The weather and air pollution information, news, system also allows cross-agency comparisons government press releases and the use of mo- of procurement, making the process more trans- bile technology by field staff of government parent and accountable.63 departments (e.g., drainage, housing and postal field staff).64 As can be seen from the above examples drawn from both developed and developing countries it Malta offers m-government services that in- is not necessary to follow a long and circuitous clude acknowledgement and status of customer path to reach the phase of transactional services. complaints; notice of court deferrals, license re- With proper planning and appropriate models it newal, exam results and direct credit payments should be possible for developing countries to from the Department of Social Security.65 In leapfrogtohigherlevelsintheevolutionarychain. Norway and Sweden, people use SMS text mes- In the case of Ghana for example, while many saging to confirm whether their tax returns are government departments have yet to establish accurate.66 The London Metropolitan Police an effective web presence, the department of sends out security alerts on mobile phones.67 In Customs Excise and Preventive Services was a survey conducted in Ireland, respondents in already at the transactional stage with GCNet. the 15-to-24-year old group favored text mes- saging as way to interact with government. 94 Chapter 5: The Basic Building Blocks of E-Government Some 48 percent of respondents noted that they tential of this medium remains largely unutilized would be interested in receiving text messages as of now. Developing country governments and reminders regarding such issues as national would do well to consider mobile service deliv- cartests,drivingtestsandhospitalappointments.68 ery as a cost-effective platform while designing e-government applications and solutions. The Philippines provides a good example of how mobile phones can be used in innovative ways. Conclusion Mobile users in the Philippines use SMS text messaging extensively--more than 200 million E-government offers both challenges and ben- SMS text messages are sent daily in the coun- efits to low-income countries. This chapter has try. Globe Telecom's G-Cash application uses outlined some of the cross-cutting issues for de- SMS text messaging to enable micro monetary veloping successful e-government applications transactions between families, friends and local and provided many examples from both devel- merchants. The service allows users, including oped and developing nations.Although complex, those without bank accounts or credit cards, to e-government applications can potentially in- send money phone-to-phone, buy goods and ser- crease government efficiency, reduce corruption vices, pay for business permits and receive mi- and provide better-quality services to citizens. cro-financing and international remittances. Public-private partnerships and creative use of Bangko Sentral ng Pilipinas (BSP) recently en- existing technologies, such as mobile phones, can dorsed G-Cash for use by banks and automated make e-government applications increasingly vi- teller machines. BSP has also ensured that G- able in many developing nations. Cash complies with security and regulatory re- quirements, including those related to anti-money Developing country governments should proceed laundering laws. The Philippines Bureau of In- on the path of e-government with caution, but ternal Revenue (BIR) is currently using the ap- proceed they must. In the words of Manuel plication for business registration and renewal Castells, the eminent sociologist, "One might say, payments. The Rural Banks of Philippines are in "Why don't you leave me alone? I want no part the process of piloting G-Cash for loan micro- of your Internet, of your technological civiliza- payments.69 tion, of your network society! I just want to live my life!" Well, if this is your position, I have bad Developing countries should look carefully at the news for you. If you do not care about the net- G-Cash model because it allows the poor to over- works, the networks will care about you, any- come the lack of bank accounts, credit cards way. For as long as you want to live in society, at and bank branches in rural areas. It also enables this time and in this place, you will have to deal the government to avoid investments in conven- with the network society. Because we live in the tional infrastructure to deliver e-government ser- Internet Galaxy."70 vices to a large number of citizens. The rapid proliferation of mobile phones presents an opportunity to developing countries to deliver information and services to citizens and busi- nesses in new and innovative ways. The full po- 95 E-Development: From Excitement to Effectiveness 6 Notes Electricnews.net, "Ireland Faces 50m E-voting Write- off," The Register, February 4, 2005, http:// w w w . t h e r e g i s t e r . c o . u k / 2 0 0 5 / 0 2 / 0 4 / 1 E-government has been defined in a variety of ways. The ireland_evoting_bill;accessedJuly28,2005.ThomasC.Gre; United Nations Global E-Government Readiness Report accessed July 28, 2005. 2004 defines it as "the use of information and communica- 7 tion technology (ICT) and its application by the govern- Thomas C. Greene, "FBI Blew $170 m on Doomed IT ment for the provision of information and basic public Upgrade," The Register, January 14, 2005, http:// services to the people." [United Nations, Global E-Gov- w w w . t h e r e g i s t e r . c o . u k / 2 0 0 5 / 0 1 / 1 4 / ernment Readiness Report 2004: Towards Access for Op- fbi_flushes_trilogy_money/print.html; accessed July 28, portunity (New York: United Nations, 2004), 15]. Accord- 2005. ing to the European Commission, e-government is defined 8Claudio Orego Larrain, "Chile's E-procurement System: as "the use of information and communication technologies Transparency, Efficiency and PPP" presentation available in public administrations ­ combined with organisational at http://www.transparency.org/integrity_pact/dnld/ change and new skills ­ to improve public services and orrego_e-procurement.pdf; accessed July 28, 2005. democratic processes and to strengthen support to public policies." (Europe's Information Society Thematic Portal, 9 R.P.Sisodia, Director e-Seva, email to author, May 2, http://europa.eu.int/information_society/soccul/egov/ 2005. index_en.htm; accessed July 28, 2005). Gartner Group 10Kenneth Bennoit, "Appendix 2J: Experience of Elec- defines e-government as "the transformation of public sec- tronic Voting Overseas", The Policy Institute, Trinity Col- tor internal and external relationships through net enabled lege Dublin, http://www.cev.ie/htm/report/first_report/pdf/ operations and information and communications technol- Appendix%202J.pdf; accessed July 28, 2005; 6. ogy to optimize government service delivery, constituency participation and internal government operations." (An- 11European Commission, "The Role of E-Government for drea Di Maio and John Kost, "Hype Cycle Shows E-Gov- Europe's Future," SEC (2003) 1038, EC, Brussels, Sep- ernment Overcoming Disillusionment," Gartner Research, tember 26, 2003, 4. Stamford, Connecticut, March 17, 2004). 12John Kost, Richard G.Harris, John P.Roberts, "New 2The Economist, "Behind the Digital Divide," Technology Appointment in Victoria, Australia, Is Seen as a Vote of Quarterly, 12 March 2005, 22. Confidence for CIOs", Gartner Research, Stamford, Con- 3 necticut, May 5, 2005. An initiative was categorized as a total failure if it was never implemented or was implemented, but immediately 13See AGIMO, "Agency Overview," in Annual Report abandoned. Partial failure was characterized by non-attain- 2003­2004, Australian Government Information Manage- ment of major goals and/or significant undesirable outcomes. ment Office, Parkes, Australia, 2004, http:// An initiative was considered successful if most stakeholder www.agimo.gov.au/publications/2004/10/annrep03-04/ groups attained their major goals and did not experience part_2_-_agency_overview; accessed July 28, 2005. significant undesirable outcomes (See Richard Heeks, "Suc- cess and Failure Rates of eGovernment in Developing/Tran- 14International Council for Information Technology in sitional Countries: Overview" IDPM, University of Government Administration (ICA), "The Office of the e- Manchester, Manchester, UK, 2003, http:// Envoy Transitions to the e-Government Unit," ICA Infor- www.egov4dev.org/sfoverview.htm; accessed July 28, mation No. 82: General Issues, ICA, Surrey, UK http:// 2005). www.ica-it.org/docs/issue82/ICA_Issue_82_2004_05.pdf; accessed July 28, 2005. 4 Lester Haines, "MPs Condemn e-Uni Disaster ­ Again," The Register, March 4, 2005, http://www.theregister.co.uk/ 15Public Sector Technology & Management, "Migrating 2005/03/04/e_uni_committee_report/print.html; accessed Citizens to e-Government Channels in Hong Kong," July 28, 2005. PTSM.net, Singapore, February 3, 2005, http:// www.pstm.net/article/ index.php?articleid=511; accessed 5 Select Committee on Work and Pensions, "Assessment of July 28, 2005. CSA's IT and telephony System", The United Kingdom Parliament, 2004, http://www.publications.parliament.uk/ 16US Congress, "E-Government Act of 2002", 3602 (a). pa/cm200304/cmselect/cm; accessedAugust 1, 2005. 17See www.core.gov; accessed July 31, 2005. 96 Chapter 5: The Basic Building Blocks of E-Government 18Stephen J.Dorgan and John J.Dowdy, "When IT lifts ration (a government company owned by the Railways), In productivity", The McKinsey Quarterly, 2004 number 4. Cable Net (a cable television provider with a subscriber See also The McKinsey Quarterly Chart Focus Newslet- base of about 400,000), Spectranet (an ISP), Tata Indicom ter, "Does IT improve performance?", June 2005, http:// (an existing telecommunications player), and Nuzveedu www.mckinseyquarterly.com/newsletters/chartfocus/ Seeds Ltd. (a cash-rich company with personnel on the 2005_06.htm; accessed July 31, 2005. ground). See http://www.aponline.gov.in/Quick%20Links/ events/APTS/PressNote_03Jan05.htm; accessed July 28, 19European Commission, "The Role of E-Government for 2005. Europe's Future", [SEC (2003) 1038], http://europa.eu.int/ e u r - l e x / l e x / L e x U r i S e r v / 29General Manager (BD) BSNL Hyderabad, letter to Di- LexUriServ.do?uri=CELEX:52003DC0567:EN:HTML; rector Communications IT&C Department, Government accessed July 30,2005. ofAndhra Pradesh,April 16, 2004 (Lr. No.TA/10-40/2004/ TP). 20Jeremy Millard and Jonas Iversen Svava, "Reorganiza- tion of Government Back Offices for Better Electronic 30Input/Output, "Federal Government Requests $59.8 bil- Public Services: European Good Practices (Back-office lion for FY2005 IT Spending", Reston, February 2004, Reorganization)," Final Report to the European Commis- http://www.newsletterscience.com/ejkrause/pdf/ sion, Danish Technological Institute, Taastrup, Denmark, 00000034.pdf; accessed July 28, 2005. January 2004, 74. 31Cited in Lucy Sheriff, "E-gov to Cost Europe 4bn+," 21EC, European Interoperability Framework for Pan-Eu- The Register, February 4, 2005, http:// ropean e-Government Services, ver.1 (Belgium: European www.theregister.co.uk/2005/02/04/idc_euro_gov_spend/ Communities, 2004), http://europa.eu.int/idabc/servlets/ print.html; accessed July 28, 2005. Doc?id=19528; accessed August 1, 2005. 32IDC Press release, "IT Spending on eGovernment Con- 22See http://www.egifaccreditation.org/introduction.html; tinues to Grow in Western Europe, Says IDC", October accessed July 29, 2005. 12, 2004, http://www.idc.com/ getdoc.jsp?containerId=pr2004_10_05_171108; accessed 23Philip J.Allega, "`Do It Yourself' Is Not Sufficient for July 28, 2005. British Government and EnterpriseArchitecture Projects", Gartner Research, Stamford, Connecticut, June 8, 2005. 33Public Sector Technology & Management, "Migrating Citizens to e-Government Channels in Hong Kong," 24Andrea Di Maio, "How to Measure the Public Value of PTSM.net, Singapore, February 3, 2005, http:// IT," Gartner Research, Stamford, Connecticut, July 8, 2003. www.pstm.net/article/ index.php?articleid=511; accessed 25John Kost and Andrea Di Maio, "Creating a Business July 28, 2005. Case for a Government IT Project," Gartner Research, Stam- 34Jeremy Millard et al., "Reorganisation of government ford, Connecticut, January 6, 2003. back-offices for better electronic public services ­ Euro- 26 Queensland Government, http://www.qld.gov.au/ pean good practices", January 2004, Volume 3, Annex 6, sharedservices/about_ssi/index.html; accessed July 31, http://europa.eu.int/information_society/activities/ 2005. e g o v e r n m e n t _ r e s e a r c h / d o c / back_office_reorganisation_volume3.pdf; accessed July 28, 27According to Article 10.1 of the Contract for develop- 2005. ment, implementation, operation and maintenance of AP 35 Broadband Network betweenAPAksh Broadband Limited Jeremy Millard et al., "Reorganisation of government and Aksh Broadband Limited and Andhra Pradesh Tech- back-offices for better electronic public services ­ Euro- nology Services Limited on behalf of Information Technol- pean good practices", January 2004, Volume 3,Annex 6 vii, ogy and Communications Department, Government of http://www.elo.nl/elo/Images/Case08-Denmark_tcm70- Andhra Pradesh signedApril 21, 2005, "The GoAP agrees 54624.pdf; accessed July 28, 2005. to provide free RoW by way of GOs, including free ROW 36Government of Andhra Pradesh, Information Technol- on AP Transmission Corporation (APTransco) electricity ogy and Communications Department, GOMs.39 dated poles of 11 KVAand other low tension distribution poles". September 12, 2002 available at http:// 28The consortium that won the bid consisted of Aksh www.apvatonline.com/ctportalnew/gosnotifications/ Optifibre Ltd. (a fiber optic manufacturer), Railtel Corpo- GO3912092002.htm; accessed July 28, 2005. 97 E-Development: From Excitement to Effectiveness 37 Maria T.Gresham and Jeremy Andrulis, "Using hybrid 46ATICA, "Guide to choosing and using free software funding strategies to support the State of Arizona", IBM licences for government and public sector entities", De- Institute for Business Value, New York, 2002, 4, http:// cember 2002, http://www.adae.gouv.fr/upload/documents/ www-1.ibm.com/services/us/imc/pdf/g510-1678-01- free_software_guide.pdf; accessed July 28, 2005. wheres-the-money-hybrid-funding.pdf; accessed July 28, 47European Commission, "eEurope 2005: An information 2005. society for all", COM(2002) 263 final, Brussels, May 28, 38Robin Gill, "Cooperation between the Public and Private 2002, http://europa.eu.int/information_society/eeurope/ Sectors to Improve Service Delivery: The Hong Kong Ex- 2002/news_library/documents/eeurope2005/ perience", presentation available at http://www.info.gov.hk/ eeurope2005_en.pdf; accessed July 28, 2005; 11. digital21/e-gov/eng/press/doc/20031118.pdf; accessed July 48"The technical specifications drawn up by public pur- 28, 2005. chasers need to allow public procurement to be opened up 39Claudio Orego Larrain, "Chile's E-procurement System: to competition. To this end, it must be possible to submit Transparency, Efficiency and PPP" presentation available tenders which reflect the diversity of technical solutions. at http://www.transparency.org/integrity_pact/dnld/ Accordingly, it must be possible to draw up the technical orrego_e-procurement.pdf; accessed July 28, 2005. specifications in terms of functional performance and re- quirements and, where reference is made to the European 40 See http://www.compranet.gob.mx/; accessed July 28, standard, or in the absence thereof, to the national stan- 2005. dard, tenders based on equivalent arrangements must be 41 National Assembly of Canada, An Act respecting the considered by contracting authorities.", European Union, Agence des parternariats public-privé du Québec, Bill 61 "Directive 2004/18/EC of the European Parliament and of (2004, chapter 32), Thirty-seventh Legislature (Québec: the Council on the Coordination of Procedures for the award Québec Official Publisher, 2004). http:// of Public Works Contracts, Public Supply Contracts and www2.publicationsduquebec.gouv.qc.ca/dynamicSearch/ Public Service Contracts", Strasbourg, March 31, 2004, 18. telecharge.php?type=5&file=2004C32A.PDF; accessed 49Computer Business Review Online, "Venezuelan gov- July 28, 2005. ernment opts for open source approach", January 5, 2005, 42Companies like QingHua Wang Bo (an IT service pro- h t t p : / / w w w . c b r o n l i n e . c o m / vider linked to QingHua University), Ken SiJie (a com- article_news.asp?guid=B4AD0DAB-0611-4F6C-8C9F- puter system research institute) and China Software Test- 8846A38A6525; accessed July 28, 2005. ing Center have all been involved as third-party supervi- 50Andrea Di Maio, "Local Governments in France Move sors of Chinese government projects. to Open-Source Applications", Gartner Research, Stam- 43The criteria for OSS include (i) freedom to redistribute; ford, Connecticut, July 8, 2005. (ii) inclusion of source code; (iii) freedom to create derived 51E-Government Unit, Open Source Software: Use within works; (iv) integrity of the author's source code, i.e., an UK Government, ver. 2, Cabinet Office, Office of Govern- amended work must be distinguished from the original ver- ment Commerce, London, October 28, 2004. http:// sion; (v) no discrimination against persons or groups; (vi) no www.govtalk.gov.uk/ documents/oss_policy_version2.pdf; discrimination against fields of endeavor; (vii) distribution of accessed July 28, 2005. a license that is technology-neutral, not specific to a product and does not add further restrictions (such as non-disclosure 52 See AGIMO, "Efficient Application of Technology: agreements or restrictions on other software). See European Organizing for e-Government," in "Better Services, Better Union, "Free and Open Source Software Directory of Key Government," AGIMO, Parkes, Australia, 2002, http:// Terms,"Europe'sInformationSocietyThematicPortal,Brus- www.agimo.gov.au/ publications/2002/11/bsbg/ sels, http://europa.eu.int/information_society/ activities/ application_of_technology; accessed July 28, 2005. opensource/doc/pdf/key_terms.pdf; accessed July 28, 2005. 53Christopher H. Baum and Andrea Di Maio, "Gartner's 44 See http://www.edulinux.cl/english/index_p2.php? Four Phases of E-Government Model, id_contenido=730&id_seccion=1473&id_portal=1; ac- Gartner Research, Stamford, Connecticut, November 21, cessed July 28, 2005. 2000. Gartner has subsequently proposed a new way to measure the progress of e-government in order to capture 45Open Source Observatory, Interchange of Data between its complexities. The new measure takes into account the Administrations, "Case Study: Extremadura LinEx" No- need for horizontal and vertical integration across public vember 2003, http://europa.eu.int/idabc/servlets/ and private sector organizations and defines four levels of Doc?id=1641; accessed July 28, 2005. 98 Chapter 5: The Basic Building Blocks of E-Government e-government: presentation, data exchange, transaction and 62Luc De Wulf and Jose B.Sokol, Customs Modernization sharing. The first level, "presentation," refers to providing Initiatives: Case Studies (Washington: World Bank and access to services, applications or data through the same Oxford University Press, 2004), 19-32. http:// user interface (e.g., website or portal), with applications www.worldbank.org/transport/learning/learning%20week/ and data remaining distinct. The next level, "data exchange," t r a d e _ f a c i l _ 2 0 0 5 / C a s e % 2 0 S t u d i e s / refers to the stage where common data standards and archi- Wo r l d % 2 0 B a n k % 2 0 ( 2 0 0 4 f ) % 2 0 C u s t o m s % tecture enable exchange of data between applications with- 20Modernization%20Initiatives%20Case%20Studies.pdf; out changing semantics. The third level, "transaction," in- accessed August 1, 2005. tegrates data and process flows across vertical and hori- 63 zontal divides. Finally, at the "sharing level," application The World Bank, "Korea's Move to E-Procurement," PREM Notes, no. 90 (July 2004), Poverty Reduction and components, data and process elements are shared across Economic Management Network, World Bank, Washing- organizational boundaries. (Andrea Di Miao, "It's Time for a New Way to Measure Progress of E-Government," ton, DC. See also http://www.pps.go.kr/neweng/; accessed August 1, 2005. Gartner Research, Stamford, Connecticut, 14 October 2004). 64 54 See http://sc.info.gov.hk/gb/www.info.gov.hk/digital21/ An interesting example of this initial phase is the Leba- nese government portal, www.informs.gov.lb. Launched in e-gov/eng/init/mgov.htm; accessed July 30, 2005. 2002, the portal is devoted to making forms available from 65 See http://www.gov.mt/egovernment.asp?p=106&l=1; across the central government, the country's five regional accessed July 30, 2005. governments and over 760 municipalities. The portal also provides advice and instructions for completing and sub- 66Swedish TaxAgency, "Taxes in Sweden 2004:An English mitting each form to the relevant government agency. Summary of Tax Statistical Yearbook of Sweden", 2004, Section 3.1.5, http://www.skatteverket.se/broschyrer/104/ 55Christopher H. Baum and Andrea Di Miao, "Gartner's 10405.pdf; accessed July 30, 2005. For Norway see also Four Phases of E-Government Model", Gartner Research, Emmanuel C.Lallana, "eGovernment for Development: Stamford, Connecticut, 21 November 2000. mGovernmentApplications and Purposes Page", 2004, http:/ 56Capgemini, Online Availability of Public Services: How /www.egov4dev.org/mgovapplic.htm; accessed July 30, 2005. is Europe Progressing? Web-based Survey on Electronic Public Services, Report of the Fifth Measurement, October 67Lallana, "mGovernment Applications and Purposes". 2004 (Brussels: Directorate General for Information and Media, European Commission, 3 March 2005), 7. 68Matthew Clark, "Irish people want m-government: sur- vey", electricnews.net, December 10, 2004, http:// 57Capgemini, Online Availability of Public Services, 45. new.enn.ie/news.html?code=9569739; accessed July 30, 58 United Nations, Global E-Government Readiness Re- 2005. port 2004: Towards Access for Opportunity (New York: 69Robin Simpson and Eleana Liew, "Globe Telecom's G- United Nations 2004), 17. Cash a Mobile Commerce Success Story", Gartner Re- 59Government corruption is a major problem in many coun- search, Stamford, Connecticut, March 1, 2005. tries. According to data collected by the World Bank, 97.8 70 M. Castells, The Internet Galaxy: Reflections on the percent of firms surveyed in Bangladesh reported that they Internet, Business, and Society (NewYork: Oxford Univer- paid bribes as part of doing business. World Bank, World sity Press, 2001), 282.16. Development Report 2005, Investment Climate Surveys (NewYork:World Bank and Oxford University Press, 2005), 246. 60Douglas Holmes, email to author, March 3, 2005 attach- ing a paper on "eGov in Latin America". 61Albert Lobo and Suresh Balakrishnan, Report Card on Service of Bhoomi Kiosks: An Assessment of Benefits to Users of the Computerized Land Records System in Karnataka (Bangalore: Public Affairs Centre, November 2002), http://unpan1.un.org/intradoc/groups/public/docu- ments/APCITY/UNPAN015135.pdf; accessed July 28, 2005. 99 Chapter 6 Beyond Secondary Education The promise of ICT for higher education and lifelong learning by Ron Perkinson T he use of ICTs to improve the access ing the access, cost and quality gaps in higher and affordability of higher education1 is education, a global enterprise that is struggling perhaps the greatest unrealized promise to reach the one-quarter of 18-to-25 year-olds of e-development. Most developing countries currently enrolled in higher education. This is have to some degree adopted the use of ICTs especially true given the priority that develop- in their schools and institutions of higher edu- ing nations have placed on achieving the Mil- cation. Although significant digital, social and lennium Development Goals in primary and sec- learning divides still exist between developed ondary education. This priority, together with nations and many of the world's poorest coun- falling levels of public funding for higher edu- tries, a number of developing countries (e.g., cation, is forcing higher education institutions China, India, South Africa and Malaysia) have in developing countries to find alternative ways been able to close such gaps over the last five of funding future development. years. This process has, however, been slow and uneven. The first section of this chapter highlights the changes facing the global higher education mar- This chapter evaluates the changing global mar- ket and examines the steady growth of online ket for higher education and training, together students (and their changing profiles) in what is with the challenges that developing countries still a small number of countries. The second face in this sphere. Today, the majority of glo- section explores some of the key future chal- bal e-learning applications are found mainly in lenges of the e-learning agenda. It highlights the developed world. By comparison, develop- the challenges posed by inadequate access and ing countries have made only small beginnings affordability and reflects on the need for cham- in the field. Yet it is in the latter countries that pions who can address these key obstacles in e-learning holds the greatest chance of bridg- developing countries. 101 E-Development: From Excitement to Effectiveness The third section looks at the economics of tech- Part I. The changing global nology-based teaching, noting that legacy mass market for higher education technologies are likely to remain more appropri- ate and cost-effective in certain developing na- Background: Global higher education tions for the foreseeable future. The section also Totalestimatedstudentenrollmentinglobalhigher examines the economies of technology-based education in the year 2000 was around 90 mil- teaching and how the parallel universe of e-train- lion.By2003,morethan100millionstudentswere ing (particularly corporate training) may provide enrolledinhighereducationworldwide,withChina greater validation of the increased cost-efficiency alone accounting for approximately 4 million of of e-education. the increase. Even if only the most populous nations of China and India are considered, there The fourth section examines the path that many is clearly growing demand for places in higher higher education institutions in both developed educationinstitutions.InChinain2004,morethan and developing countries are traversing towards 30 percent of higher education students were in Web-based learning. The analysis argues that their first year of study, with a total of 26 million different mixes of e-learning, based on both senior secondary school students about to enter intranet and distance-learning technologies, can the higher education system. This number trans- be expected to serve as stepping stones towards latesintoroughly15millionChinesestudentswho more cost-efficient, Web-based delivery. Cost- hope to enroll in tertiary education programs over effective solutions will depend on available in- the next four years.2 frastructure and resources, prevailing and future student profiles, together with applicable eco- In India, it is not unheard of for some higher edu- nomic and affordability drivers. cation programs to receive 6,000 applicants per place.3With over 60 percent of India's population The fifth section examines promising develop- falling in the 0-to-25-year age group,4 the nation ments and success factors in the delivery of af- faces daunting demand for both secondary and fordable e-learning programs, in spite of prevail- higher education. Acomparison is useful for un- ing physical, geographic and economic con- derstanding the gravity of the challenge facing straints. The section reviews programs that have India. The United Kingdom has more than 330 made significant gains in advancing the e-learn- universities5 for a population of around 60 million ing agenda, including cross-border delivery of people. If the same university-to-population ratio education services among developing countries. were applied to India, the country would require more than 5,500 additional universities to put it on The sixth and final section addresses the future an equal footing with the United Kingdom. of e-learning and e-training and offers six key recommendations. These recommendations are Since the early 1990s, both public and private essential for enabling developing countries to higher education institutions in most countries optimize the potential gains from e-learning and have struggled to keep up with growing enroll- to break down the barriers of remote locations, ment demand. Particularly in developing coun- affordability and appropriateness of ICT use in tries, governments have been forced to balance education, training and lifelong learning. education system needs against fiscal realities. As a result, they have begun to seek alternative 102 Chapter 6: Beyond Secondary Education ways to fund the development of higher educa- Changing student profiles. The changing land- tion through more innovative models that can scape of global higher education is reflected in more readily satisfy the changing demands of changed student profiles in most countries. Ac- market-led economies and knowledge societies. cordingtotheU.S.DepartmentofEducation,over 5.9 million, or 39 percent, of all students enrolled Forces of change in higher education programs in the USA in 2004 Higher education systems in both developed and were over the age of 24. This number is projected developing countries are being forced to navi- toreach6.6millionin2007and6.9millionin2012. gate their way through "a perfect storm" of seven In OECD member countries, the proportion of converging forces of change: adults with tertiary education qualifications has almost doubled over the past 25 years, rising from · the increasing importance of knowledge as 22 percent in 1980 to around 41 percent today. In the major driver of economic development, Canada, around 30 percent of undergraduate stu- which has increased the importance of edu- dents are over the age of 25; in Australia, New cation, training and lifelong learning; Zealand, Denmark, Norway and Sweden, over · an increasing world population, with a large 20 percent of first-year university students were cohort of potential higher education students; over the age of 27 in 2000.6 · theimpactofglobalizationonbothhigheredu- cation and local markets, which has created a The lifelong learning agenda is also taking hold globalmarketforhighereducationandtraining; in developing countries. Although little statisti- cal data is available, many developing countries · theimpactofincreasingcompetition,bothwithin with more flexible age participation policies are and outside borders, in a globalized economy also attracting new kinds of learners to higher and the consequent emergence of new, education programs. Their students are becom- borderless providers of tertiary education; ing more diversified, older and a growing per- · thecontinuingimpactofinternationalizationon centage pursue their studies on a part-time ba- higher education, including international stu- sis. Countries such as Chile, China and Malay- dent enrollment and faculty and student ex- sia are beginning to place increasing importance changes.Internationalizationhasalsoincreased on accommodating these new learners, as they thenumberofinstitutionalrelationshipsandal- recognize the potential contribution that a more liances, with many affiliations leading to com- highly skilled workforce can make to economic mercial initiatives by both public and private- development. sectorplayers. Ithasalsocontributedtogreater transferability of qualifications (both within Decline in public financing. In most countries, nations and across borders); even where education is supposedly free, new · the continuing ICT revolution and use of the or supplementary charges are being introduced Internet, which are impacting the way edu- that shift an additional share of costs to students cation is organized and delivered at all levels and their parents. Some of these charges have of the education system; and been quite substantial. For example, contributions from non-state sources recently increased from 2 · the global decline in public financing, espe- to 23 percent of educational spending in Hungary. cially for higher education. In Canada, average undergraduate tuition fees 103 E-Development: From Excitement to Effectiveness increased by 135 percent between 1991 and learning technologies in classrooms at all levels of 2001.7 Austria introduced tuition fees of roughly education, as well as in corporate training pro- US$750 per year in 2001.8 In Great Britain, Par- grams, has been increasing. It should be noted, liament recently approved a plan to allow univer- however,thattheseincreasesaremodestcompared sity tuition fees for British students to rise up to totheprojectionsforWeb-basedlearningthatwere US$5,450 a year as of September 2006.9 made only five years ago. However, formal edu- cation systems across the globe are showing in- InChina,publicuniversitiescurrentlyderivemore creasing interest in e-learning not simply as a me- than 40 percent of their income from non-state diumforaddingvaluetoteachingandlearning,but sources; household spending on education in the alsotoserve"anytime,anywhere"initiativesinways country is estimated at 10 percent and is expected that were not previously possible. to climb to 14 percent by 2010. And in Cambodia, one of the world's least developed countries, it is E-learning. Electronic learning can be defined estimated that less than 40 percent of total higher as instructional content or learning experiences education funding comes from the state.10 deliveredorenabledbyelectronictechnology. The term covers a wide range of applications and pro- Use of new technologies. Many countries have cesses, such as Web-based learning, computer- been forced to adopt the use of mass education based learning, virtual classrooms and digital col- models to cater to changes in local markets, de- laboration. It can be used to describe the delivery mographics, employer demands and student pro- of content via the Internet, intranets or extranets files. Such models are intended to advance higher (i.e., LANs or WANs), audio- and videotape, sat- education and training through non-state financ- ellite broadcast, interactive TV, CD-ROM and ing.An additional motivation has been to increase other electronic means. access and opportunity for a new generation of studentswhohavegrownupwithinformationtech- Compared to conventional mass media technolo- nologiesandenjoyusingcomputers,mobilephones gies,e-learningismoreappropriateforknowledge- and the Internet. based applications, whereas the former have be- come the preferred medium for skills training (al- Today, sound online programs appeal to students though such programs certainly involve some who prefer to learn independently andwith peers. knowledgetransfer).Conventionalmasstechnolo- For some, the use of ITCs and the Internet facili- gies also tend to be used where up-to-date Web- tates greater student engagement and participa- based applications are not available. tion than do traditional one-way lectures. Im- proved online pedagogies are providing greater International expansion of e-learning opportunitiesforactivelearningbyprojectgroups, In China, close to one million students are esti- withthebenefitofmoreregularpersonalizedfeed- mated to be studying online today.11 In the United back and formative assessment. Statesin2003,therewere1.9milliononlinehigher education students. This figure increased to 2.6 Many young adults have also changed their out- million students (a 24 percent increase) in 2004, look on how and where they would like to learn meaning that 16 percent of all higher education and upgrade their skills in a changing world of students in the United States were studying work. Over the last decade, the adoption of e- online. Approximately 40 percent of this group 104 Chapter 6: Beyond Secondary Education were fully online students, an 18 percent in- tertiary education have been conducting market crease over the prior year.12 Very conservative research in selected countries where potential estimates project that the online e-learning sub- demand exists for their programs. As more stu- sector will become a global, US$150 billion plus dents from developing countries seek either a industry by 2025.13 foreign qualification or choose an e-learning model, successful models in the developed world With some justification, contemporary provid- are likely to determine the models adopted in ers of international e-learning programs believe developing countries. that the international market for online educa- tion will continue to grow substantially in most Part II. Future challenges countries. Some specialists believe that work- of e-learning ing adults will increasingly opt for either a qual- ity U.S. or alternative foreign program and quali- Four barriers challenge the e-learning agenda: fication without living in the USA or another access, affordability, appropriateness of ICT use foreign country. The emerging trend for work- in e-learning and the need for "champions" at ing adults is to access online courses without both the political and educational provider level. leaving their jobs and incurring the high travel The mix and degree to which these barriers im- and living costs, as well as stringent visa re- pact development differ depending on each quirements, of studying abroad. country's social, economic, political and techno- logical situation. For example, in 2003, the University of Phoenix Online had students located in approximately 91 Access countries. In addition, many U.S. and residents Access alone does not determine successful of other OECD countries who live and work in implementation of e-learning and online learn- developing countries benefit from the opportu- ing. The sample of developing countries shown nity to continue their education while living in table 6.1 shows that the advancement of e- abroad. In fact, international providers of online learning is definitely assisted by improved ac- Table 6.1 Information infrastructure vs. e-learning & online learning development, 2003 105 E-Development: From Excitement to Effectiveness cesstoinformationandcommunicationsinfrastruc- Givenexistingconditions,thehighcostofInternet ture, but not in isolation from other key determi- services will predetermine higher delivery costs nants of successful implementation. Turkey, for of distance education providers, which they will example, has a higher number of (telecommuni- need to pass on if they are to remain in business. cations) main lines per 100 inhabitants, but is still Coupled with low per capita incomes, the chal- a relatively low adopter of e-learning when com- lenges of affordable access to ICTs in schools pared to Mexico, India or China. Mexico and and institutions of higher learning is one of the China also have lower mobile telephone market most important priorities that governments of penetration rates per 100 population than Turkey, least-developed countries and their telecommu- yet have adopted e-learning across their formal nications service providers will face in the im- tertiary systems to a greater degree.14 mediate future. Clearly, access to ICT infrastructure at afford- Where Web-based learning and mixed delivery ableratesisimportantforadvancingthee-agenda. models (i.e., models that combine face-to-face It should be noted that the choice of technology is learning with e-learning) are working, real costs not the main driver of e-learning. However, im- and benefits remain difficult to evaluate. Out- proved access to affordable ICTs will determine side of the United States, no systematic data is the extent of their use, as well as how quickly available on e-learning costs, a key issue that new modes of ICT-assisted delivery will be de- most governments must face in the near term. ployed. Access remains a major challenge for The need for governments and higher education governmentsandtelecommunicationscompanies, and training providers to identify sustainable, which must work together to find better ways of cost-efficient delivery models for e-learning in- investing in a country's human capital by provid- vestments is another crucial element of advanc- ing enhanced access to Internet-based resources. ing the e-agenda. The few virtual universities Such resources will ensure greater affordability that exist do not appear to be replacing conven- of ICTs and the more flexible education and train- tional campuses, nor does the use of online ma- ing programs that they can deliver. terials appear to be supplanting faculty.15 Cer- tain new models that blend face-to-face and Affordability online delivery can reduce costs and increase Affordability is another important challenge that both access and affordability, but no data yet in- has yet to be successfully addressed in many dicates that an increase in online delivery results developing countries. In African countries, for in significant cost savings that could substantially example, economic barriers, technology con- reduce tuition fees. straints and government policy are key barriers to more scaleable and viable business models One case where cost reductions have indeed for e-learning. In many such countries, the been realized is that of Tec Milenio in Mexico. affordability of infrastructure is an obstacle to Tecnologico de Monterrey founded Tec Milenio the introduction new technologies. The average in 2002 to reach the growing market of lower- annual per capita income in Sub-SaharanAfrica, middle income working students. Tec Milenio's for example, is US$490 per year--lower than Universidad Virtual uses Tecnologico de the average annual cost of 20 hours of dial-up Monterrey professors to deliver online courses Internet service per month (approximately from its parent campus to modestly equipped US$720). 106 Chapter 6: Beyond Secondary Education satellite campuses; teaching practitioners support E-learning also provides a means for students to the delivery of the courses at these campuses. take courses from several institutions at once, The online provider delivers its programs at about as well as to combine learning environments (e.g., one-thirdoftheiroriginalcost,makingaccessmore combining campus-based with fully online affordable for lower-income students. After two courses). E-learning thus offers great potential years of operation, Tec Milenio had around 8,400 forimprovingstudentchoiceofcurriculaandthus, students enrolled in its programs, which are tar- the overall student learning experience, regard- geted mainly at young working adults who seek less of pedagogical changes. to return to tertiary studies to upgrade skills and qualifications, as well as low-income students in- Champions of change terested in getting a better education.16 Champions of change are needed to advance the use of e-learning in program and training The Open University in the UK is also gradually delivery. When faculty and institutional leader- moving away from traditional distance-learning ship are prepared to advocate new approaches courses that use books, video cassettes and CD- and adopt e-learning in their programs, the meth- ROMs towards online courses, and has reported odology will have much greater impact. Two that its per-student cost is one-third the average examples where effective leadership has led to cost of a similar on-campus program. In this the adoption of successful e-learning models are case, fixed capital costs were lower and student Tecnologico de Monterrey in Mexico feedback prompted the university to deploy staff (Universidad Virtual) and Istanbul Bilgi Univer- in support of e-learning processes rather than sity (which has an online e-MBA program). In "traditional" university courses.17 the case of Universidad Virtual, advocates of online learning championed not only a change in Appropriateness of ICT use the means of delivery, but also sought to reach Appropriateness of ICT use and its impact on new types of higher education students, includ- quality have become important determinants for ing women, community groups, workers in small the success of e-learning models. In many set- and medium enterprises and other constituents tings, e-learning appropriately adds value to ex- in more geographically remote settings. isting courses or gives such courses a new thrust by adding new materials, such as information Government champions from the Internet or multimedia materials. New Government champions of e-learning, especially forms of e-learning can also improve the qual- in countries with low age-group participation18 ity of tertiary education and the effectiveness in higher education, can also be an important of learning by: catalyst for change. In Turkey, for example, the · increasing the flexibility of the student learn- Higher Education Council (Yuksek Ogrenim Kurumu, or YOK) approved the introduction of ing experience; Istanbul Bilgi University's first full online MBA · enhancing access to information resources for program in 2000 at a time when many e-learning more students; and start-ups around the world were struggling to · potentially driving innovative ways of learn- achieve their educational and financial objectives. ing, as well as providing the basis for more The decision of YOK to support Bilgi cost-effective delivery models for both teach- University's e-MBA start-up subsequently ers and learners. 107 E-Development: From Excitement to Effectiveness Box 6.1 Universidad virtual: An innovative model for reaching widely disbursed communities UniversidadVirtual, which offers e-training initiatives through a network of Community Learning Centers (Centros Comunitarios deAprendizaje, or CLC), is an example of how innovative use of online delivery, blended with face- to-face learning, can increase affordable access to higher education, continuing education and SME training. The program provides constituents in dispersed communities new educational opportunities that allow them to im- prove their skills and quality of life while contributing to the development of their communities. Universidad Virtual's network of 1,048 CLCs are located in both Mexico (942 CLCs) and across the United States (106 CLCs). To date, they have delivered blended online courses to over 70,000 students and adults. Course offerings include 23 computer courses for people of all ages, one of the most popular of which is the "BasicAbilities Course." The Universidad Virtual also offers 14 undergraduate and 10 postgraduate degrees. Its continuing education programs offer 64 online courses, a total of 1,696 instructional hours, for such diverse students as teachers, public officials, civil groups, health workers and family education workers. These programs also include courses especially designed for Hispanics living in the United States, which aim to help them cope faster and better with American culture. Special online courses are also offered to entrepreneurs and small and medium enterprises (SMEs) on such topics as "How to Start a Business," business administration skills and business planning. E-training courses are also offered to municipal managers on participative and open government, public finance, and introduction to e- government. In addition, the CLCs can offer short, e-training courses online to health and first-aid workers on such topics as women's health, healthcare and exercise, AIDS, managing diabetes, hypertension and respiratory infections. Online programs are also offered to NGOs on a range of topics, including organizational development, project administration, finance, management, marketing and the creation of funds, sustainable development, plan- ning, and strategies for environmental conservation. Source: Correspondence and conversations of the author with Tecnologico de Monterrey, 2005. proved a good decision, setting an example of in the United States. Most students enroll at uni- what can be achieved with positive support from versity and begin employment with the expecta- government, both for countries in the Central tion of using the Internet both in their everyday Europeanregionaswellasotherdevelopingcoun- lives and to support their daily work activities by tries. The Bilgi University program also offers a accessing specific resources or acquiring work- strong online learning model.19 related knowledge. Online education and training Between 2000 and 2002, training in U.S. com- in the United States panies delivered in a classroom dropped by al- Online learning, in both the formal and informal most 10 percent, while training delivered via sense, has become a mainstream activity in most learning technologies, especially e-learning, in- universities and many large multinational firms creased 12 percent. Today, many large U.S. cor- porations are using Web-based knowledge man- 108 Chapter 6: Beyond Secondary Education agement and proprietary learning programs, put- dents are women, highlighting the potential im- ting greater demands on institutions of higher portance using e-delivery models to reach this education to produce graduates who can easily market.22 use new learning technologies (e-learning and e-training) in the workplace.20 The expectation that e-delivery will eventually enhance these opportunities and make higher Outside of the United States, the development education programs more accessible, affordable and application of e-learning and e-training has and appropriate, enhancing employability and been much slower. In some countries, particu- productivity in both urban and remote geographic larly in Africa and parts of Asia, e-learning and locations, has yet to materialize. Governments the use of the Internet are still too expensive and and donors must think more innovatively about thus less viable mediums of delivery than other how to improve access to low-cost telecommu- forms of mass delivery (e.g., TV, radio and cor- nications and ISP services. Affordable infra- respondence courses) that continue to be used, structure can then foster e-learning opportuni- based on satisfactory success over time. ties to reach wider and disbursed constituencies with special needs. Need for innovative solutions For poorer countries inAfrica and other parts of Part III. Emerging economics of the world, the advantages that ICTs and the technology-based teaching Internet could bring to women and groups in re- mote regions and poor societies has yet to be There is no evidence to date that e-learning pro- realized. In 1998, women in Africa represented vides cost savings to the public sector in either around 35 percent of higher education enroll- developed or developing countries. This may ments, but only 23 percent of university stu- partly be due to the fact that the majority of e- dents.21 Given these low enrollment figures, there learning initiatives of significant size are mostly is great potential for African women to increase private, for-profit enterprises. There are also very their participation in higher education through few existing, reliable studies that accurately com- innovative distance-education delivery models, pare the costs of delivery across institutions. should the problem of costly infrastructure be Course design and development costs, teaching resolved. salaries, communications costs, access to com- puters and faculty support are just some of the The use of ICTs to enhance distance delivery variables that can impact learning environments. also holds the promise of givingAfrican women access to a wider range of education and train- The University of British Columbia inVancouver ing programs through more interactive forms of tracked the costs of development and delivery e-delivery. Women in Muslim communities and of Web-based and print-based distance-learning women studying from home are, for example, programs over a five-year period, using a ratio on the rise in many countries. In South Africa, of one instructor per thirty students (see figure roughly 70 percent of students at Vista Univer- 6.1). As the figure demonstrates, compared to sity and 50 percent of students at UNISA (Open the assumed costs of face-to-face or Web- University of South Africa) are women. In supplemented face-to-face teaching, mixed mode Namibia, 77 percent of distance-education stu- and fully online teaching were more cost-effec- 109 E-Development: From Excitement to Effectiveness tive forms of delivery, once approximately 200 Figure 6.1 Economics of technology- students had completed each course (40 per based teaching course offering). The University of British Co- lumbiastudyalsohighlightedthepitfallsofsupple- menting face-to-face teaching with Web-based materials, which adds resources but does not lead to corresponding cost reductions elsewhere.23 The findings of the British Columbia study mir- rored the experience of the e-MBA program of Istanbul Bilgi University. Launched in 2005, the program passed the threshold of 300 students after three years of operation, delivering posi- Source: Tony BatesAssociates, Ltd., UK, 2005. Reprinted tive educational outcomes and financial returns. with permission. These results do not, however, mean that the same experience will automatically apply to other e-learning ventures, given wide variations in sala- cational outcomes. More sustainable e-learn- ries and development costs between countries. ing business models are needed, however, that are scaleable in terms of both student volume Growing economic advantage and geographic reach. of e-learning E-learning does not necessarily offer an inher- Only five years ago, the perspective offered in ent economic advantage over other forms of figure6.2rightfullychallengedthatvirtualuniver- delivery, particularly mass delivery (i.e., via tele- sities, e-learning and Internet delivery would not vision or radio). Given positive market condi- be as effective as other forms of mass delivery. tions, supported by quality, cost-effective access In some of the world's poorest countries, this ar- and affordable educational programs, however, gument holds firm today. However, significant there is a great chance that unmet demand for advances in ICT infrastructure in many develop- higher education will increase consumption of ing countries over the last four years, particularly online programs in developing countries. As pre- inChina,IndiaandMexico,haveledtosignificant viously mentioned, e-learning may be more ap- adoption of different forms of e-learning. propriate for knowledge-based applications, whereas mass media technologies are arguably Figure 6.2 describes the ideal case as one with moresuitableforskillstrainingorcountrieswhere low costs and high yields; the least attractive case two-way, interactive Web-based applications are is located in the lower right segment of graph. not available. In this context, yields on the use of In 2001, correspondence courses represented the mass media technologies will initially be higher. best mix of cost and yield. This form of distance learning has been used for more than 100 years As e-learning and instructional technologies im- and still has a place in poor countries. The inclu- prove and facilitate stronger interest and stu- sion of Web-based distance delivery on the chart dent engagement in learning, this can lead to in 2005, however, indicates its potential as a com- higher yields in both student numbers and edu- petitive alternative. 110 Chapter 6: Beyond Secondary Education the development of newer and better models Figure 6.2 Cost vs. yield of different emerge. However, given that the promise of distance-learning delivery methods improved access and affordability to adequate communications infrastructure and up-to-date education technologies in some of the world's poorest countries has yet to be realized, it may be another generation before low-income coun- tries can take advantage of these technologies on a mass scale. Corporate e-training reduces costs In a recent study of 30 universities in the United States that have introduced e-learning, prelimi- Source: Ruth and Shi, "Is Anyone Measuring Cost-Ben- nary results showed that all institutions had re- efits?" George Mason University, Fairfax, Virginia, 2001. (Arrow added in 2005.) duced their costs by about 40 percent on aver- age (the range was 20 to 84 percent). The project projected that the estimated savings of the uni- TheAfricancontinentpresentlyhasapproximately versities involved would be close to US$3.6 mil- one-fifth of one percent of the world's Internet lion each year.27 host sites.24 Experience shows, however, that the useofsimpletechnologiesgraduallyleadstohigher For many years, salaries have represented the usage rates and ultimately, to the gradual leverag- major cost component of corporate training, fol- ing of existing capacity with newer capabilities. lowed by the cost of training venues and confer- The current progression of technologies used to ences. The advent of technology-assisted learn- deliver distance learning begins with correspon- ing and e-learning is now allowing companies to dence courses and progresses to radio and TV optimize the use of salaried instructional staff courses, and ultimately, different forms of Web- through the more cost-effective distribution of based, Internet or e-learning courses. e-learning. U.S. employers have also turned to e-learning to improve employee training, espe- Arelevantexampleofthisprogressioncanbeseen cially its delivery. Employers have come to real- inChina,whichhasleveragedthebenefitsofmass ize that the flexibility, convenience and cost-ef- education. China has experienced two genera- fectiveness of e-learning not only improve train- tions of technology-assisted distance education: ing delivery, but also aid business development one based on television and the other, on the and profitability. Internet. China Radio and TV currently serves 1.5 million students.25 Whereas only 200,000 stu- Although e-learning can require a substantial up- dents were studying via the Internet in 2000, this front investment, the results of implementations number is estimated to have reached close to 1 by large users are encouraging. When class- millionin2005.26 room training is replaced with e-learning solu- tions, corporations have claimed that their costs Growth in e-learning delivery across the world dropped as much as 50 to 70 percent. In some appears inevitable, as access, affordability and cases, the per-learner cost over a five-year pe- 111 E-Development: From Excitement to Effectiveness riod is estimated to drop as much as 85 percent. In response to a recruiting crisis, in 2001 the U.S. For example, Hewlett-Packard estimates that it Army created a unique e-learning program saved US$5.5 million on training 700 engineers called "eArmyU" for military personnel. The by switching to an e-learning system.28 program presently enables soldiers to take classes and earn associate's, bachelor's, and As a result of implementing an e-learning sys- master's degree from 32 universities and col- tem, Novell reduced its per-learner costs from leges around the United States. The program US$1,800 to between US$700 to US$900; offers some 150 degree programs with more Buckman Labs reduced its total training costs than 3,000 courses. from US$2.4 million to around US$400,000; and IBM within a one-year period saved US$200 Courses are asynchronous, enabling soldiers to milliononitsmanagementdevelopmentprogram, do classwork whenever their schedule permits. while providing five times as much training at An offline learning application allows students one-third of the cost.29 to download all course materials from the course management system, work offline and Ford Motor Company saved US$17 million be- then submit assignments online whenever they tween 1999 and 2002 by introducing e-learning can access the Internet. Online tutoring and systems for company education and training. academic support, a virtual library, and an online The Ford Learning Network (FLN), launched help desk, bookstore and career services are in 1999, is based on the concept of just-in-time also provided. Two years after its launch, some knowledge and learning for employees. FLN 31,181 soldiers had enrolled in the program. The integrates all training, management, online test- most popular degree programs are in general ing and learning resources into a single user studies, criminal justice, computer sciences, interface that includes access to a library of business and management.31 more than 400,000 content titles, including 1,500 online courses, 1,900 e-books, 800 instructor- E-learning as a customer service led classroom courses, an array of internal Web In the corporate sector and governments of ad- sites, and hundreds of journals, periodicals and vanced industrial societies, informal use of e- other resources.30 learning is becoming a part of everyday opera- tions. For some years, both governments and Parallel partnerships private firms in these countries have provided A number of organizations have forged partner- training to their customers and service providers ships with universities to deliver learning to their through e-learning systems. Global information personnel. The U.S. military, for example, must technologycompanieslikeIBM,Microsoft,Cisco train 2.4 million men and women in four services and Oracle, for example, provide product-related (army, navy, air force and marines), plus roughly instruction and courses to customers or partners one million civilian employees and a large num- via e-learning systems. The exact growth of this ber of military dependents. The military's edu- type of e-learning is difficult to track, but irre- cational strategies, needs and equipment are con- spective of the data source, growth in this sector tinually evolving at a rapid pace, with extremely is compelling. sophisticated technology playing a greater and greater role in its educational services. 112 Chapter 6: Beyond Secondary Education Part IV. The gradual con- Figure 6.3 Use of e-learning tinuum towards web-based learning The continuum Educational institutions across the world are po- sitioned at different points on the road map be- tween campus- or classroom-based learning and Web-based learning. E-learning, moreover, can use any of the delivery modes of the classroom, blended classroom/online delivery or pure online Source: Tony BatesAssociates, Ltd., UK, 2005. Reprinted delivery. with permission. On-campus classroom delivery can include One of the biggest challenges of many universi- bringing Internet sites of relevance and interest ties is convincing faculty to accept the changes from around the world into the classroom. Stu- required by online delivery. Typically, the intro- dents can also access topics or course materials duction of pedagogical innovations and method- and use the Web in ways that enhance, but do ologies is challenging when e-learning becomes not replace, traditional teaching methodologies. a partial substitute for traditional face-to-face teaching. To effect changes in the way profes- Blended classroom/online delivery can par- sors organize their teaching activities and use tially replace face-to-face teaching with online new technologies, consultation with and buy-in learning. Students might, for example, access on the part of faculty is needed. topic or course materials online, or manage cer- tain aspects of their learning and interact with Higher preference for others (synchronously and/or asynchronously). blended models Throughout the phase of blended delivery, teach- The most popular e-learning programs today are ers introduce changes in pedagogical strategies in the fields of business, administration, finance to support the changing requirements of online and IT. It appears that blended learning will re- students. main the most popular mode of delivery for these programs for some time to come. Depending on Pure online delivery is located at the more ad- course objectives, blended learning can also help vanced end of the continuum, where students improve delivery by adding an online component, access either intranet-based or Internet-based while preserving instructor-led learning for con- learning objects (distributed learning systems), cepts not easily delivered outside of a classroom downloading topic or course materials and con- (e.g., clinical-based medical surgery). Although tacting tutors and each other entirely over the blended learning is the most popular form of e- Web. The design of new pedagogical models learning delivery today, greater experimentation and a shift toward greater peer-to-peer models with pure online delivery is likely to occur in the of learning becomes important during this phase. future. 113 E-Development: From Excitement to Effectiveness Open education resources · the demand for free e-learning material ver- Although countries and institutions that are de- sus "fee-paid" material; and veloping open educational resources (OER)32 are · the role of private companies in promoting e- still on a steep learning curve, such resources learning investments. have the potential to expand educational access, affordability and quality. Digitization and the Impact on the learning experience potential for instant, low-cost global communi- The use of ICTs and e-learning potentially of- cation have opened tremendous new opportuni- fer increased possibilities to positively impact ties for the dissemination and use of learning teaching and learning in a world where the num- materials. This trend has spurred an increased ber of technically savvy students with a prefer- number of OER initiatives that are available for ence for using new technologies for "anywhere, free on the Internet, including (i) open anytime" learning will continue to grow. This courseware; (ii) open software tools (e.g., learn- newer breed of learner is better adapted to dis- ing management systems); (iii) open material for tance learning based on ICTs that promote faculty and staff capacity building; (iv) reposito- learner-centered, self-paced learning. Without ries of learning objects; and (v) free educational doubt, face-to-face exchange remains impor- e-learning courses. tant in most forms of educational delivery. How- ever, the use of new technologies increases the Nevertheless, expectations of the commercial capacity for newer and better ways of knowl- possibilities of e-learning, especially at the ter- edge-sharing and teamwork. tiary level, are increasing the trend toward ac- cessibleOER.Virtuallyallcross-bordere-learning Growing evidence shows that accessing online today is commercial, with the majority of provid- courses and online applications can enhance stu- ers private, for-profit enterprises.33 It is thus likely dent learning and interest. The aforementioned that non-state investors and providers will lead studyof30U.S.universitiesconcludedthatonline the way in e-learning and pioneer new and more instruction improved student attitudes towards affordable delivery models in both formal and learning, attendance, modes of instruction and non-formal education and training systems. How completion rates. (More than 50,000 students open source software and systems, along with nationwide were involved in the study.)34 open source courseware, will develop in tertiary education remains to be determined. Issues that New technologies can also be effective in teach- need further study include: ing specific subjects. The Policy and Leadership · how copyright practices and rules for e-learn- Studies Group at the National Institute of Edu- ing material will develop in tertiary education cation (NIE) in Singapore, for example, has de- institutions; signed a computer simulation to teach education · the true costs of customizing software or managers and leaders how to structure an orga- nization. The computer simulation, "Organiza- courseware to fit local contexts; tion Structures," was designed to create an ac- · the extent to which learning object models tive learning environment. Students go through will prove successful and be used by teach- onlineprocessesofplanning,implementing,gath- ing staff; ering feedback and refection, and are then able to see the results of their organizational strate- 114 Chapter 6: Beyond Secondary Education Box 6.2 E-learning impact and its drivers According to Larsen and Vincent-Lancrin, the positive impacts of e-learning are driven by: · Facilitated access to international faculty and peers, e.g., with the possibility of online lectures or joint classes with remote students; · Flexible access to materials and other resources, allowing students to revise a particular aspect of a course, while providing part-time students more flexibility and remote students easier access to library materials; · Enhancement of face-to-face sessions, as the availability of archived lectures online frees faculty to focus on difficult topics (the debate on pedagogy sparked by the introduction of e-learning also influences these sessions); and · Improved communication between faculty and students and increased peer learning. Source: Larsen and Stephan, "The Impact of ICT on Tertiary Education: Advances and Promises," OECD, Paris, 2005, 8. gies.Although this simulation is still undergoing cerning the superior or inferior quality of fully revision and development, it highlights the kind online learning compared to other modes of ter- of engaged learning that is now occurring in e- tiary education. learning, illustrating how such learning is chang- ing traditional face-to-face delivery. Simulated e-learning through digital games Electronic communications are also being in- In certain settings, e-learning is also being con- creasingly used in problem-based learning. ducted via digital games. The U.S. military, for Teaching teams at the Law Department of example, uses games to train soldiers, sailors, Temasek Polytechnic in Singapore have, for ex- pilots and tank drivers to master expensive, sen- ample, introduced online inquiry and online dis- sitive equipment. The military does not need to cussion forums into paralegal training. The course simulate a tank or airplane, but to train people's design requires students to collaborate in teams minds so that when they get into a real tank on a to conduct a series of inquiries and client inter- battlefield, they do the right thing. Many action views. Using online forums, students post fac- games thus teach essential skills like teamwork, tual questions and probe their clients, who are communication, as well as concepts of command online twice per week. and control. Most of the games used in military training are developed by the military in partner- The "positive impact" of e-learning on the over- ship with commercial game software vendors. all learning experience is itself a significant achievement, although it has not radically trans- Weakening differentiation of online formed teaching and learning processes. While degrees and qualifications institutions that have adopted e-learning gener- Differentiation between online qualifications and ally have a positive view of its possible impact conventional campus-based degrees is starting on quality, little convincing evidence exists con- to wane and is expected to disappear over time. 115 E-Development: From Excitement to Effectiveness Even in China, where qualification certificates is the university of record for the project and the denote the form of delivery, this practice is di- provider of all qualifications.36 minishing as e-learning delivery becomes mainstreamed. Employer perceptions of and SAC plans to establish around 300 distance-learn- resistance to online qualifications have all but ing centers (DLCs) in existing hospital or medi- disappeared in the developed world. No clearer cal school locations across China, plus an addi- example of this trend can be given than the Uni- tional 90 continuing medical education (CME) versity of Phoenix Online (UPOL) in the USA. learning centers for doctors between 2005 and UPOL students are based in 91 countries, in- 2007. The DLCs and CMEs will be supported cluding many developing countries; more than by 30 strategically sited technical support cen- 50 percent of their tuition fees are subsidized by ters across the country, with satellite communi- employers (who clearly like what is taught and cations used to provide links to programs in re- do not object to the mode of delivery.) 35 gionswherelandlinetelecommunicationsservices are either difficult or more expensive to access.37 Part V. Emerging issues and success factors in e-learning The siting of DLCs inside existing hospital loca- tions allows nurses, health workers and doctors to study after hours at their place of work, tak- Technology solutions ing courses provided by one of the country's lead- When designing a successful e-learning imple- ing medical universities. The strategic location mentation, whether campus-based or for distance of participating hospitals also makes access to education, the functional needs of pedagogy and continuing education easier for general practi- learning should determine the technology se- tioners, who in some cases would have to travel lected. Acquisition of new technologies should hundreds of miles every month to fulfill continu- thus follow rational planning that has specified ing medical training obligations. In this example, the functionality required to support pedagogical satellite technologies and rich media content have strategies. This approach will not only ease the proven more cost-effective than the more con- burden of unnecessary capital expenditures, but ventional, browser-based content delivered by will also result in better and more efficient use China's Education Research Network of new technologies as they become available. (CERNET).38 Satellite communications, for example, are open- Istanbul Bilgi University (Bilgi) in Turkey is an- ing distance education and training programs to other example of how decentralized campuses more remote areas of China. Shanghai Aero- can provide online programs and resources for space Computer System Engineering Co., Ltd. students, SME workers and individuals in geo- (SAC) currently offers a satellite-based distance graphically remote locations. The university's medical education and training service called the online e-MBA program was launched in 2001 China Modern Distance Education Project and provides instruction in both Turkish and En- (CMDE). The aim of the project is to upgrade glish. Following its initial success, Bilgi in 2005 the qualifications of nurses, working healthcare began to plan a network of remote distance-learn- professionals and doctors throughout the coun- ing centers (DLCs) across Turkey. Given that try. Health and medical courses are delivered by over 50 percent of Turkey's population is under the Shanghai Second Medical University, which 116 Chapter 6: Beyond Secondary Education Box 6.3 Nine success factors of a bankable e-learning project 1) Positive regulatory environment for private investment. 2) Attractive market conditions: unmet demand and supply, plus scalability (many e-learning models need high enrollments to offset high initial development costs). 3) Saleable services (unmet demand and affordability are converted into consumption). 4) Predictable revenues. 5) A proven and trusted education business model that balances fair financial returns against the enhancement of teaching and learning provided by electronic delivery. 6) Quality and relevance of learning content, including credentials, qualifications, assessment strategies and quality management systems. 7) Strong financial condition of the provider, including positive cash flows that will produce near-term profitability and/or surpluses. 8) Strong governance and management, with a proven successful track record. 9) Clear strategic vision and strong internal control systems. Source: R. Perkinson, "Summary of Education Investment Workshop," International Finance Corporation, Washington DC, February 2003. 30 years of age, there is considerable unmet de- Success factors mand for places in higher education institutions Most distance e-learning initiatives delivered by among young people, both employed and unem- both public and private higher education institu- ployed. Bilgi intends to reach this cohort by link- tions are commercially driven. Many are private ing decentralized centers with online courses. and for profit. Public providers conveniently use Online capability will also allow less-advantaged the word "surplus" as an alternative to the more groups in semi-urban areas to access seminars conventional terms "profit" or "net income" and special workshops involving leading academ- taught in their business schools. Whether public ics and business leaders. or private, the International Finance Corporation identifies nine success factors of successful com- Courses blend online and instructor-led delivery mercial e-learning models in both developed and and will target mid-life executives, managers and developing countries (see box 6.3). lifelong learners from a wide cross-section of Turkish society. These students would otherwise The factors listed in box 6.3 determine the risks find it difficult to access similar programs due to and barriers to entry, particularly with respect to their geographic locations. As the numbers of investments in e-learning ventures. Governments students increase, the DLCs will eventually make can play a critical role in fostering non-state in- the cost of short courses more competitive for vestment in these ventures. Investors look for the emerging Turkish middle class.39 positive regulatory environments for investment, 117 E-Development: From Excitement to Effectiveness avoiding smothering regulations that create com- the size of that of the United States. As a result, mercial uncertainty. An example of a policy that the Chinese government is openly supporting the can jeopardize commercial objectives is the cap- advancement of online solutions to improve ac- ping of tuition fees, which can increase the risk cess to higher education throughout the country. to marginal returns, as well as unfairly restrict a provider from reinvesting surpluses to improve The use of ICTs and e-learning has a good quality. Capping tuition fees can also result in chance of reaching an increasing number of non- financial returns that are insufficient to service traditional higher education students by: debt or provide fair returns to shareholders. · expanding participation at both the tertiary university and non-university level Regulations that limit equity and ownership will also turn local and foreign investors away. Un- · increasing the flexibility of participation and even playing fields, where public-sector institu- modes of delivery tions receive more favorable treatment, added · increasing service to people living in remote to inconsistent and inefficient approval processes areas that disadvantage private investors, are additional · reaching foreign students who might wish to reasons that cause investors to shy away from pursueforeignprogramswhileremainingresi- investing in educational ventures. In many de- dent in their own country veloping countries, these barriers also apply to national investment in e-learning initiatives, leav- Developing countries with unmet demand for ing cross-border delivery the sole option for in- higher education programs in topics such as busi- terested students. ness, IT and finance are finding that foreign e- education providers are stepping in to fill the gap. A growing global phenomenon A number of large, scaleable e-learning programs Despite the financial distress of many e-learning are creating attention around the world, a few of ventures in the late 1990s, online initiatives are which are based in developing nations. on the rise. Although investors today are more cautious when evaluating new investments in Laureate Education Inc., USA. Laureate Edu- online learning, signs nevertheless indicate that cation offers online undergraduate and graduate these ventures will grow significantly in the fu- degree programs for working professionals, as ture, especially in developing countries. It is in well as degree programs at international cam- such countries where optimized use of new tech- puses. Laureate's online tertiary units consist of nologies can lower the barriers of access and Canter & Associates, Walden University, Na- affordability. tionalTechnological University (NTU), and Lau- reate Online Education, B.V. Collectively, these China, for example, is perhaps the world's larg- units offer degree programs in education, psy- estpotentialonlineeducationmarket. Thecountry chology,healthandhumanservices,management, has one of the world's lowest percentages of engineering and information technology, prima- university graduates per capita.As a result, over rily to students outside the United States. 100 million people aged between 18 and 25 do not have a university education. China also has Laureate's online higher education institutions are a potential continuing education market 10 times assisting the group's campus-based institutions 118 Chapter 6: Beyond Secondary Education to launch distance-learning initiatives, including These partnerships give NTU students access joint and coordinated degree programs.40 to the nation's best professors and the most up- to-date advances in their fields of study. Canter & Associates (Canter) is the largest teacher-education and professional development Laureate Online Education, B.V., is a new organization in the United States. Canter has worldwide e-learning partnership between Lau- established partnerships with accredited univer- reate and the University of Liverpool in the UK sities and colleges to produce materials for gradu- that specializes in the delivery of online graduate ate-level courses and degree programs. Since programs to working professionals in over 95 1976, it has enrolled more than 1 million teach- developed and developing countries around the ers in partner master's degree programs and world. Online students typically have between 8 graduate courses. Over 200,000 kindergarten to and 15 years of work experience. 12th-grade educators have participated in pro- fessional development courses through Canter's The Apollo Group/ University of Phoenix research-based distance-learning format, which Online. The adult education market in the USA links educators with respected educational ex- is a significant and growing component of the perts and leaders via the use of printed materi- post-secondary education market, estimated by als, video and the Internet. the U.S. Department of Education to be a US$280 billion industry.41As mentioned earlier, Walden University is based in the United States over 5.9 million, or 39 percent of all students and provides online distance programs to stu- enrolled in higher education programs are over dents from more than 30 countries, specializing the age of 24.42 Many working adults seek ac- in master's and doctoral degree programs. credited degree programs that can accommo- Courses are offered through four schools: Edu- date the fixed schedules and time commitments cation, Management, Psychology and Health and of their professional and personal obligations. Human Services. Walden is accredited by the The University of Phoenix serves this market Higher Learning Commission and a member of both in the United States and worldwide through the North CentralAssociation (NCA), a regional the University of Phoenix Online (UPOL), the accrediting association recognized by the U.S. largest private, for-profit online educational pro- Department of Education. vider in the U.S. tertiary sector today. The university's enrollment rates reflect the rapidly National Technological University (NTU) was growing market for its services: 18,000 students the first regionally accredited virtual university were enrolled in 2000, 79,000 in 2003 and over in the United States. Established in 1984 with 109,000 in 2004. the backing of industry leaders such as IBM, Lockheed Martin, Boeing, Hewlett-Packard and Tecnologico de Monterrey, Mexico. In 2004, Motorola, NTU offers master's degree programs TecnológicodeMonterreyinMexicohad101,000 and graduate-level certificate programs, as well students on all of its campuses, of which over as non-credit professional development courses. 80,000 were taking one or more of their courses Courses are delivered via videotape, CD-ROM online through UniversidadVirtual, the online di- and online through partnerships with leading visionoftheuniversity.TecnologicodeMonterrey schools of engineering across the United States. is a good example of a "wired" university by 119 E-Development: From Excitement to Effectiveness world standards. It has a digital library that in such fields as information technology; man- houses more than one million online articles and agement sciences; fashion design; hotel, travel a Business Information Center that offers 110 andhospitalitymanagement;journalismandmass databases, an exhibition hall, projection rooms communications; insurance and actuarial ser- and "connected" study cubicles for student use. vices; health programs; ecology and environmen- tal science; biotechnolgy and bioinformatics.43 As noted earlier, Tecnologico de Monterrey also has a division named Tec Milenio University, The university uses a mix of new technologies which uses Tecnologico de Monterrey profes- to overcome the typical constraints that its stu- sors to design courses from the parent campus, dents face, such as finances, family, geography which are then delivered to modestly equipped and careers. Virtual classrooms use both inter- campuses at about one-third of their original cost. active satellite technology and open classroom In 2003, Tec Milenio had six campuses that em- teaching. To improve its reach and benefit from ployed 491 faculty and 6,440 students. In 2004, economies of scale, the program has invested student enrollments rose to 8,611. significantly in very small aperture terminals (VSAT) to reach remote locations where the Another innovative Tecnologico de Monterrey Internet and other conventional delivery medi- project is Prep@NET, which uses undergradu- ums are not readily available. Students can di- ate students to teach and mentor secondary stu- rectly access the university's distributed learn- dents online. Prep@NET currently offers pre- ing system, which contains self-instruction ma- paratory school programs to students in grades terials, standard lectures by key faculty, tutoring 10, 11 and 12 . The programs are financed by and student support via special Learning Centre three state governments of Mexico. Computers faculty, plus other online learning materials and and Internet access for the students are provided self-assessment modules.44 through collaboration between the state govern- ments, local companies and vendors--an ex- ManipalU's delivery mediums accommodate in- ample of how governments and telecommunica- teractive learning methodologies, including syn- tions providers can work together to advance chronous and chat modes, email, voice-based innovative education delivery models. interactivity and white board presentations. As student numbers have grown, economies of scale Manipal Universal Learning (ManipalU), have allowed the university to keep its tuition fees India. ManipalU provides distance learning and competitive, depending on the location. Certain e-training initiatives through the ManipalAcad- learning communities have found it cost effective emyofHigherEducation(MAHE)andtheSikkim to invest in minimal infrastructure (e.g., the pur- Manipal University of Health, Medical andTech- chase of a small dish antenna and related hard- nological Sciences (SMU). The program offers ware) to make their communications with the uni- 52 programs to 40,000 students through 500 versity more affordable and of higher quality.45 learning centers in India and serves nearly 2,000 international students in more than ten countries PRCEDU, China. PRCEDU is one of the larger in the South Asia, Africa and the Far East. Its online university operations and education ser- MBA and health sector courses are designed vice providers in China. Not an accredited uni- for working professionals. Programs are offered versity in its own right, it partners with such uni- 120 Chapter 6: Beyond Secondary Education Figure 6.4 Tecnologico de Monterrey course design and delivery Source: Correspondence and conversations of the author with Tecnologico de Monterrey, Mexico, 2005. versitiestoofferonlinedegreesthroughoutChina. In less than 12 months, the courses created new In 2004, the PRCEDU platform had enrolled over employment opportunities for people who had 100,000 students in partner universities.46 previously found it very difficult to secure em- ployment in administrative and clerical positions. Reaching the disadvantaged By tracking their students, the company has de- Individuals and SMEs in socially disadvantaged termined that the earnings of people who had settings are beginning to benefit from online and completed Technocatz training were 15 to 25 blended learning. New Zealand's South percent higher than their previous earnings. Some Auckland area, for example, is made up of pock- successful certificate students are now setting etsofpoorsocioeconomicgroupsoriginatingfrom up their own online training centers for training the Pacific Islands. In 2004, Technocatz Web other Pacific Island groups, using the online TrainingLtd.,anonlinetrainingprovider,enrolled courses provided by Technocatz. Online over 5,000 Pacific Island adults in basic IT train- scalability has allowed the company to reduce ing courses. Technocatz delivers its courses charges for its IT courses to below US$150 online to different community locations, where per person, making it accessible to even very the delivery of basic IT courses is supported by poor groups.47 local practitioners. 121 E-Development: From Excitement to Effectiveness Technocatz also delivers courses online to farms E-learning markets are still predominantly local in remote settings. These courses, which would or country-based and face many language and otherwise be difficult to access, are partly subsi- cultural barriers. Simultaneously, learners are dized by Fonterra, a large milk ingredients cor- increasingly adapting to e-learning, particularly poration that does business with the farming com- mid-life working executives, who benefit from munities. The courses provide basic IT training the greater flexibility and convenience of study- to assist farmers and their wives to manage their ing "anytime anywhere," as opposed to attend- holdings more effectively by recording financial ing traditional campus-based programs. In the information, managing live stock and inventory private sector, e-learning is helping firms avoid and gaining access to market prices for stock the impractical costs of developing, upgrading and produce. The programs have particularly and transferring knowledge via traditional train- benefited more remote farmers, both large and ing delivery methods. small, including an important group of New Zealand'sindigenousMaorifarmingpopulation.48 Increased connectivity and bandwidth is making the delivery of quality training via Internet or Conclusion: The changing satellite more practical in an increasing number landscape ahead of developed, and some developing, countries. In emerging economies, however, it can be a challenge to have job-related tutorials and train- A recent survey in the United Kingdom found ing courses delivered in a cost-effective man- that professionals working in both the public and ner, especially when students and locations are private sector rated the improved access and scattered. At the same time, a shortage of in- flexibility of online learning ahead of cost sav- structors and travel difficulties in these countries ings.49 Cost savings did score very high in their make traditional training methods very costly. evaluations, but the survey findings suggest that arguments regarding the return on investment in Outlook for the future e-learning need to become more sophisticated. In 2003, 82 percent of all public universities in Overall, the added value of e-learning was seen the United States offered online courses.51 Many to be of great importance. technology courses in the country now feature Web-accessible e-learning (e.g., training in tech- Over the last decade, the e-learning industry has nology) as a standard part of course delivery. faced high set-up costs, inadequate technical in- Lack of comprehensive data from other coun- frastructure in many regions, low consumer con- tries--especially developing countries--makes fidence, cultural resistance, as well as concerns it difficult to document these trends in other parts about the quality and relevance of online pro- of the world. Existing surveys, however, indi- grams. Despite these difficulties, e-learning is cate that e-learning delivery will increase in the still on the rise, creating its own momentum. Pro- future. This finding is reinforced by the first in- viders are also using better methodologies for ternational survey on online learning conducted both mass delivery and greater personalization in 2002 by the Observatory on Borderless Higher of program delivery. There has also been a no- Education (OBHE) of the United Kingdom. The ticeable increase in the importance and adoption survey revealed that, among the 42 U.K. institu- of online learner support modules, which pro- tions that participated in the worldwide survey, vide both mentoring and technical help.50 122 Chapter 6: Beyond Secondary Education Box 6.4 Recommendations for advancing the e-learning agenda 1) Governments and telecommunications companies must work to reduce the cost of access to information and communications technologies, as this cost plays a critical part in determining the extent and uptake of e- learning, as well as how quickly new modes of ICT-assisted delivery are implemented. 2) Both governments and telecommunications companies must work together more cohesively to find better ways to invest in the human capital of individual countries by providing improved Internet-based communica- tions and resources at all levels of education. 3) Governments and telecommunications providers need to think more innovatively about how to provide low- cost telecommunications and ISP services to optimize e-learning opportunities for disbursed constituencies with special needs. 4) Governments must play a critical role in fostering non-state investment in e-learning ventures. Investors will look for positive regulatory environments and avoid smothering regulations that create commercial uncer- tainty. 5) In the near term, governments much address the lack of systematic data on the costs of e-learning. 6) Allow the functional needs of pedagogical and learning strategies to determine the technology of e-learning programs, whether such programs are campus-based or fully online. 62 percent had developed or were developing nologies. Recent OBHE surveys show that on- anonlinelearningstrategy.Mosthadalreadydone campus enhancement of teaching and learning, so as far back as 2000.52 plus improved flexibility of delivery, were the primary rationales for developing institutional e- The second OBHE survey in 2004 indicated that learning strategies. Only 10 percent of the insti- 79 percent of the 122 universities surveyed from tutions considered the enhancement of distance Commonwealth countries either had an institu- learning more important than enhancement of tion-wide "online learning" strategy (46 percent) on-campus learning.54 or were developing one (33 percent). Only 9 percent of the institutions surveyed had no e- The international movement towards knowledge learning strategy in place or under development societies, combined with the need for lifelong in 2004.53 These findings indicate significant learning systems and their growing importance adoption and/or willingness to adopt some form for economic development, will all continue to of e-learning on the part the higher education force change on education systems and corpo- sector. In general, however, the adoption of e- rate training worldwide. It is especially impor- learning by universities is still at a relatively early tant that higher education expand to include new phase worldwide. systems that accommodate new kinds of learn- ers, many of whom require flexible learning op- The most effective reasons for adopting e-learn- tions not bound by time or location. Globaliza- ing will continue to be driven by the needs of tion and internationalization will also continue to teaching and learning, not new and available tech- impact higher education systems and their use 123 E-Development: From Excitement to Effectiveness of ICTs, with e-learning environments playing Notes an important role in helping higher education in- stitutions optimize the benefits of globalization. 1 As used in this chapter, the term "higher education" is used to denote different levels of post-secondary educa- tion, sometimes referred to as "tertiary university" and In addition, the considerable growth in educa- "tertiary non-university" education. Higher education in tional, instructional and research networks will this context therefore also applies to the parallel world of have a potentially far greater positive impact on training, including vocational, "certified" industry, corpo- developing countries than e-learning programs rate and information technology training. alone. "Internet2," for example, is a generic term 2 Websites of the Chinese Education and Research Net- for the next-generation National Research and work, http://www.edu.cn/HomePage/english/ statistics/edu- Education Networks (NRENs) of the world's cation/index.shtml (accessed January and July 2005) and the China Ministry of Education, http://www.moe.edu.cn/ universities and research centers. A limited-ac- english/basic_b.htm (accessed January and July 2005). The cess research and development vehicle for ex- data listed on these sites only goes through 2002; the num- perimenting with new collaborative and instruc- bers cited above are estimates based on IFC staff research in 2004­2005. tional technology, it appears that Internet2 will be able to provide better and more appropriate 3Personal knowledge of the author. network capabilities to support research and edu- 4 NationMaster, "Encyclopedia: Demographics of India," cational activities of universities worldwide.55 Sydney, Australia, 2003­2005, http:// www.nationmaster.com/encyclopedia/Demographics-of- India (accessed July 2005). In2005,allhigh-incomeandmanymiddle-income countries are participating in second-generation 5 See Universities and Colleges Admission Service NREN projects.56 Regional (REN) projects are (ucas.com), Cheltenham, UK, n.d., http://www.ucas. ac.uk/ instit/index.html (accessed July 2005). also proliferating, including "Géant" in Europe, 6 "Red Clara" in Latin America and "APAN" in OECD, Education at a Glance (Paris: OECD, 2003). theAsia-Pacific region. Internet2 also holds the 7Statistics Canada, "University Tuition Fees," The Daily, promiseoflinkinguniversitiesindevelopingcoun- August 21, 2002, http://www.statcan.ca/Daily/ English/ tries with regional networks around the world. 020821/d020821b.htm (accessed May 2003 and July 2005). Not only can these networks provide new op- 8Austria Ministry for Education, Science and Culture, "In- portunities for collaboration and advancement of formation on Tuition Fees at Universities," January 2004, instructional technology and e-learning, they can http://www.bmbwk.gv.at/fremdsprachig/en/univ/ English_- encourage greater global collaboration, knowl- _Universities_I7478.xml#H2 (accessed May 2003 and July 2005). edge creation and transfer in countries currently without good e-development networks. 9A. Labi, "British Tuition Increase Passes Final Hurdle," The Chronicle o Higher Education 50, no. 45 (July 16, 2004); OECD, "OECD Economic Survey of the United ICTs and the Internet will continue to influence Kingdom: Graduate Contributions For Higher Education," the ways in which higher education has tradi- OECD Economic Survey of the United Kingdom (Paris: tionally been delivered. In the future, new tech- OECD, 2004), http://www.oecd.org/dataoecd/50/25/ nologies will lead to new modes of delivery that 24834806.pdf (accessed July 2005). will advance quality-based mass education to 10R. Perkinson, "IFC Appraisal," IFC, Washington, DC, groups and regions that have not yet been reached 2001; estimate based on statistical data provided by the by more conventional delivery models. Ministry of Education, Youth and Sport, Phnom Penh, Cambodia. 124 Chapter 6: Beyond Secondary Education 11Author estimate based on conversations with universi- Chinese universities and accumulated market appraisal data ties and accumulated market appraisal data regarding a range involving a range of university distance providers. of university distance providers. 27Carol A. Twigg, "Improving Learning and Reducing 12Sloan Consortium, Entering the Mainstream: The Qual- Costs: New Models For Online Learning," The Observa- ity and Extent of Online Education in the United States, tory on Borderless Education, London, UK, 2003. 2003 and 2004, Sloan Center, Olin and Babson Colleges, 28 FranklinW. Olin College of Engineering, Needham, Massa- B. Hall, Benchmark Study of Best Practices, e-Learning, a Forbes special advertising section, 2000 http:// chusetts, http://www.sloan-c.org/resources/survey.asp (ac- www.forbes.com/specialsections/elearning/e-05.htm#b(ac- cessed July 2005). cessed January and July 2005). 13Michael T. Moe, "The Book of Knowledge: Investing in 29W. Horton, Designing Web-based Training: How to Teach the Growing Education and Training Industry," Merrill Anyone Anything Anywhere Anytime (Hoboken, New Lynch & Co., Inc., New York, 2000. Jersey: John Wiley & Sons, Inc., 2000). 14International Telecommunications Union database, ITU, 30Correspondence and conversations of the author with Geneva, 2005. Observations are based on the author's cur- Latitude Consulting Group, Inc., and Novations Learning rent role in evaluating many tertiary, distance- and e-learn- ing projects internationally. Technologies, Lansing, Michigan, 2005. Printed here with their permission. 15Author's observation, based on numerous international 31Danna Voth, "TheArmy Boots up for e-Learning," Learn- project evaluations. ing and Training Innovations,Advanstar Communications, 16 Correspondence and conversations of the author with Lansing, Michigan, 2003, http://www.sfu.ca/~dchen/ Tecnologico de Monterrey, 2005; printed here with its per- Cmns453/html/reading1.htm (accessed January and July mission. 2005). 17Kurt Larsen and Stephan Vincent-Lancrin, "The Impact 32The term open education resources (OER) typically re- of ICT on Tertiary Education: Advances and Promises," fers to educational resources that are free and open to all, OCED, Paris, 2005. such as those based on open source software and courseware, including non-copyrighted digital resources. 18The term "age-group participation" refers to the partici- See, for example, the MERLOT (Multimedia Educational pation of 18-to-24 year-olds in higher education. Resource for Learning and Teaching Online) repository of 19 Unpublished data of the author, based on an IFC project, OER at http://www.merlot.org/Home (accessed July 2005). 2005. 33Author's observation, based on evaluations of many ter- 20X. Cao, "Workplace Learning and E-LearningAdoption: tiary, distance- and e-learning projects internationally. Experience of the Private Sector in the United States."World 34Twigg, "Improving Learning and Reducing Costs," 2003. Bank Institute, Washington, DC, 2004. Unpublished. 35Apollo Group, Inc., Annual Reports (Phoenix, Arizona: 21William Saint, Tertiary Distance Education and Technol- 2003 and 2004), http://www.apollogrp.edu/ Investor/ ogy in Sub-SaharanAfrica, Document 20992, Education & AnnualReports.aspx (accessed January and July 2005); Technology Technical Notes Series 5, no. 1, World Bank, Charles Schwab Corporation, Company Research Report, Washington, 2000, 97. Charles Schwab Corporation, San Francisco, CA, Septem- 22Saint, Tertiary Distance Education, 2000, 7. ber 15, 2004. 36 23A.W. Bates, Technology, E-Learning and Distance Edu- Correspondence and conversations of the author with cation (London: Routledge, 2005). SAC in 2004; printed here with its permission. 37 24Stephan Ruth and Min Shi, "Distance Learning in Devel- Ibid. oping Countries: Is Anyone Measuring Cost Benefits?" 38Funded by Chinese government, CERNET is a national George Mason University, Virginia, USA, 2001. communications backbone that connects universities and 25Ruth and Shi, "Distance Learning in Developing Coun- colleges across China. It was started in 1994 to improve tries," 2001. networking across the sector and to accommodate the fu- ture demands of China's strategies for distance education 26Author's estimate of 2004, based on conversations with connectivity and growth. See China Education and Re- 125 E-Development: From Excitement to Effectiveness search Network, "CERNET Evolution," Beijing, China, 54Ibid. August 15, 2001, http://www.edu.cn/20010815/ 55M. Foley, unpublished paper, World Bank Institute, 188550.shtml (accessed July 2005). Washington, DC, 2005. 39Correspondence and conversations of the author with 56Ibid. Istanbul Bilgi University, May 2005, which approved this text. 40Correspondence and conversations of the author with Laureate Education, Inc., Baltimore, Maryland, 2005; printed here with its permission. The main source of infor- mation for this section is Laureate's corporate website, http://www.laureate-inc.com/univOnline.php (accessed January and July 2005). 41Apollo Group, Annual Report, 2003. 42"College Enrollment by Age of Students, 2002," The Chronicle of Higher Education, 2004. 43 Correspondence and conversations of author with MAHE, 2005; printed here with its permission. 44Ibid. 45Ibid. 46 Correspondence and conversations of author with PRCEDU, Beijing, China, 2005; printed here with its per- mission. 47Data provided by Technocatz, Auckland, New Zealand, 2005; printed here with its permission. 48 Correspondence and conversations of author with Technocatz, Auckland, New Zealand, 2005; printed here with its permission. 49Epic Group Plc, "Epic Survey 2003: The Future of E- Learning," White Paper, Epic Group, Plc, Brighton, UK, 2003, http://www.epic.co.uk/content/resources/ white_papers/survey2003_htm (accessed January 2005). Printed here with the permission of Epic Group. 50Author's observation, based on numerous reviews of international projects. 51Sloan Consortium, Entering the Mainstream, 2004. 52OBHE, "Online Learning in Commonwealth Universi- ties" (surveys), OBHE, London, United Kingdom, 2002 and 2004, http://www.obhe.ac.uk/products/briefings (ac- cessed May 2005). 53Ibid. 126 Chapter 7 The Role of International Cooperation in e-Development by Bruno Lanvin and Isabel Neto T o a large extent, dealing with the e-agenda cies in this sphere. Such efforts are not only fi- is generally seen as a domestic matter, nancial (i.e., official development assistance), but whether one addresses e-strategy (chap- moreimportantly,policy-related(i.e.,sharingbest ter 3), e-leadership (chapter 4) or even the en- practices and assisting nations to create effec- abling environment for ICT development (chap- tive regulatory institutions). ter 2). Yet telecommunications and other infor- mation-intensive services are the first candidates On the other hand, the international community forinternationalization,sincetheyrelyonthemost at large has a responsibility to respond to chal- mobile global factor of all, namely, information. lenges that are broader than those faced by indi- The process that led to the World Summit on the vidual nations, such as the technical, economic Information Society (WSIS) is itself recognition and policy rules that will constitute universally of the international dimension of information-re- accepted rules of the game. This category of lated issues. activity includes norms and standards (the ITU), trade agreements (the WTO), but also to some The international community now faces a num- extent, Internet governance (the WGIG). It also ber of challenges and expectations with respect includes international financial support for re- to e-development. On one hand, it is expected to gional infrastructure and other types of cross- support national efforts to build information so- border cooperation. cieties and bridge the digital divide. Efforts to build infrastructure, connect less densely popu- The international community also has a role in lated areas and offer innovative ways for local developing analytical and policy tools that allow communities and businesses to create value from developingnationstobetterconceptualizetherole better connectivity are the core mandate of bi- of ICT in development. It also has a role in stimu- lateral donors and multilateral development agen- lating long-term investment in relevant areas. 127 E-Development: From Excitement to Effectiveness Collecting available data and statistics, as well where in e-development.1 Nor does it aim to pre- as formulating internationally agreed develop- scribe, judge or rank ongoing international ef- ment goals (such as the MDGs or the WSIS forts to bridge the digital divide. Its goal is to goals) is one part of this task. Another is to fa- offer a global view of recent efforts to achieve cilitate collaborative efforts. Effective global col- internationally agreed development goals through laboration in cyber-security will, for example, better use of ICTs, as well as to facilitate better require establishing new relationships and new worldwide distribution of the benefits of ICTs. connecting paths for information between pri- The paper thus endeavors to answer two major vate and public-sector entities. questions: What major trends are observable in international cooperation for e-development? Last but not least, the international community What new roles and modus operandi could the must provide forums where all of these issues international community adopt to maximize the can be discussed openly and professionally. The positive effects of ICT on global development? G-8 Digital Opportunity Task (DOT) Force, the U.N. ICT Task Force and WSIS all fall under Section 1. Trends in this category. e-development and international cooperation It would nevertheless be a tragic mistake to limit the definition of international community to the This section looks at both the supply and demand public international community (i.e., bilateral and sides of international e-development efforts. multilateral donors). The private sector and civil When considering possible roles and responsi- society at large are increasingly being called to bilities of the international community, financing theforetohelplocalcommunities,nationalecono- is a natural first topic (the supply side). Are in- mies and international entities face the challenges ternational aid and investment flows helping to of the emerging global information economy.The finance the connectivity needs of poorer regions? WSIS has been breaking new ground by involv- Do they focus on areas and sectors likely to pro- ing civil society organizations in intergovernmen- vide a quick economic return? Do they concen- tal debates. This practice is in line with the ef- trate on infrastructure (e.g., mobile telephony, forts of a number of international bodies (e.g., broadband capacity), services (e.g., ICT in edu- G-8 DOT Force, the U.N. ICT Task Force and cation), or multisectoral approaches (e.g., e-gov- entities incubated by the World Bank, such as ernment)? How do public and private funding the Development Gateway) to do the same. The combine and/or substitute for one another in such involvement of the private sector and civil soci- efforts? Is e-development a priority in develop- ety organizations in public international proceed- ment assistance or is the appeal of ICT for de- ings is contributing to the mutual cross-fertiliza- velopment fading in the face of other concerns tion of stakeholders involved and to new forms such as terrorism, HIV/AIDS, and access to of cooperation among them (e.g., private-public drinkable water? partnerships). Similar efforts and innovations are expected in coming years. It is important not to reduce the issue of interna- tional cooperation to the supply side. Defining The purpose of this chapter is not to provide a demand for e-development is equally important. state-of-the-art matrix of who is doing what and 128 Chapter 7: The Role of International Cooperation in e-Development What are the demand trends in developing coun- Figure 7.1 Total DAC donor bilateral tries and economies in transition? What do these ODA committments to ICT infrastructure countries identify as the main roadblocks to effi- cient, competitive and fair information econo- mies? What kind of support do they expect from the international community? The rise in private financing for the ICT sector In recent years ICT infrastructure investments and financing in the developing world have re- flected decreasing levels of official development assistance (ODA) and increasing levels of pri- vate sector-funding (see chapter 1), with ODA Notes: DAC: OECD DevelopmentAssistance Committee; shifting towards specific ICT applications. ODA ODA: Official Development Assistance. flows for infrastructure in general (whether en- Source: OECD Development Assistance Committee (DAC)/OECD, Financing ICTs for Development, 2005. ergy, transport, ICTs, irrigation, water supply, sanitation or the infrastructure components of rural and urban development) have been declin- cades. Several decades ago, the ICT sector was ing since 1996. The decrease in ODA commit- in the hands of state-owned enterprises. Follow- ments was especially sharp in the ICT sector: ing a wave of PTT privatizations and the intro- plunging from US$1.2 billion in 1990 to US$194 duction of competition, especially in mobile tele- millionin2002.2 phony, a number of private telecommunications operators has emerged. These private operators Figure 7.1 illustrates the magnitude of OECD have helped increase teledensity significantly. In bilateral donor commitments to the ICT infra- Africa, for example, there are now more mobile structure, both in total volume and as a share of phones than fixed and teledensity (both fixed and these countries' total allocable ODA. The num- mobile) has increased fivefold since 1995.4 In bers speak for themselves: the share of aid for addition, the private sector has made significant ICT infrastructure dropped from 4.5 to 0.6 per- investments in the sector. Over the last decade, cent of total bilateral ODA in the period 1990­ the combination of PTT privatization, mobile net- 2002. This trend resulted from the wave of work licensing and other private ICT investment privatizationsofnationaltelecommunicationspro- opportunities have drawn over US$250 billion of viders that occurred in the 1990s, plus the per- private investment into ICT infrastructure in de- ceived profitability of the ICT sector, which veloping economies.5 prompted bilateral and multilateral donors to strengthen the role of private investment in in- The ICT sector worldwide, even in some of the frastructure development.3 least-developedcountries,hasprovenhighlyprof- itable in many areas. Financial resources are thus It is now generally accepted that the private sec- naturally drawn to the sector, given the opportu- tor and foreign direct investment (FDI) in par- nity for a favorable return on investment (par- ticular have been the primary sources of ICT ticularly in the case of mobile telephony). How- development and finance over the past two de- ever, a significant amount of recent investments 129 E-Development: From Excitement to Effectiveness were tied to privatizations and the payment of sequence, the ICT component of these projects license fees, not necessarily to the construction is sometimes difficult to quantify or even iden- of new facilities (i.e., they correspond in some tify. This trend, discussed in more detail in the instances to one-time infusions, not long­term, following section, also explains to some degree sustained flows). In addition, FDI in ICT infra- why investment flows into the ICT sector are structure has declined markedly in recent years decreasing--part of the decrease can be ex- following the euphoric boom years of the 1990s.6 plained by the fact that this investment is attrib- uted to specific social and economic sectors, in- Given the dramatic shift of telecommunications stead of as an ICT expenditure or investment. infrastructure from public to private ownership, Indeed, it is extremely difficult to track ICT-for- both multilateral and bilateral donors and the gov- development investment figures. ernments of developing countries have substan- tially reduced their role in funding capital ICT The challenges of mainstreaming investments. Indeed, even though there is clearly ICT as a tool for development still a role for public financing of ICT (e.g., with Since the mid-1990s, bilateral and multilateral respect to ICT-for-development projects), other development agencies have been supporting ICT- priorities, such as health, water, food, and emer- for-development (ICT4D) though a variety of gency relief are competing for public funds. pilot activities. This funding gave rise to a multi- plicity of projects, often of small financial value, Most donors have abandoned support for ICT scattered across all sectors and regions. The infrastructure, leaving the job to the private sec- rationale behind this approach was clearly heu- tor. The World Bank in particular believes that ristic: at a time when no previous experience or investment in ICT infrastructure should continue theory existed about how to use information tech- to come predominantly from the private sector. nologies for development, donors believed it use- Consequently, it generally advises governments ful to "let a hundred flowers bloom" and then against investing scarce public funds in infra- compare results. In the first years of the twenty- structure, except for situations where public in- first century, this initial approach ran into two vestments can be a catalyst for private invest- distinct challenges: ment, the market alone will not meet access ob- · The constellation of small pilot projects gen- jectives (e.g., rural access) or ICT infrastruc- erated a myriad of anecdotal evidence that ture is considered a public good. showed how imaginative uses of ICTs could enhance the delivery of education, health, At the same time that investment in the ICT sec- gender balance, better governance and other tor has shifted from public to private sources, a significant development goals. However, such stronger international commitment to reduce pov- anecdotal evidence provided little concrete erty has changed the focus of international do- information about the macroeconomic impact nors from infrastructure and technology per se of ICTs on developing countries or the to ICT applications that can promote develop- scalability and sustainability of such projects. ment. Many donors have thus "mainstreamed" ICTs in their development assistance programs, · Following the burst of the ICT "bubble" using ICT in different projects (e.g., health or around 2000, development circles lost inter- education) as a tool of development. As a con- est in ICT, as development professionals came 130 Chapter 7: The Role of International Cooperation in e-Development to view ICT as gadgetry, when compared to (DAC) commissioned a major survey of how bi- lasting development issues such as endemic lateral and multilateral donors had mainstreamed diseases or new challenges such as interna- ICT in their activities (see box 7.1). tional terrorism. The OECD/DAC also produced a detailed ma- Given these challenges, the effort to mainstream trix of "who is doing what" in ICT for develop- ICT into "traditional" development projects was ment.8 The matrix confirmed that most donors problematic. As the private sector took increas- had overcome the trauma of the "ICT crash," ing interest and responsibility in financing infor- realized that ICT was a major ingredient of de- mation infrastructure and developing telecom- velopment and were mainstreaming it in their munications and information services worldwide, development work. the international donor community appeared to struggle with its own role in bridging the digital Recently, public donors have adopted a different divide. Was the time ripe for moving beyond pi- view of what mainstreaming means. For ex- lots and anecdotal results? Should donors be in- ample, the OECD/DAC matrix of 2003 (see Box volved in scaling up successful projects, or should 7.1) showed a different picture than the 2001 sustainability be a pre-requisite before additional version (see Box 7.2). The same 2003 exercise resources were devoted to ICT4D projects? underlined the difficulty in identifying and quan- Were good practices emerging from the multi- tifying the ICT component of various projects, plicity of small projects financed in the 1990s? suggesting that most donors had mainstreamed Was ICTa major tool for development or merely ICT in their development programs. However, a technical dimension of development efforts in the exercise also clearly recognized that the to- sectors such as health and education? tal volume of funding for ICT had not increased between 2001 and 2003 and remained "well short To address these complex issues, the interna- of US$1 billion." tional community has relied on a number of fo- rums, the mandate of which cut across sectors. Beyond "either/or" These forums have included international bodies The old debate of the 1990s about choosing be- such as the G-8 DOT Force (created in 2000), tween ICT and other development imperatives the U.N. ICTTask Force (also launched in 2000), (e.g., the argument that investment in ICT draws as well as the WSIS process (which gathered precious resources away from more urgent de- momentum in approximately the same year). The velopment needs) has now shifted. The old idea thinking of donors in this area was also stimu- of trade-offs has given way to a new idea of lated by (i) ongoing efforts to coordinate aid flows complementarity. It is now clear that these new and increase the efficiency of development as- technologies are not an end in themselves. Nor sistance in general,7 and (ii) the new momentum will a one-size-fits-all approach work--develop- in favor of internationally agreed development ing countries vary too greatly in geography, cul- targets such as the Millennium Development ture and level of economic attainment. ICT can- Goals(MDGs).Majorpublicdonorssubsequently not eliminate the need for political stability, physi- devoted specific attention to mainstreaming ICT cal infrastructure, human capacity or basic health in development programs. For example, the care, nor can it offer a panacea for all develop- OECD Development Assistance Committee ment problems. 131 E-Development: From Excitement to Effectiveness Box 7.1 Survey of donor ICT for development activities The DevelopmentAssistance Committee of the OECD conducted a survey in 2003 on how bilateral and multilat- eral donors have mainstreamed information and communication technologies (ICT) in their development assis- tance programs to more effectively achieve development goals, particularly the Millennium Development Goals (MDGs). The survey covered twenty-three DAC members and twenty-five multilateral agencies. Its main find- ings were: · The vast majority of donors recognize the potential of ICT as a catalyst for socioeconomic development, but not all of them are at the same stage of using ICT to meet development objectives. While some are planning to develop new ICT strategies, others have already used ICT for years and have drawn lessons from their past experience; · In all cases, donors are using ICT in service of broader strategic objectives in a number of development sectors (health, education, e-commerce, e-government, etc.). Their focus is on meeting objectives, not on technology per se; · Achieving the MDGs, particularly poverty reduction, underpins most donor ICT strategies. These strategies aim to create an inclusive information society with special attention to underserved regions, including least- developed countries (LDCs) and vulnerable populations; and · Most donors have built ICT4D strategies on partnerships that involve a number of actors from other bilateral and multilateral agencies, ministries (communication, education, etc.), civil society, the private sector, univer- sities and research institutions in both developed and developing countries. Source: OECD/DAC, "Survey of Donor ICT for Development Activities and the Lessons Learnt," OECD, Paris, 2003. Evidence is growing, however, that ICT is a po- ICT is a powerful tool to pursue tentially powerful tool in an overall development development objectives strategy, when used in the right way. This new at the national level approach requires innovative and close partner- The new ICT approach of major donors is mir- ship between governments, business and civil rored in national development strategies that view society.9 ICT is, in fact, a general-purpose tech- ICT as a major instrument to kick-start certain nology (GPT) characterized by "(1) wide scope development efforts (e.g., reforming government for improvement and elaboration; (2) applicabil- through e-government activities) or accelerate ity across a broad range of uses and in a wide others (e.g., using ICT to facilitate trade). variety of products and processes; and (3) strong complementarities with existing or potential new Over the last few years, however, one of the technologies. GPTs play the role of `enabling most striking changes that has affected demand technologies,' opening up new opportunities, in developing countries and countries in transi- rather than offering complete solutions."10 tion is a shift from "i-demands" (ICT-focused and ICT-specific needs) to "e-demands" (re- 132 Chapter 7: The Role of International Cooperation in e-Development quests related to the e-development agenda, such and indirect needs (e.g., strengthening the regu- as e-government, e-commerce, e-health and e- latory and competition environment, building vi- education). Even more recently, there has been able economic models for universal service and a shift from "e-demands" to "k-demands" interconnection). (knowledge-related needs, particularly in the area of service-based competition, innovation and When the same government begins to formulate vocational training). priorities as "developing e-commerce," or "pro- moting e-government" and to aggregate these The international donor community finds such priorities under the umbrella of "e-strategies," demands (whether e- or k-based) more difficult the translation challenge becomes significantly to address because these demands do not cut more complex for the donor community. Sud- simply across sectors, but also across donor and denly, donors have to consider and discuss the beneficiary audiences. When a national govern- appropriateness of such objectives, touching on ment includes ICT development as a priority in new issues of e-readiness, the sequencing of e- its national strategy, the international community strategies and the sustainability of application- has relatively little difficulty translating this pri- based projects (as opposed to projects based on ority into direct (e.g., connectivity, ITequipment) generic technologies such as telephony). The Box 7.2 Changes in the OECD/DAC matrix, 2001 to 2003 · By 2003, most donors had developed a strategy not only to use ICT within existing and new programs, but within their own agencies to improve the delivery of development programs. · Long-term experience in the field with ICT-for-development pilot projects is shaping strategies, as are in- depth studies. The needs of developing countries, particularly the priorities identified in the Millennium Decla- ration, guide these strategies. · Donors consider ICTs in the broad sense, encompassing both older technologies (radio, television) and newer technologies (Internet, mobile phones); some donors emphasize the need to combine the two in order to realize maximize benefits. · In most cases, donors view ICTs as tools to meet development objectives, not as a separate sector. Some donors underline the need to create an enabling environment as a prerequisite for effective use of ICTs as tools of development. These donors view investment in telecommunications infrastructure and the creation of the necessary technological, legal, regulatory and human framework as a priority. · Guiding principles for the use of ICT emphasize respect for national ownership and demand-driven support and assisting developing country governments to formulate their own ICT development strategies. When developing countries decide to harness ICT for development, some donors recommend that their respective ICT strategies be incorporated into Poverty Reduction Strategy Papers (PRSPs). Source: OECD/DAC, "Survey of Donor ICT for Development Activities," 2003. 133 E-Development: From Excitement to Effectiveness fundamental ingredients of success (e.g., con- Two possible avenues will be explored in detail: duciveregulatoryandinstitutionalframeworkand (i) the need to learn from experience by mea- economic regimes that ensure the viability of the suring how ICT concretely benefits development, ICT sector) have not lost their value, but they and (ii) the urgent necessity for international play- are now one step further from the current needs ers to revisit and revise their roles. of potential aid recipients, which are expressed at a higher level. Monitoring, evaluation and stocktak- ing: Learning from experience The advent of knowledge societies has further Chapter 3 addressed the need for monitoring and complicated the picture for donors: in an increas- evaluation frameworks for ICT-based develop- ing number of countries, ICT is seen as a tool to ment initiatives. The international community pursue an e-agenda, itself only one set of priori- (donors in particular) has recently become more ties for achieving broader concerns, such as in- aware of the importance of such frameworks, ternational competitiveness or fair and dynamic as well as the necessity to identify best prac- information societies. Paradoxically, by reach- tices and share knowledge about how ICT can ing a higher level of complexity, the international contribute to specific development objectives. community may soon have an unprecedented Without going into technical details, this section opportunity to solve the difficult dilemma of e- will review some of the trends in this domain development. and how they affect the roles of international organizations. Section 2. What next? Possible new roles for the Measuring the benefits of ICT and the success international community or failures of specific projects is particularly ur- gent because current data is limited. ICT projects are difficult to track and there is insufficient rig- The previous section has identified some of the orous data to serve as a basis for policy deci- trends, demands and expectations of the inter- sions. Certain organizations are tracking differ- national community in the area of ICT for devel- ent aspects of ICT. The ITU's World Telecom- opment. It also highlighted some of the changes munications Development Report (WTDR),11 that have begun to be implemented and/or ac- for example, focuses on telecommunications. The knowledged in this sphere, such as increasing Global Information Technology Report the role of the private sector and shifting from (GITR) edited by the World Economic Forum an ICT-based to a development-based agenda. also tracks ICT, but from a strong private-sec- tor perspective.12 A recent report produced by This section attempts to suggest some of the the WSIS Task Force on Financing Mecha- ways in which the international community nisms13 provides helpful information on track- (public donors, international organizations, the ing ICT investments; the publication is the re- private sector and civil society at large) could sult of a substantial effort to gather information play a more active and decisive role in building from different sources. a truly global information society that support development. The multidisciplinary nature of ICT and the fact that it is a relatively new area makes it espe- 134 Chapter 7: The Role of International Cooperation in e-Development cially difficult to track. Given the aforemen- and practical implementation. Best- and worst- tioned shift from providing technology to fos- practice knowledge is crucial in this context. tering development through sectoral applications, Best-practice examples should focus not simply ICT project components have become neither on projects that have succeeded, but the critical separately identifiable nor quantifiable. Even the success factors, including business analysis and task of trying to track investments in ICT can strategic planning for ICT-based solutions; ca- be challenging. Investments in the sector in- pacity development inputs, activities and outputs clude infrastructure projects, support to the IT that can be measured; and risk management. industry and funding of ICT applications. Where Similarly, worst practices should analyze the ICT is only one component of a larger project, causes of failure and identify the obstacles that as opposed to a standalone project, it can be prevented good projects from achieving difficult to track and monitor donor commit- sustainability, scalability, and on-time completion ments, which potentially leads to incomplete or within budget. inconsistent reporting. Additional data and analysis can assist e-devel- As mentioned in Chapter 1, there is also little opment actors to design comprehensive frame- rigorous, comparable evidence or project evalu- works for evaluating how ICT assists the de- ation that documents the benefits of ICT to de- velopment process, providing rationales for velopment. International cooperation organiza- sectoral decision makers to promote ICT in their tions need to measure how ICT benefits devel- respective areas. An example of such frame- opment in order to (i) justify their investments, work is the "multiplier vs. subtracter" approach specifically, the use of public funds, (ii) use these developed by Lanvin and Qiang and briefly de- measurements as a strategy and activity plan- scribed in box 7.3.14 In this model, the ICT sec- ning input and (iii) promote sustainable models tor is used as a lens to re-think development strat- that work. In this respect, international organi- egies and a tool to help all sectors reach devel- zations may be in a privileged position to enable opment objectives. This approach explicitly rec- stock taking and the dissemination of shared ognizes the role of ICT as a cross-sectoral force. experience. Measuring and evaluating ICT projects will iden- The sheer volume and diversity of initiatives in tify which models work and can achieve the ICT field reflect that international develop- sustainability and, ultimately, scalability. Interna- ment organizations recognize the potential power tional organizations are in a privileged position to of ICT to promote development. In some cases, conduct such stock taking, compile best prac- significant resources have already been ear- tices and disseminate information, as well as pro- marked for ICT. Yet for ICTs to become a more vide forums for research and reflection. Ex- effective tool of sustained growth and poverty amples of such initiatives are infoDev reduction, it is urgent that donors move beyond (www.infodev.org) and the Development Gate- experimentation to a more rigorous, coordinated, way (www.developmentgateway.org). Certain results-oriented approach. international cooperation organizations have al- ready started working in this area, or have at Donors need to determine how they are going to least identified it as key priority. A forthcoming use available resources: both in terms of funding World Bank publication, for example, will look at 135 E-Development: From Excitement to Effectiveness Box 7.3 The "multiplier vs. subtracter" approach:Aframework for ICT The "multiplier vs. subtracter" approach provides: 1) A conceptual frame of reference that decision and policy makers can use to (1) see the big picture, (2) identify causalities between actions and anticipated effects and (3) choose the pre- ferred political path, relative emphases and sequencing of their own activities and those of their public and private partners. Such a frame- work provides examples, references and meth- odologies for estimating the effects of higher investment in ICT on various social and eco- nomic objectives (including the MDGs). 2) A set of "scorecards" that policymakers, local stakeholders and international contributors can use to (1) measure the efforts made at different levels of decision making, (2) evaluate their impact along the chain of causalities described above and (3) mobilize energies and support where any "missing link" or imbalance is identified that could imperil the pursuit of established development objectives. 3) Feedback mechanisms (particularly at the local level) for the public and private sector to promote ICT as a tool for development and growth. Source: Lanvin and Qiang, "Poverty `E-readication,'" 2003. trends in the information society and provide an private sector--will continue to play a major role ICT index.15 The UNDP has identified both re- in financing local, regional and global efforts to search and analysis of effective strategies and bridge the digital divide and build vibrant, com- the use of ICT to enhance achievement of petitive and fair information societies, this com- MDGs as key areas of work for its ICT portfo- munity will increasingly be called to accept new lio. Last but not least, recently defined UNCTAD responsibilities and roles. Specific areas of in- priorities include research and analysis on ICT ternational cooperation with immediate relevance for economic development, measurement of e- are described in the paragraphs below. business and related indicators, and assessments of the digital divide. Provide globally accepted frameworks for analysis, measurement, monitoring and New roles for international evaluation. Globally comparable indicators are cooperation needed that can describe the relative strengths Although the international community--includ- and weaknesses of individual economies vis-à- ing public donors, international agencies and the vis information-intensive competition. Indicators 136 Chapter 7: The Role of International Cooperation in e-Development that measure e-readiness or knowledge pillars Facilitate mechanisms for e-security. Given may, for example, progressively become core the cross-border nature of cyber-crime, networks elements of investment climate analyses and for exchanging know-how and expertise relat- national development plans.16 National statisti- ing to new legal frameworks will be required to cal offices will seek international guidance to investigate, prosecute and deter cyber-crime and providereliableandinternationalcomparabledata e-security threats. Telecommunications regula- about the state and availability of ICT infrastruc- tors or ministers with ICT portfolios will increas- ture and services in their respective economies.17 ingly be required to anticipate the impact of next- Last but not least, monitoring and evaluation of generation networks on economic and social sec- efforts will become more central to the decision tors that are dependent on telecommunications making of donors, investors and beneficiaries of and Internet services. These bodies are now fac- ICT4D initiatives and programs. ing complex new challenges, including certain challenges of convergence (e.g., SMS integra- Facilitate new sources of financing for tion with e-mail and Voice-over-IP). In many ICT4D. Because an international viewpoint is countries, regulatory bodies will need to estab- often a pre-requisite for collecting and identify- lish an overall e-security framework in which ing best practices and successful experiences, security concerns relating to basic telecommu- internationalplayerswillcontinuetohavethecore nications, the global grid and the Internet are part responsibility for testing, studying and dissemi- of a complex, international set of institutional ar- nating new business models for financing ICT rangements.20 for development. This role is particularly impor- tantindomainssuchasuniversalservice,inwhich Lead experimentation and disseminate best public entities and the private sector can join practices. Information technologies continue to forces in a mutually beneficial way. International change at a rapid pace. It is likely that break- public donors also have an increasingly impor- through innovations which combine ICTs and tant role to play in ushering private funds into other domains (e.g., biology, genetics, agricul- ICT financing in emerging economies,18 with ture) will occur with increasing frequency in the special attention given to risk mitigation and sub- near future. The international community's role sovereign lending.19 here must be to encourage and support pilot projects that illustrate how such innovations con- Ensure that developing nations have a voice tribute to specific development objectives. It must in the development of new governance frame- do so in a true spirit of technological neutrality works. Agrowing number of ICT-related issues (i.e., giving priority to development goals over are likely to become cross-border issues in com- technology adoption). The international commu- ing years. Internet governance, for example, is a nity may also be able to provide guidance to the harbinger of broader issues of global governance. scientific community, stimulating greater efforts In this context, the international community must to include development concerns into fundamen- ensure that developing countries have a voice in tal scientific research. Exploring the applicabil- discussing and adopting governance frameworks ity of specific technical solutions to poorer coun- that may endure for some time to come. tries may yield positive and important lessons for governments and the private sector.21 137 E-Development: From Excitement to Effectiveness Provide forums for the exchange of views. however, a more integrated vision of develop- Last but not least, information societies are be- ment has begun to combine these two perspec- ing built without textbooks. Technologies are tives: an increasing number of developing coun- changing too rapidly, and new successful prac- tries are realizing that their current and future tices are blossoming too fast, for a stable list of role in the global information economy depend standard procedures to be established. The build- on their ability to mobilize and use knowledge. ing of information societies also raises a number of social, ethical and political issues that cannot Competitiveness and the ability to create value be addressed in the absence of society-wide in innovative ways are increasingly seen as in- debates. A major responsibility of the interna- terdependent. The e-agenda thus becomes a core tional community in the years to come will be to set of objectives and priorities within a larger provide neutral ground for such debates at the knowledge agenda ("k-agenda") and ceases to global level. Hopefully, these forums will become be an end in itself.Although the original i-agenda "circles of confidence" where new partnerships of the 1980s and early 1990s has not lost its im- can be built between stakeholders at local and portance, is now increasingly seen (by both do- internationallevels.Stimulatingsuchpartnerships nors and developing countries) as an intermedi- should be a priority objective of international co- ate set of priorities and infrastructure conditions operation.22 that allow countries to pursue higher-level ob- jectives. Meanwhile, the environmental condi- Conclusion: Taking advantage tions of rule of law, good governance, and con- of new momentum ducive regulatory and competition frameworks remain as important as ever. The trends emerging today will accelerate in For the international community, the progression coming years--compounded or mitigated by in how ICT deployment has been perceived trends that have not yet been identified. One of (moving from an "i" to "e" to "k" agenda) has the main tendencies of ICT for development is been the source of additional challenges. The not going to fade away quickly: the shift towards better circumscribed an issue is, the easier it is turning ICTs into instruments of development. to elaborate suitable institutional and conceptual frameworks. This was the case when the inter- During the 1980s and early 1990s, governments national community dealt with expanding and sought greater connectivity as an end in itself, harmonizing telegraph networks across national and were focusing on the conditions that would borders. However, when seemingly unrelated allow them to get there, including attracting for- issues (e.g., interconnection regimes, trade ne- eign investment and improving their regulatory gotiations, freedom of expression, intellectual frameworks (an "i-driven" agenda). As of the property, education, knowledge and governance mid-1990s, an "e-everything" era began in which issues, to name but a few) start converging un- the e-agenda (e-commerce in particular) drove der the single heading of "information societies," ICT4D. National governments formulated ICT the existing international approach to these is- needs along the lines of e-agendas, geared to- sues, including forums, institutions and mecha- wards improving specific sectors (e.g., educa- nisms, needs to be revisited. tion, health, governance), which became the heart of the ICT4D rationale. In the last few years, 138 Chapter 7: The Role of International Cooperation in e-Development Given this background, the MDG+5 Summit of 6See UNCTAD (United Nations Conference on Trade and September 2005 and the second phase of the Development), E-Commerce and Development Report 2004 (New York and Geneva: UNCTAD, 2004). WSIS in November 2005 should be seen as an 7 unprecedented window of opportunity that will On February 24­25, 2003, a path-breaking meeting took place in Rome. Senior officials of over 20 multilateral and not repeat itself in the near future. The former bilateral development organizations and about 50 countries has the ability to make ICT a priority of the de- spent two days discussing how they could improve the velopment agenda, whereas the latter can make effectiveness of their work--how they could better fight development the main objective of ICT-related poverty--by working more closely together. The main mes- sage, expressed through the Rome Declaration on Harmo- international debates. The ambition of the inter- nization, is clear: donor aid, however well-intentioned, has national community should be to seize this mo- come to levy a high toll on recipients in terms of transac- ment to reconfigure the ICT-for-development tion costs. Donors can alleviate this problem by doing more to coordinate their efforts, harmonize (and thus reduce) debate, both the development and ICT sides. By their multiple requirements, and assist partner countries to accepting the new roles described above, gov- take charge of their own development process. At the Fo- ernments, international organizations, business rum, donors and partners presented their plans for carrying and civil society at large are in a position not this work forward. ("High-level Forum on Harmonization," http://www1.worldbank.org/harmonization/romehlf, last only to turn the information revolution into an accessed 19 July 2005). On the same topic, see also the instrument of global prosperity, but also to shape Development Gateway Special Report "Aid the ways in which they interact with each other Harmonization:What Will It Take to Meet the MDGs?" in the face of other global challenges. http://topics.developmentgateway.org/special/ aidharmonization (last accessed 19 July 2005). More re- cently, a follow-up high-level forum took place in Paris Notes (February 28­2 March 2005) on "Joint Progress Toward Enhanced Aid Effectiveness: Harmonization, Alignment, Results," under the leadership of the World Bank, the 1 Such an exercise would necessarily have a short life ex- OECD, regional development banks and the French gov- pectancy and is more properly handled by online observa- ernment. tories such as those developed by the OECD (e.g., the Development Assistance Committee, or DAC), the Devel- 8The original matrix was produced by the OECD Develop- opment Gateway or the stock-taking work of the WSIS. ment Center. See OECD/DAC, Donor ICT Strategies Ma- trix (Paris: OECD, 2003), http://www1.oecd.org/dac/ictcd/ 2 Organisation for Economic Cooperation and Develop- docs/matrixdocs/FullMatrix.pdf (last accessed 19 July ment, DevelopmentAssistance Committee, Financing ICTs 2005). for Development: Efforts of DAC Members; Review of Recent Trends of ODA and its Contribution, Report to the 9B. Lanvin and C. Qiang, "Poverty `e-Readication:' Using U.N. Task Force on Finance Mechanisms for ICT for De- ICT to the Meet MDG; Direct and Indirect Roles of e- velopment (Paris: OECD, 2005). Maturity," in The Global Information Technology Report 2003-2004 (New York and Oxford: Oxford University 3The downward trend in ODA was also related to financial Press, 2003). crises inAsia, LatinAmerica and Russia in the mid- to late 1990s. 10 Nagy K. Hanna, Why National Strategies are Needed for ICT-enabled Development, ISG Staff Working Papers, 4World Bank, GICT (Global Information and Communica- no. 3 (June) (Washington, DC: Information Solutions Group tionTechnologies Department), "Financing Information and Informatics Advisory Services, World Bank, 2003), 11, Communication Infrastructure Needs in the Developing http://www.apdip.net/documents/policy/misc/ World: Public and Private Roles," Draft, GICT,World Bank, policy_strategy1.pdf (last accessed 19 July 2005). Washington, DC, 2005. 11 See ITU, World Development Report (Geneva: ITU, 5 Calculated on the basis of data from the World Bank 2002 and 2003). Private Participation in Infrastructure (PPI) database. Data from 1992­2002 for all regions. For more info on PPI, see http://ppi.worldbank.org. 139 E-Development: From Excitement to Effectiveness 12A forthcoming World Bank publication. World Informa- 18Within the World Bank Group, for example, the Interna- tion and Communication for Development Report 2006: tional Finance Corporation (IFC) is the primary provider Trends and Policies for the Information Society," will in- of financing to the private sector. In order not to crowd out clude a broader set of indicators. private investment, many of the multilateral development banks, or MDBs (e.g., AFDB, EIB, EBRD, IADB, and 13WSIS, "The Report of theTask Force on Financial Mecha- IFC) stipulate that their investments must be only part of nisms for ICT for Development: A Review of Trends and total investment in a given project. In addition to directly anAnalysis of Gaps and Promising Practices," WSIS, ITU, supporting the private sector, MDBs also play a key role Geneva, 2004, http://www.itu.int/ wsis/documents/ in bringing additional resources from the private sector to doc_multi.asp?lang=en&id=1372|1376|1425|1377 (last ac- development projects. The EBRD, AFDB, IADB and IFC cessed 19 July 2005). all provide this type of resource mobilization service. Syn- 14Lanvin and Qiang, "Poverty `e-Readication,'" 2003. dicated loans, for example, have a significant catalytic im- pact: each dollar of IFC investment in a sector attracts on 15World Bank, World Information and Communication for average approximately US$9 of outside funding. Development (Washington, DC: forthcoming).With respect 19 to knowledge pillars, the World Bank's KnowledgeAssess- The World Bank Charter permits the Bank to lend only ment Methodology provides a set of policy-oriented tools to national governments or under a sovereign guaranty. His- to assess and compare countries' performance in educa- torically, most regional multilateral development banks have tion, innovation, information infrastructure and overall per- also been sovereign lenders, although all MDBs now have formance. See "Knowledge Assessment Methodology important and growing private-sector programs. With the (KAM) Home Page," website of the World Bank Group, emergence of local and small-scale initiatives, such as local Washington, DC, http://info.worldbank.org/etools/ WiFi initiatives and municipal e-government programs, new kam2005 (last accessed 19 July 2005). schemes to address the financing needs of local entities have become urgent. The IFC, for example, has established 16 With respect to e-readiness, Bridges.org regularly up- a Municipal Fund modeled on a private equity fund and dates its "E-readiness Assessment: Who is Doing What has worked with bilateral donors to develop a sub-sover- and Where" survey. See http://www.bridges.org/ereadiness/ eign, partial-risk facility (GuarantCo). where.html (last accessed 19 July 2005). Other tools for 20 evaluating e-readiness that have gained international recog- See G. Weimann, "Cyberterrorism: How Real is the nition include the Network Readiness Index of the World Threat?", Special Report 119, U.S. Institute of Peace, Wash- Economic Forum and INSEAD, which currently ranks 104 ington, DC, 2004, http://www.usip.org/reports (last ac- countries. See "The Networked Readiness Index Rankings," cessed 19 July 2005); T. Glaessner, T. Kellerman, and V. in S. Dutta, B. Lanvin and F. Paua, eds., Global Technology McNevin, Electronic Safety and Soundness: Securing Fi- Information Report, 2004­2005 (New York: Palgrave nance in a New Age, World Bank Working Paper, no. 26 MacMillan, 2005),http://www.weforum.org/pdf/ (Washington, DC: World Bank, 2004); G. Sadowsky et. Global_Competitiveness_Reports/ReportsGITR_2004 al.,Information Technology Security Handbook (Washing- _2005Networked_Readiness_Index_Rankings.pdf (last ton, DC: infoDev, World Bank and Global Internet Policy accessed 19 July 2005). Initiative, 2003). 21 17Recent efforts in this domain include the constitution of For example, alternative broadband networks (e.g., those the "Partnership on Measuring ICT for Development." based on power lines) offer a range of new possibilities for Members of the initiative include the ITU, the OECD, "unconnected" areas where electrical networks exist or are UNCTAD, the UNESCO Institute for Statistics, the U.N. beingdeveloped.WththerapidadoptionofWiFiandWiMax Regional Commissions (UNECLAC, UNESCWA, solutions at local levels, many traditional approaches to UNESCAP, UNECA), the U.N. ICTTask Force, the World last-mile connectivity are being revisited. See, for example, Bank, and EUROSTAT. The Partnership aims to accom- "Digital Cities Convention" on the webiste of the Wireless modate and further develop various ongoing initiatives re- Internet Institute, Boston Massachusetts, http:// garding the availability and measurement of ICT indicators www.w2idigitalcities convention.com (last accessed 19 July at the regional and international level. See "Partnership for 2005). Measuring International Development," website of the 22See, for example, "Informal Summary of the Open Con- UNCTAD E-commerce Branch, UNCTAD, Geneva, n.d., sultations on the Global Alliance, 13 April 2005, Dublin" http://measuringict.unctad.org/QuickPlace/ measuringict/ on the website of the U.N. ICT Task Force, New York, in.nsf/h_Toc/281E7067B40AD764C1256EE80048DACC/ http://unicttaskforce.org/perl/documents. pl?id=1523 (last ?OpenDocument (last accessed 19 July 2005). accessed 19 July 2005). 140 Annex 1 Regression Results for the Determinants of E-Development by Isabel Neto, Charles Kenny, and Subramaniam Janakriam This annex describes in greater detail cross- shows that 79 percent of the variation in the country regressions discussed in chapter 1 of number of secure servers per capita among this report. countries can be predicted by looking at GDP per capita alone (regression 1). This result is The data set for this regression analysis con- significant, as it suggests that the "digital di- sists of one-period observations for 123 coun- vide" measured in terms of advanced Internet tries. Details of the data and sources are laid use is very much part of the broader "devel- out in table A1.1. The variables cover secure opment divide." This finding should temper Internet servers per capita (our chosen mea- some of the more optimistic hopes of e-devel- sure of e-development); GDP per capita (a opment as a tool for "leapfrogging" stages of measure of general development); the number development. of fixed and mobile phones per capita (a mea- sure of infrastructure availability); an index of However, the results of the regression analysis economic rights (a broad measure of policy and suggest that the use of secure servers is not institutional quality); a measure of the quality determined by GDP per capita alone. Both in- of the Internet, including e-commerce legisla- frastructure rollout and the broad measure of tion (designed to capture sector-specific poli- policy and institutional development also strongly cies and institutions); and a measure of sec- and significantly correlate with the number of ondary schooling (to capture human capital). secure servers in a country. The second re- gression suggests that, allowing for income, a It is important to note that the level of e-de- 10-percent improvement in economic rights velopment using our chosen measure is would be associated with a 30-percent increase strongly correlated with overall development, in the number of secure servers, and that a 10- as measured by GDP per capita. Table A1.2 percent improvement in the number of fixed and 141 E-Development: From Excitement to Effectiveness Table A1.1 Data description and sources mobile subscribers would be associated with a and the general policy and institutional environ- 9-percent increase in the number of secure ment has a more significant relationship with Internet servers. secure server rollout than either factor alone, thus coordinated improvements will generate the larg- Again, the comparative strength of these two est returns. additional variables suggests that broader measures of development are the key to e- The importance of a broad approach is re-en- development. An e-strategy that attempted to forced by the fact that, when the broader mea- increase Internet use without looking beyond the sure of policy and institutional quality is included ICT sector would generate very limited returns, in the regression (regression 4), measures of the compared to one that crossed sectors. Regres- quality of Internet-specific legislation show only sion 3 in table A1.2 suggests that the impact of a weak positive relation to the rollout of secure combined improvements in both infrastructure servers. Finally, general stocks of human capi- 142 Annex 1: Regression Results for the Determinants of E-Development Table A1-2 Regression results for secure servers tal as measured by secondary education rates do not appear to be a significant determinant of advanced Internet use to date. Finally, it is worth emphasizing a few caveats. The regressions are simple least squares one- period analyses, which allow for no firm state- ments about causality and which have not been tested for robustness. Further, they include a composite variable (economic rights) of a type that has come in for criticism in the literature. Given these caveats, the results of these regres- sion analyses should be treated with a suitable level of caution. 143 Annex 2 Selected List of National E-strategies The following e-strategies (either national or sub-national) were reviewed as part of the background research for the World Bank toolkit, Monitoring and Evaluation of E-strategies Results (METER), discussed in Chapter 3. Selected national e-strategies Country (or region) URL of the strategy Albania http://www.undp.org.al/?elib,428 Angola http://www.uneca.org/aisi/nici/Angola/angola.htm Azerbaijan http://www.nicts.az:8101/ Bangladesh www.bccbd.org/html/itpolicy.htm Bhutan http://www.dit.gov.bt/bips/documents/documents.htm Bolivia http://www.aladi.org/nsfaladi/ecomerc.nsf/0/E8147919B55D97A403256 BEA004D2EDA/$File/lineamientos.pdf?OpenElement Chile http://www.agendadigital.cl/agenda_digital/agendadigital.nsf/vw DocumentosWebLink/27363116E8E6631704256E5800549FE3 ?OpenDocument China (Hong Kong) http://www.info.gov.hk/digital21/eng/strategy2004/strategy_main.html Colombia http://www.agenda.gov.co Czech Republic http://www.micr.cz/scripts/detail.php?id=1288 Dominican Republic http://www.edominicana.gov.do/interfaz/contenido.asp ?Ag=1&CategoriaNo=3 145 E-Development: From Excitement to Effectiveness Country (or region) URL of the strategy Egypt http://www.uneca.org/aisi/nici/Egypt/egypt.htm Finland http:://www.tietoyhteiskuntaohjelma.fi/esittely/en_GB/introduction Ghana http://www.uneca.org/aisi/nici/Ghana/ghana.htm India (National) http://www.gipi.org.in/ITPolicyInIndia.php India (Andhra Pradesh) http://www.gipi.org.in/state_policy/andhra.pdf India (Delhi) http://delhigovt.nic.in/icetpolicy.pdf India (Haryana) http://www.gipi.org.in/state_policy/haryana.pdf India (Orissa) http://www.gipi.org.in/ITPolicyInIndia.php Indonesia http://www.sdnbd.org/sdi/issues/IT-computer/policy/indonesia.pdf Ireland http://www.taoiseach.gov.ie/index.asp?locID=181&docID=1773 Jamaica http://unpan1.un.org/intradoc/groups/public/documents/CARICAD/ UNPAN009931.pdf Japan http://www.kantei.go.jp/foreign/policy/it/index_e.html Jordan http://www.reach.jo Korea http://www.ipc.go.kr/ipceng/public/public_view.jsp ?num=2007&fn=&req=&pgno=3 Mauritius http://ncb.intnet.mu/ncb/downloads/Downloads/Reports%20and %20surveys/Others/finalntp.doc Mozambique http://www.markle.org/downloadable_assets/mz_final_ict_strategy.pdf Namibia http://www.uneca.org/aisi/nici/Documents/ICT%20Policy %20Document%20Ver%208.2.pdf Nigeria http://www.uneca.org/aisi/nici/Documents/IT%20policy%20for %20Nigeria.pdf Norway http://odin.dep.no/nhd/engelsk/publ/rapporter/bn.html Poland http://www.informatyzacja.gov.pl/_d/files/projects/epoland-the_strategy_on _the_development_of_the_information_society.pdf Romania http://unpan1.un.org/intradoc/groups/public/documents/UNTC/ UNPAN016044.pdf Russia http://www.e-rus.ru/eng Rwanda http://www.uneca.org/aisi/nici/Documents/rwanpap2.htm 146 Annex 2: Selected List of National E-strategies Country (or region) URL of the strategy Singapore http://www.ida.gov.sg/idaweb/aboutida/infopage.jsp ?infopagecategory=&infopageid=I226&versionid=2 Slovenia http://unpan1.un.org/intradoc/groups/public/documents/UNTC/ UNPAN015723.pdf South Africa http://www.tsicanada.com/documents/Strategy.pdf Tanzania http://www.tanzania.go.tz/pdf/ictpolicy.pdf Thailand http://www.nectec.or.th/intro/e_nationalpolicy.php Trinidad & Tobago http://www.gov.tt/nict/ Tunisia Hard copy only Ukraine http://www.e-ukraine.com.ua United Kingdom http://e-government.cabinetoffice.gov.uk/assetRoot/04/00/60/69/04006069.pdf Venezuela http://www.mct.gov.ve Vietnam http://mpt.gov.vn/english/introduction/?thucdon=in 147 References Chapter 1 Chinn, M., and R. 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