ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC

Fifty-fifth session
22-28 April 1999
Bangkok

Part Two of the Economic and Social Survey of Asia and the Pacific, 1999

Asia and the Pacific into the Twenty-first Century: Information Technology, Globalization, Economic Security and Development

IV. INFORMATION TECHNOLOGY, GLOBALIZATION AND DEVELOPMENT

A hallmark of the closing years of the twentieth century is the marked intensification of the process of globalization. This process has manifested itself in accelerated movement of goods, services, factors of production and technology across national boundaries. The rapid spread of the use of information and communication technology (ICT) around the globe is both an outcome and a determinant of this process of globalization. While there are many positive outcomes from the continuing improvements in ICT, there are also escalating risks associated with its use. In this theme topic study, an attempt is made to analyse the relationships between ICT, the process of globalization and economic development in the developing economies of the Asian and Pacific region, with particular attention being paid to trade, investment patterns and financial flows. These issues are also viewed from the perspectives of economic volatility and economic security, with the objective of identifying options for ICT-related strategies for the developing countries of the ESCAP region.

ICT is a generic term covering computers, broadcasting, telecommunications, data networks and "smart" components, which are becoming increasingly common in all types of appliances such as cars, televisions and washing machines. It can be defined as the totality of the electronic means to collect, store, process and present information to end-users in support of their activities. It consists of computer systems, data communication systems, knowledge systems, office systems and consumer electronics, as well as networked information infrastructures, the components of which include the telephone system, the Internet, fax machines and computers.

The pace of technological change in ICT in recent years has led to revolutionary changes in the processing and dissemination of data and to the emergence of an information society, with an immense effect on production, services, economic development, organization of labour and the environment. A core component of ICT is the semi-conductor chip which, since the early 1980s, has not only decreased in size and cost but also increased steadily in capacity and complexity. This has enabled computers to evolve from room-size machines to palm-size devices. Today, information technology reflects the convergence of technologies associated with computing, telecommunications and office systems. Information technology processes and packages information, and telecommunications allow information technologies to interact with other information technologies and remote devices in networks, permitting users to access databases and communicate with other users over long distances. The combination of information technology and telecommunications technology has greatly enhanced existing service industries and has led to a spin-off of numerous new ones. It has increased the productivity of banking, business management, administration, education and health-care services, and so on. It has also allowed greater mobility and flexibility in capital and financial movements. It is this combination of information technology and telecommunications into ICT that defines the global information network and the development of a global information infrastructure.

It is almost universally accepted that the use of ICT is beneficial for individuals, organizations, economies and the international community. While there are reservations in specific contexts, suggestions to return to the work habits of the age prior to the informatics revolution are not taken seriously. There is no reason to doubt that the benefits of what is being experienced today are likely to increase with the further evolution of ICT. On the other hand, the changes that ICT is bringing to individuals and economies are creating significant new uncertainties. Organizations and people are forced to adapt to new circumstances and to new requirements at the workplace and outside, and these adaptation processes are complicated and often initially difficult to absorb.

GLOBALIZATION AND ITS CAUSES

While the definition of globalization varies with the context of analysis, it generally refers to an increasing interaction across national boundaries that affects many aspects of life: economic, social, cultural and political. In the context of this study, in order to keep the analysis within reasonable bounds, the focus is only on the economic aspects, with particular emphasis on the role of ICT. As such, globalization narrowly refers to the growing economic interdependence of countries worldwide. This includes increases in the international division of labour caused by swelling international flows of FBI, accompanied by an increasing volume and variety of cross-border transactions in goods and services, international capital flows, international migration and the more rapid and widespread diffusion of technology. This should not be construed to imply that social, cultural and other forms of globalization are unimportant, only that they are less germane to discussions of economic security and development.

Economic globalization arises out of the interaction between market- and technology-related factors as well as economic policies at national and international levels. Market-related factors include increased competition for resources in the production of the same goods and services, greater engagement in international trade and enhanced efforts to attract FBI. These have all been assisted by technological and information-related improvements. For example, the growing role of transnational corporations in both production and service sectors of practically every country has placed competitive pressures on home country firms, exerting an inordinate influence on the existing pattern of technological specialization. Since 1970, financial innovations have led to lower transaction costs and the development of new financial institutions and instruments, as well as dramatic growth in cross-border financial transactions. Additionally, increasing urbanization around the world has resulted in more uniform tastes, preferences and demand, spurring market growth even further.

In terms of technology-related factors, the componentization of production, facilitated by advancements in both manufacturing technologies and ICT, has led to lower costs and the dramatic shortening of economic "distances". With the microelectronics revolution, new communication technologies have facilitated the international diffusion of new production, marketing and organization technologies at low cost, allowing faster and cheaper movements of goods and services. Advances in telecommunications and transport, for example, have helped to lower the costs of communication and transportation¹ while the emergence of fax and global computer networks has drastically reduced the economic significance of geography. At the same time, systematic rationalization of procedures and documentation for international trade, together with wider and easier dissemination of prices of traded goods, has contributed to the convergence of market prices, resulting in fewer distinct markets.

The convergence of policies at national and international levels, leading to increasing coordination, has been stimulated and facilitated by the globalization process. At the national level, there has been a continuous but often gradual removal of government restrictions and controls towards less planned and more private sector-based economic systems in both developed and developing countries,² and market-related reforms in the economies in transition. More flexible exchange rates and freer foreign exchange transactions have also been adopted more widely. The more recent reforms to reduce capital and exchange controls coincided with an intense period of deregulation of domestic financial markets. At the international level, there was an increase in multilateral agreements on rules affecting international transactions in goods and services.³

TECHNOLOGIES AND THE PROCESS OF GLOBALIZATION: EMERGING TRENDS

Technologies

In general, ICT encompasses all technologies used in collecting, storing, processing and transmission of information in the form of voice, data or image. This includes microelectronics, opto-electronics and related technologies. Despite some differences in the definitions of ICT, there is general agreement on the main components which already exist or are likely to be introduced in the near future. These are: (a) electronic computers and, particularly, personal computers with increased capacity and performance and containing microprocessors and enhanced memory storage capacities; (b) wired and wireless telecommunications; © software for information storage and processing, communication interfacing and systems operations; and (d) home multimedia machines and electronic appliances. In addition, other technologies include cash cards to store money electronically, smart cards containing microchips encoded with various classes of confidential information, mobile video-phone communication services and electronic notepads with voice and handwriting recognition.

It should be emphasized that new ICTs function interdependently. They are also converging. The assembly of ICT is an intelligent information network. Sensors and detectors, computers and knowledge-based systems, control systems and display systems are interconnected into communication networks, allowing these networks to be able to perform the information functions required by their users. In combination, they form a national information infrastructure and are linked to the global information infrastructure.

Electronic computer systems

Computers of various types form the core of ICT. Modern computers can be broadly divided into three categories based on the performance factors of throughput and speed: personal computers, mainframe computers and supercomputers. Personal computers are now approaching mainframes in throughput and supercomputers in speed. Software, which runs any computer system, processing and manipulating information and directing the communication interfacing, is being increasingly integrated with hardware as computer systems are developed in a package form in order to increase functionality. The next generation of computer software will be capable of flexible information processing such as images and sounds on a real-time basis. A low-cost personal computer to work with the Internet, the so-called "network computer" is being developed. This will be, in effect, an intelligent telephone. Users will be able to rent software from service providers and will not need to worry about new versions and updates of their system. It is likely that the network computer will revolutionize computing once again.

Another trend is the merging of communication, home electronics, broadcasting and publishing into all-in-one computers (figure IV.1). Most personal computers will come with voice and fax facilities, making telephones and fax machines redundant. Similarly, digitalization makes compression and decompression of images easy. Household appliances are evolving and are being merged to computer systems. Communication and broadcasting are becoming integrated digital devices. Today's personal computer is the most multifunctional tool of all consumer products or appliances for business, education, entertainment and services; it brings together seamlessly graphics, telephony and multimedia. A shift from proprietary to open architecture has facilitated this. For example, the network computing architecture announced by Oracle Corporation provides a flexible and unified framework with a consistent interface for the development and deployment of distributed business applications within a variety of network architectures. This allows client-servers, legacy systems, the Internet, Microsoft and Netscape to share a common open standard for Internet commerce. With network computing architecture, customers can utilize their existing ICT infrastructure to take advantage of new technologies while using existing service platforms.

Information superhighway

Conceptually, the information superhighway is an electronic communication network which provides connectivity for any conceivable transaction, for example, entertainment, home shopping, banking and video-conferencing, to name a few. The Internet is one example of this concept. It provides connectivity between more points than any other alternative networks and at a comparatively low cost. It currently connects 25 to 30 million users in more than 140 countries, and the Internet population is expected to reach 200 million by the year 2000. Network information centres which provide services for higher-level use now exist in many countries in the region, including Australia, India, Japan, Malaysia, Pakistan, the Republic of Korea, Singapore and Thailand. Information service providers are also available in the above-mentioned economies as well as in Bangladesh; China; Guam; Hong Kong, China; Indonesia; New Zealand; Philippines; and Taiwan Province of China.

The Internet was started as a network among researchers supported by government and industry. Since the early l990s, the commercial dimension of the Internet has emerged from growing business networks. The cohabitation of non-commercial and commercial sectors in the Internet is the current reality. This situation has raised several concerns: (a) there is no governing body or agency; (b) there are no service quality guarantees; © there is no security of transaction; (d) information on the Internet is unstructured, unsorted and difficult to find; (e) operations are often unstable; and (f) there are no proper payment schemes. These issues will have to be solved before the Internet can become a real information superhighway.

At present, ICT in many developing countries is primarily targeted at the privileged and the business community which can afford the current, relatively high, cost of connectivity. In order to increase the use of the Internet by the rest of the population, low-cost links are required, using the basic telephony that is already in place or satellite connections. Recent developments in satellite technology have facilitated reliable, high-quality, rapid communications services to remote areas. These systems use hybrid terminals which share the antenna and transceiver sections, thus greatly reducing capital investment and the heavy installation costs associated with fixed-line networks. This leading-edge technology could allow rural areas to connect quickly and cheaply to the rest of the world.⁴

THE SITUATION IN THE ASIAN AND PACIFIC REGION

In 1997, the worldwide market for ICT amounted to $1.8 trillion, or approximately 6 per cent of world GDP, 40 per cent greater than in 1992.⁵ It grew by about 27 per cent per annum between 1992 and 1997, more than five times the rate of global economic growth. The bulk of this growth was investment in telecommunications (figure IV.2). In the period 1992-1997, Asia and the Pacific, Latin America and Eastern Europe registered the fastest growth in ICT spending, averaging 15, 14 and 10 per cent respectively. In absolute terms, North America, Western Europe and Japan continued to dominate. Asia and the Pacific and Latin America achieved the highest records in terms of cumulative average growth rate over this period. Figure IV.3 shows ICT spending in 1997 by region in absolute terms, as well as the compound annual growth rate.

Figure IV.2. Worldwide ICT spending

Source: World Information Technology and Services Alliance (WITSA) / International Data Corporation (IDC), Digital Planet: The Global Information Economy, vol. 1 (October 1998), p. 2

The number of Internet hosts and personal computers has been growing rapidly, reaching 25 and 120 million respectively worldwide; the former rose twentyfold and the latter threefold between 1992 and 1997. Within the ESCAP region, the diffusion of ICT has been increasing rapidly.⁶ Table IV.1 presents information on investment in telecommunications, the number of main telephone lines, cellular telephone subscriptions, Internet hosts and the number of personal computers relative to population for individual ESCAP countries.⁷ While the table shows that many countries in the region have been investing significantly in ICT, the relatively large populations in some countries, such as the members of ASEAN, and China, India and the Republic of Korea, can obscure the actual intensity of their efforts.

The information in table IV.1 is summarized in figure IV.4. The trends in ICT developments in the ESCAP region are measured by cross-country weighted averages for the selected indicators per 100 persons, except for telephones (per 10 persons) and the Internet (per 1,000 persons). Figure IV.4 shows that for the region as a whole the most rapid growth in the 1990s has been in computers and cellular telephones, with a rapid increase in Internet connections taking place only since 1994. The degree of diffusion in the developing countries of the ESCAP region shows a somewhat different trend, with the number of telephones rising over the whole period, rapid growth in the 1990s in the number of computers, rapid growth since 1994 in the number of cellular telephones, but very little change in the number of Internet connections. As can be seen from figure IV.5, the members of ASEAN and the NIEs⁸ accounted for a large share of the investment in ICT in the developing countries of the ESCAP region until 1992, after which the diffusion became much more widely spread.

Figure IV.3. ICT spending by region in 1997

Source: World Information Technology and Services Alliance (WITSA) / International Data Corporation (IDC), Digital Planet: The Global Information Economy, vol. 1 (October 1998), p. 5

Figure IV.4 ICT diffusion in the ESCAP region

(a) All ESCAP members/associate members

(b) ESCAP developing countries

Source: International Telecommunication Union, Statistical Yearbook, 1994 (Geneva, 1995) and Asia-Pacific Telecommunication Indicators, 1997: New Telecommunication Operators (Geneva, 1997)

Figure IV.5 Investment in telecommunications by the developing countries in the ESCAP region

Source: Compiled from data in ITU, Statistical Yearbook, 1994 (Geneva, 1995) and Asia-Pacific Telecommunication Indicators, 1997: New Telecommunication Operators (Geneva, 1997).

INTERRELATIONSHIPS BETWEEN INFORMATION TECHNOLOGY, GLOBALIZATION AND THE DEVELOPMENT PROCESS

At least four dimensions of the positive impact of ICT on economic growth can be discerned.⁹ First, ICT allows process innovation (new ways of doing old things) which increases productivity and creates new value added. Second, innovative economic activities (new ways of doing new things) may be generated. Third, ICT represents a new factor of production, along with land, labour and capital, which can lead to economic restructuring. Finally, it represents a new means of organizing activities through its synergies with other technologies. All of these dimensions directly impact on growth or indirectly do so through multiplier effects ("ripple effects") that influence price, income and capacity.

Recent rapid advances in ICT have thus become a major force in promoting economic growth. With smaller, faster and cheaper ICT, the cost-to-performance ratio of its application has declined considerably, thereby raising productivity. The potential for growth has also been expanded by the use of ICT to promote more efficient utilization of inputs such as energy, raw materials and land. Some new applications of ICT have made it economical to customize products and have made production processes more flexible. With closer attention to customer tastes and preferences, producers have increased the value added (usefulness and appeal) of their products and improved their quality. The adoption and dissemination of ICT also contribute to the build-up of networks that, in turn, increase knowledge and lead to innovations.

Some new applications of ICT have made it possible to carry out production and service activities efficiently on a small scale. Advances in telecommunications enable enterprises which are geographically separated to communicate both within a country and across borders. The growing decentralization and globalization of many industries provide new opportunities for developing countries to participate in regional and global subcontracting. Participation, however, depends on the quality of the local telecommunications infrastructure and the ability to work in an electronic communications environment. Within developing countries, the organizational changes and decentralization options made possible by ICT can facilitate a better spatial distribution of economic activities, especially those industrial operations which have been centralized in large cities.

New and varied applications of ICT are also speeding up the integration of markets across countries through the transmission of market signals and consumer/producer responses. These effects are already being reflected in changes in the design of products and processes and in the nature of industrial competition. As a consequence, market horizons have become broader, with more information available on markets and worldwide competitor responses to changes in them. Timely and detailed information about markets, point-of-sale information and electronic linkages to clients and distributors have enhanced the capability to provide consumers with tailor-made products and services and to create market niches. Producers with computer-assisted design are also capable of responding to market signals with greater flexibility and speed. Built-in software and "intelligence" in products, automatic diagnosis of malfunctions and electronically assisted after-sales service increase the adaptibility and substitutability of products, which in turn increases competition. The resulting globalization of competition and the pressures of market integration have forced most large-scale manufacturers to consider their sources of inputs, markets and competitors on a worldwide scale.

ICT has revolutionized the marketing systems for commodities and other widely traded standardized goods through the diffusion of market-determined prices instantaneously around the world. Even small-scale producers are becoming an integral part of the marketing chain as they have access on a real-time basis through mobile phones, the Internet, and so on to the prices of their products on international markets such as commodity exchanges. This, in theory, should reduce the potential for exploitation of these producers and enhance their bargaining position with traders. Local traders have the means to become better equipped to compete with international trading firms and enhance their competitiveness in marketing new products as well.

In the more advanced countries, new applications of ICT are profoundly changing the services sector. In particular, the nature and structure of financial, insurance, marketing, distribution, and tourism/travel businesses have been transformed by improvements in the speed, reliability and cost of manipulating vast quantities of information related to financial, inventory and sales transactions. Advancements in ICT have raised the information equipment intensity of the services sector and increased the diversity of services provided by any one firm. American Airlines, through its reservation system (SABRE), for example, is now in the business of hotel reservations, car rentals and software development, and is rapidly expanding into supplying spare parts. At the same time, service providers, traditionally small and decentralized, are being linked nationally and globally through the use of communications technology.

In terms of investment patterns, the application of ICT can help to improve economic efficiency of investment by permitting the financial intermediaries to evaluate more correctly the portfolio preference of savers while managing more effectively the risks inherent in global portfolios. The increasingly wide coverage of economic and financial data available on a timely basis on both countries and individual firms, especially when there are reliability checks and auditing, should permit these intermediaries to identify and fund the most productive investments. This should provide investors with a broader range of investment opportunities and ensure that asset prices realistically reflect underlying risks and returns. More modern investment banking and hedging services can also help to overcome limitations generated by uncertainty and incomplete information.

Increasing globalization is likely to have a long-lasting influence on inflation rates in countries because of the discipline imposed on domestic financial policies by increased financial market integration, such integration having been spurred and facilitated by advances in the applications of ICT. Differentials in real interest rates between domestic and foreign markets have become a major factor influencing the decisions on short-term money flows, and even small changes in these differentials can cause large movements of funds. The destabilizing effects of these flows of funds on the balance of payments of a country can be very severe and any consequent movements in the exchange rates can have substantial effects on its exports and imports independent of any changes in real economic fundamentals. Nominal interest rate differentials among countries appear to be diminishing as they are integrated into the global system and, because of this, their inflation rates also have to conform. A country which is globalized will not be able to run hyper or even high inflation rates without being cut off from international financial flows.

In fact, the easier access to real-time information worldwide through the application of ICT means that fewer countries can isolate themselves from the effects of world economic events and trends, and that countries cannot formulate economic policies without being responsive to outside signals. The distinction between a country's international and domestic economic policies is becoming increasingly blurred; all macroeconomic policies are increasingly international ones. Recent studies have shown, for instance, that large and volatile capital flows demand that countries have a more conservative fiscal stance and maintain a sustainable fiscal structure.¹⁰

In the medium term, a trend has emerged in many countries towards a broader and more integrated use of ICT in socio-economic development. With new forms of applications becoming available at decreasing cost, and with a shift in emphasis from quantitative to qualitative growth, the impact on growth will often depend on the capacity to disperse ICT capabilities across a broad range of economic activities, not just in the manufacturing of ICT products (for example, microchips). This perhaps distinguishes ICT from other forms of technological development, which often tend to be location- or industry-specific, and difficult to transfer.

ICT and competitiveness¹¹

In fact, the very definition of mobile and immobile factors of production, the quality and quantity of which determine a country's competitiveness, needs to be recast to include the influence of ICT. According to an OECD report,¹² thanks to the convergence of computer and communication technologies, it has now become technically feasible for multinational enterprises, banks, and industrial and service firms to install intra-corporate worldwide information networks, through which headquarters management can link together production and marketing facilities around the world. The report also notes that an increasing fraction of total value and wealth produced in the world will be produced and distributed through the intra-firm and inter-firm networks covering the entire globe. In this regard, a country will be even more in the position of waiting to be selected as a site of operations by investment decisions rather than giving permission for investments to be undertaken. The deciding factor will therefore be whether or not a country is seen as attractive as an investment site by its own firms or by multinational ones.

Source: Based on information in Yoo Jungho, "The Korean economy in a borderless world", Korea Journal (Korean National Commission for UNESCO), vol. 37, No. 4 (1997), pp. 25-38.

In the past, the internationally mobile factors of production were mainly capital and technology, and immobile ones were labour, land and natural resources. Today, as illustrated in figure IV.6, the ability of countries to restrict the movement of goods, services and labour has become much weaker and the determining factors of competitiveness have clearly shifted towards the social and economic institutional and governance characteristics of a country. The physical infrastructure, the rules and regulations applied to business and individuals, the degree of transparency, perceptions of fairness or lack of corruption, the investment climate and the functioning of the legal system will be the most important elements inducing investment in the production of goods and services. Technologies and skilled labour can move easily and so the ability of a country to attract or keep an industry, whether it be textiles, automobiles, computer software development or financial services, will depend on these institutional factors. This implies that countries will be forced to pay more attention to meeting international norms of economic behaviour and the rules of the game if they wish to avoid marginalization.

Two rather rough illustrations of this influence of ICT can be seen in figure IV.7. The two parts of this figure report cross-country relationships between investments in telecommunications as a percentage of GDP averaged over the 1987-1996 period and indicators of transparency and degree of proper business practices, as reported by the world competitiveness survey data collected and collated by the International Institute for Management Development from executives of multinational corporations. If increased application of ICT has the above-described effect on competitiveness considerations, then some (weak) positive correlation would be expected, and is indeed found in these figures.

Figure IV. 7. ICT diffusion and indices of the investment climate

(a) ICT diffusion and transparency

(b) ICT diffusion and proper business practices

Source: Calculated from data in ITU, Statistical Yearbook 1994 (Geneva, 1995) and Asia-Pacific Telecommunication Indicators 1997: New Telecommunication Operators (Geneva, 1997) and from the world competitiveness survey organized by the International Institute for Management Development.
Note: Each dot represents an individual country, the abbreviations and full names of which are as follows: AUS for Australia, CHN for China, HKG for Hong Kong, China, IND for India, IDN for Indonesia, JPN for Japan, MYS for Malaysia, NZL for New Zealand, PAK for Pakistan, PHI for Philippines, KOR for Republic of Korea, RUS for Russian Federation, SGP for Singapore, TAI for Taiwan Province of China, THA for Thailand and TUR for Turkey.

Nevertheless, within the production sector, the effect of ICT on the competitiveness of developing countries is likely to vary between countries at different levels of industrialization. Flexible automation technologies and organizational innovations are coalescing into new best-practice manufacturing systems which are spreading throughout industry in the advanced economies. Diffusion in developing countries is still very limited, occurring primarily among the newly industrialized countries. Even in them, the diffusion is quite slow. For example, while some have enjoyed good export performance in those industries where products are simple and the effects of flexible automation are relatively minor, there are new obstacles in many other industries (such as machine tools) where new techniques are being rapidly adopted by the OECD countries, with substantial improvement in their competitiveness.

The role of ICT, particularly telecommunications, cannot be overemphasized in supporting growth in services and economic activities as a whole. Studies funded by the United Nations in Kenya and the Philippines have shown that the total benefits of telecommunication investments were, in some cases, 40 to 80 times greater than the usual measure of benefit, revenue or willingness to pay. These additional benefits include direct benefits from savings of personal time and reduced expenditure on more expensive communications media (such as messengers or telegrammes) or on alternative transportation services. Other benefits came from the use of a more effective communications medium for the acquisition of supplies, the operation of organizations, and the sale and marketing of goods or services. In business, expansion was achieved mainly through reaching a wider range of customers. Agriculture, health care delivery, wholesale/retail trade, services, transportation, construction, and light industry also benefit from telecommunications. Unless developing countries take these substantial indirect benefits and externalities arising from telecommunications into account, there will be serious underinvestment in communication systems. Consequently, their competitiveness will decline.

In essence, the ICT revolution has given rise to an ongoing change in the techno-economic paradigm which is likely to speed the transition of the world economy towards even more information-intensive technology-based products and processes. Countries lacking the necessary educational, research and design capabilities may become even more seriously disadvantaged in international competition.¹³ They will not be equipped to participate in the knowledge society.

The knowledge society

The shift from the agricultural age to the industrial age was driven by economic factors such as improvements in productivity resulting from better technology, including knowledge and skills, development of new sources of energy, and improvements in market mechanisms. It is ICT which has played a central role in enabling the further growth from the industrial age towards the knowledge society. In all areas of human intellectual creativity, this technology facilitates the development and analysis of ideas and concepts. During the past 30 years, the rapid expansion of knowledge in so many areas such as genetics, medicine, space science, medical science and the environment would have been impossible without the ability to handle and analyse large quantities of data.

Knowledge is becoming the key resource. Educational institutions and libraries are at the centre of the knowledge society. There is also a rise in knowledge industries based on workers who are skilled in a wide range of subjects and technologies. In the knowledge society, education is central to personal, organizational and national well-being. Educational attainments on a lifelong basis are becoming correlated with high monetary and social value. There are likely to be changes in organizational structures in the public and private sectors to enable them to deliver learning systems efficiently in an information society from pre-school to old age. Especially promising technologies are interactive video, networking and collaboration tools which stimulate curiosity and creative thinking, and promote innovation. Appropriately used, technology can reduce education-related costs, increase access and boost learning retention rates.

ICT will continue to play a central role in driving social change as the knowledge society develops its information infrastructure. Telecommunications will facilitate the creation and operation of global networks of people with specific interests (commercial, scientific, religious, artistic and so on). Although science and technology will bring about these developments, their interaction with social and political factors will determine their usefulness. This interplay is especially apparent in the current evolution of the information superhighway, where issues such as universal access, privacy and government jurisdiction are yet to be resolved. Governments now face the challenge of managing appropriate social change to accommodate the knowledge society that can maximize both international competitiveness and social equity. These dual objectives involve a delicate balancing act.

In the next three chapters, substantial empirical evidence is presented regarding the application of ICT in the areas of trade, investment and production patterns and financial flows, the constraints faced and opportunities foreseen, based on the experiences of ESCAP countries. This material is then used as the basis for the policy proposals made for the consideration of governments in the last chapter.

Table IV.1. ICT diffusion indicators