Activity File
ICT, Poverty and the Global Economy
Challenges and Opportunities for Developing Countries
Summary
In recent years, considerable attention has been paid to the role that information and communication technologies (ICT) might play in promoting economic growth, combating poverty, and strengthening developing countries’ participation and competitiveness in the global economy. Spurred by the example of countries such as India that seem to be “riding the ICT wave” successfully, many developing countries are looking to reap the benefits of ICT-led growth for their own economies. International development agencies have supported, and participated in, this mounting enthusiasm for ICT-led growth and poverty reduction by helping developing countries prepare and implement “national ICT strategies” or “e-strategies” designed to integrate ICT into broader national development and poverty reduction plans.
Background / Terms of Reference
Yet there are some signs that this enthusiasm for ICT-led growth and poverty reduction in developing countries may be excessive, or at least subject to caveats. Developing countries need to think about the challenges and opportunities of ICT-enabled growth and poverty reduction within the larger context of:
- Reforming the structure, and increasing the flexibility and diversity, of their economy
- Maximizing the reach and beneficial effects of ICT across economy and society
- Creating the proper policies, regulations, incentives and investments—both public and private—to promote broad-based economic growth.
That broader strategy needs to be rooted in: a realistic and rigorous assessment of each developing country’s particular assets and competitive advantage, the current structure of its domestic economy and place in regional and global markets, and an analysis of its potential for entering new markets or developing new goods or services. ICT can be a vital tool of this strategy in several ways by: extending access to new markets, increasing productivity, making it possible to disaggregate the value chain for goods and services in ways that permit developing countries to find new niches in global markets, and expanding access to global knowledge and best practice. Yet ICT can only help if the broader growth and competitiveness strategy is itself realistic.
In the past year, infoDev has commissioned a series of regional and country studies on ICT, poverty, growth and competitiveness. In order to provide a common analytical framework for this growing area of infoDev’s work program, infoDev has commissioned a broader “framework paper” on how ICT can help developing countries diversify their economies, compete in regional and global markets made more open by globalization and new technologies, and as a result assure broad-based economic growth that leads to a reduction in poverty. This framework paper provides a general analytical framework for developing country policymakers trying to chart a course forward for their countries.
The framework paper consists of two parts.
- The first part lays out the general analytical framework for understanding the challenges and opportunities that ICT present for developing countries as they seek to promote broad-based growth and combat poverty in the context of an increasingly open global economy.
- The second part, included as an annex, examines one key sector—textiles—in developing countries by deconstructing the international value chain for that sector. This second component of the study is meant to offer a model of the type of in-depth analysis of competitiveness, value chains, and the structure of a country’s economy that developing countries must undertake in order to build a realistic strategy for ICT-enabled growth.