Demands of the information society
To the optimistic view of the opportunities offered by the information society must be added the sober acknowledgment that there are conditions that must be met first, and that developing countries are not always in a position to do so. Thus, savings through lower costs presupposes investment in the telecommunication sector, the basis for the new economy, and a transformation in business organization and business culture. This cannot be done overnight, hence developing countries must identify priority areas in which they expect rapid results to be achievable, to minimize the financial burden and win broad support for change.
In some sectors of the economy, change will be more evolutionary in nature, closely tied to falling transaction costs. Manufacturing and retail trade are two examples of sectors in which profound changes are to be expected. Trade, in particular, stands to gain from the expected economies (reduced purchasing costs, accelerated accumulation, dissemination and application of knowledge and more efficient customer relations).
From the standpoint of a strategy for investments, neither computers nor the Internet in themselves can do much to increase the productivity of a country or a company. Productivity will benefit from ICTs only if the other avenues for improving operational efficiency are being explored at the same time: production, marketing and the corporate culture. For electronic commerce to become a motor for development, investment in infrastructure, hardware and HR development must be accompanied by profound changes in business organisation and management and, to the extent that its activities have an impact on business efficiency, in the public sector too. In particular, the division of competencies and responsibilities between the public and private sectors will need to undergo a transformation.
In the digital economy, information flows more rapidly and spreads in a more diffuse manner than in traditional organizations, decentralizing decision-making. For this reason workers must be have the ability and the authority to handle a larger variety of tasks.
More generally, the impact of the Internet on numerous essential production sectors in developing countries will depend not only on the depth of the structural transformation that companies and their customers are prepared to accept, but also on the connections they make between information and the material side of their activities. For example,
current efforts by developing countries to move towards electronic commerce may be defeated if shipments are left to languish for weeks in a customs warehouse, or if products consistently fail to meet quality standards due to inadequate workforce training.
ICTs can help certain sectors diversify, but technical and legal problems may also need to be addressed. One example is confidentiality, which is an important requirement in parts of the services sector. Commercialization of digital products (text or music) depends on effective protection of intellectual property. Other services, e.g. entertainment, presuppose the availability of broadband Internet access.
Of course, it is not only businesses' internal organisation that is affected by the need to change practices in response to the potential offered by the Internet. They must also ensure that codes, standards and practices are compatible, and learn to share information with other companies. Networking via the Internet offers new possibilities
for cooperating and forming strategic alliances.
Ultimately, economic growth and improvements in the quality of life will come about as the efficiency improvements that are achieved thanks to ICTs permeate through the productive fabric of the developing countries. Far from being limited to high-tech ghettos, the Internet revolution will spread through the entire domain of organized economic activity; this is why it offers developing countries better chances of benefiting from its promises than did earlier technology revolutions.
