18 May 2000

Byliner: Under Secretary of State Larson on the Digital Divide

(Following is an article published May 18 in the Economic Perspectives journal of the U.S. State Department. No restrictions on republication. The complete journal can be found at http://usinfo.state.gov/journals/ites/0500/ijee/ijee0500.htm)

Maximizing International Digital Opportunities

By Alan Larson

(The author is U.S. Under Secretary of State for Economic, Business, and Agricultural Affairs.)

Helen Mutono, a Ugandan woman, uses the Internet to sell her handmade African baskets; she spends the proceeds on helping children who have been orphaned by AIDS. In a letter to Vice President Al Gore, Ms. Mutono wrote, "For the grandmothers and aunts who are burdened with the responsibility of caring for these orphans, access to the Internet may be the only way of reaching the global market and making real income from their handicrafts."

It is clear that the Internet holds huge potential for developing countries to expand businesses, create jobs, improve social services, and bring diverse groups closer together. Participants in the global information economy are witnessing a huge increase in business-to-business and business-to-consumer applications that provide more choices and better information, and keep prices down and quality high. There are clearly even greater future benefits to be derived, both in the United States and especially in other countries. The Internet can help even small businesses find customers and partners all over the world and help the unemployed find jobs faster.

There are also numerous social benefits resulting from policies that foster participation in the new global information economy. The Internet helps link up communities of interest and makes available a vast array of information potentially useful to our citizens. Information technology can provide educational benefits through distance-learning projects and school-to-school partnerships. The Internet can help provide people in poor and remote areas with access to the same vast bodies of knowledge as people in the wealthiest places. Health care can benefit dramatically from transnational institutional linkages and by providing individuals with access to health information resources on a range of public health issues.

Information technology also has enormous potential in the preservation of cultural heritages and their global dissemination, for example through "virtual" art galleries and cyber-libraries containing oral histories and the sounds of traditional music. The Internet will also help foster the spread of democracy and respect for human rights and hinder corruption by providing the means for transparent governance and the free flow of ideas and information.

President Bill Clinton has said that the Internet "will do as much as anything else to reduce income inequality" between industrial and developing countries.

Unfortunately, the developing world is far from achieving that goal. The international "digital divide" between industrialized and developing countries is immense and growing. Half of the 275 million people currently accessing the Internet are in North America. Meanwhile, in the Middle East, slightly more than one million are online; in Africa, the number is about two million. Notably, there are more Internet users in New York City than in the continent of Africa.

Helping developing countries achieve greater prosperity is more than an expression of U.S. altruism. It is inseparably linked to U.S. national security and American prosperity. Global integration enables problems such as disease, narcotics, crime, corruption, and environmental degradation to affect us no matter where on this planet they may occur. Yet global economic integration -- the increased flow of people, goods, services, knowledge, and capital -- is also a tool that allows us to more readily cooperate with and potentially help improve the lot of people all over the world.

UNLEASHING INFORMATION TECHNOLOGY POTENTIAL

The United States Government recognizes the seriousness of the threat posed by a widening of the already yawning chasm between the world's richest and poorest countries. It also recognizes the special potential that information technology provides for helping to narrow that gap. In this light, the U.S. government has initiated a number of programs aimed at helping developing countries to take advantage of the opportunities provided by the global information economy. Following are just a few programs that the United States hopes will help the information revolution take root in developing countries:

In South Africa, the U.S. Agency for International Development (USAID) provides Internet equipment for an emergency medicine training partnership between Howard University in Washington, D.C., and the University of Transkei hospital. The partnership will increase emergency medical training and improve the quality of care of the Transkei hospital, which treats 45,000 trauma patients each year in its emergency rooms.

In Uganda, USAID, in collaboration with the World Bank, has begun to install computer labs, Internet access, and teacher training in dozens of schools and teacher training institutes that will reach more than 7,000 students a year. USAID also is providing computers, Internet connectivity, and training to link a Kampala-based organization of professional women with the Association of Women organization in northern Uganda to facilitate information sharing on health, business development, and education. The U.S. Federal Communications Commission (FCC) is running separate information technology program with the Uganda Communication Commission.

In Bulgaria, the U.S. State Department's Global Technology Corps sent a U.S. telecommunications expert to Sofia on a volunteer mission to advise the Bulgarian Internet Alliance for Economic Development, the main telecommunications policy-making body in Bulgaria. The volunteer subsequently accepted an invitation to join the alliance steering committee and continues to advise and assist it.

In Guatemala, the U.S. embassy is working to help establish an Internet-based marketing facility for an indigenous cooperative producing handicrafts. The Global Technology Corps has completed a business feasibility study. A final business plan is being drawn up.

In Jamaica, USAID is assisting the government in allowing the entry of two cellular companies to operate in Jamaica -- providing competition for the current monopoly -- which should bring down telecommunication costs in the country. USAID also will assist in redrafting Jamaica's Telecommunications Act, developing a new regulatory framework and management training.

In Egypt, the U.S. embassy is running workshops on processing online payments to help expand the use of e-commerce.

But individual programs alone are not enough to ignite technological change in the developing world. Governments in Latin America, Asia, Africa, the Near East and elsewhere must, in most cases, undertake fundamental policy reforms, assisted when possible by international financial and development institutions, if they hope to take full advantage of the benefits of the global information economy.

PREREQUISITES FOR THE INFORMATION REVOLUTION

A developing country that wishes to fully share in the benefits of the global information economy must foster a policy and regulatory environment conducive to information technology development. That includes five key elements: (1) a liberalized, pro-competitive telecommunications policy and regulatory environment; (2) a physical infrastructure sufficient to exploit the power of Internet communications; (3) educated entrepreneurs, knowledge workers, and policy-makers; (4) Internet applications tailored to the needs and conditions of the developing world; and 5) liberalization of related sectors.

Our experience in recent years has taught us several important lessons. First, if a nation's telecommunications policy environment is favorable, the private sector will respond positively. In the United States and elsewhere, we have seen that affordable, cost-based telecommunications services are the key to attracting long-term private investments. Second, targeted investments from the international community and key infrastructure projects can speed development considerably. Such projects should address both technical (e.g., connectivity) and human (e.g., technical education) limitations in the developing world. Third, institutions and governments in developing nations will succeed only through strategic thinking aimed at charting a clear path and a plan for reaching well-defined goals.

The enormous potential of the global information economy and electronic commerce will remain unfulfilled until governments remove often-severe logistical barriers not only in the telecommunications sector but in the transportation, customs, and delivery service sectors as well. Telecommunications reforms must make it cheaper to get online and stay online. Transportation regimes must be liberalized, through open skies agreements and other reforms, to make it easier and cheaper to ship goods ordered electronically from one country to another. Goods must flow quickly and predictably through the customs process. The efficient movement of goods through customs -- at predictable tariff schedules -- is critical to achieving cost-saving "just-in-time" deliveries of parts, components, and final products. Finally, delivery service regimes must be reformed to permit goods to quickly and inexpensively traverse the "final mile" between the port of entry and the customer's doorstep. A holistic approach that addresses all four sectors together will generate critical synergies and dramatically help to fully prepare a country to participate in the global information economy.

THE IED INITIATIVE

Reflecting the importance the U.S. government attaches to closing the international digital divide, President Clinton issued a directive in November 1998 requesting that the Secretary of State coordinate with other government agencies an initiative encouraging the Internet and e-commerce in developing countries. The Internet for Economic Development (IED) initiative, under the coordination of the State Department's Bureau of Economic and Business Affairs, seeks to empower developing countries to use the Internet to energize their economies, to gain access to knowledge that can improve standards of living, and to foster the free flow of ideas. The Department of State, the U.S. Agency for International Development (USAID), the Federal Communications Commission (FCC), the Commerce Department, and other agencies are working with host governments, multilateral organizations, and the private sector to implement specific projects that respond to participating countries' specific needs. The initiative initially involves 12 countries, which Vice President Gore announced in June 1999. These countries, which were chosen based on their commitment and ability to implement the four key elements identified above, are Guatemala, Haiti, Jamaica, Bulgaria, Egypt, Morocco, Ghana, Guinea, Uganda, South Africa, Mozambique, and India. Other developing countries have expressed a desire to join the initiative, and the Clinton administration hopes to be able to expand the program. Within the State Department, specific projects in support of IED are being developed by the Global Technology Corps (GTC), a team founded in mid-l999 by the Office of International Information Programs to establish private/public high-technology partnerships. The GTC works with companies, individuals, and organizations that are willing to volunteer their time, expertise, and resources to help spread the benefits of information technology worldwide. GTC activities in IED countries have included volunteer support for a micro e-commerce project in Guatemala, and volunteer travel to Jamaica by the founder of a well-known e-commerce company for discussions of e-commerce trends with local officials and businessmen. In South Africa, GTC is planning a mid-2000 video-journalism seminar to introduce university students to the latest techniques for using digital video cameras, which produce television-quality video at a small fraction of traditional costs.

USAID has provided the vast majority of funds required to implement IED programs. USAID has approximately 90 missions, and virtually every one has a project that is using the Internet to achieve development objectives. Total fiscal year 1998-99 funds dedicated to IED was approximately $12 million; it should reach nearly $15 million for fiscal year 2000. Examples of specific IED country programs include a $1 million Rural Information Technology Expansion program in India; a $1 million information technology (IT) program in Bulgaria; a $2.2 million IT/economic growth program in Egypt; a telecommunications reform program in Jamaica; a computer-based teacher training program in Morocco; community-based telecenters in Guatemala; support for private Internet service providers in Haiti; a regional electronic commerce policy workshop in southern Africa; and an initiative in Jamaica to connect the country's hospitals to assist in sharing information, especially information related to infectious diseases.

USAID is also implementing the Leland Initiative, a $15 million, five-year program launched in 1996 in cooperation with the State Department to enhance Internet connectivity in 21 African countries. This program was named in honor of the late Mickey Leland, a U.S. congressman who worked to alleviate poverty in Africa. The Leland initiative promotes policy reform, helps build necessary infrastructure, and works to increase the ability of African countries to use IT to sustain development. The six IED countries in Africa are also Leland countries. Examples of Leland/IED programs include Internet training for local officials in Ghana; extension of high-speed Internet access to secondary cities in Guinea and Mozambique; and (with the FCC) telecommunications regulatory cooperation with Uganda, Ghana, and South Africa.

The FCC is contributing to IED through Chairman William Kennard's Development Initiative. That effort, announced in June 1999, provides telecommunications policy and regulatory assistance to developing countries seeking to achieve and sustain their place in the global information society. The FCC is working with developing countries to build independent regulatory agencies equipped to facilitate universal service through competition, liberalization, privatization, and transparency -- goals that are part of the World Trade Organization Basic Telecom Services Agreement. That agreement is a landmark because, for the first time, the international community agreed to liberalization principles that have led to vastly lower prices and improved services.

To date, efforts under the Kennard Development Initiative have focused on Africa and Latin America. Recognizing that demand for FCC information and guidance on telecom matters far outstrips resources, the FCC has published Connecting the Globe: A Regulator's Guide to Building the Global Information Community," a copy of which is available through the FCC's Internet site at http://www.fcc.gov. This manual highlights the major issues facing telecom regulators around the globe.

Commerce Department experts have taught e-commerce workshops in Africa and elsewhere. Commerce Department officials are active in international meetings and discussions of Internet governance issues. Commerce also has held telecommunications summits, including a Latin America Telecommunications Summit and a China-U.S. Telecommunications Summit. These policy conferences are designed to bring government and industry leaders together to discuss new technologies and pro-competitive policies that promote access to and the use of information technology.

Grants issued to U.S. recipients under the National Telecommunications and Information Administration's Technologies Opportunity Program (TOP) are being used to further efforts to close the international digital divide by providing models for similar programs overseas. For example, community networking, educational, and health and wellness programs can be linked to parallel efforts in institutions and communities overseas. TOP has already facilitated a joint project between one of its community network grantees and an international project in Mexico (funded by the World Bank).

THE FUTURE

The United States is committed to assisting developing countries to undertake the steps necessary for them to fully share in the benefits of the global information economy, and it seeks to partner in doing so with other governments and the private sector.

No single government, company, organization, or individual can effectively satisfy all of the developing world's needs for policy, regulatory, and technical assistance in the information technology field. Working together with international partners, however, we can make a major contribution to helping developing countries to take the steps necessary for them to share in the benefits of the global information economy.

We look forward to working with international partners to help developing countries to take full advantage of the tremendous opportunities afforded by information technology.

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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