01 August 2000

IT Offers Potential Wealth to Developing Countries

Washington -- Developing countries using the right mix of tax breaks, investment incentives and commitment to education can enjoy substantial economic benefits from information technology (IT) by establishing offshore data processing centers, says an IT consultant to the U.S. government.

Developing countries "can jump across what used to be long phases of industrial development to become extremely competitive with the world leaders in the core industrial sector of communications technology," Derek Leebaert told a group of Senegalese academics, business executives and government officials.

Leebaert spoke from the U.S. State Department in Washington via a digital video conference to his audience at the U.S. embassy in Dakar, Senegal July 31.

Leebaert is a lecturer at George Washington University in Washington and co-founder of a Linguateq, a technology company that develops software to make Internet systems work together. He is a corporate consultant to the U.S. Defense Department and travels internationally for the U.S. government to speak on issues related to electronic commerce.

"There are very few, if any, secrets to success in the electronic marketplace," Leebaert said. Within two kilometers from the meeting room in Dakar, Leebaert said he was sure "there must be several young Bill Gates walking about, young people with all that intelligence, all the savviness, with all the perseverance as this famous American entrepreneur. These young people are all around you. It's simply a question of reaching out and allowing them to fulfill their full entrepreneurial potential."

As a young entrepreneur, Gates founded the Microsoft Corporation, which makes computer software, and has since become among the richest men in the world.

Leebaert said India, Taiwan, South Korea, and Ireland are examples of countries that have adopted the right mix of policies to produce IT powerhouses, staffed by world class computer engineers and funded by foreign investors.

Leebaert listed three reasons for their success:

-- foreign tax and investment incentives. India, for example, gives foreign IT investors a 10-year tax haven, making the country very attractive for investment, Leebaert said.

-- strong government commitment to IT and basic education.

-- drive by offshore corporations to develop sophisticated technology skills of their workers.

Leebaert says his company contracts with Indian companies for computer processing because the Indian companies are able to do more than basic operations.

Much of data processing is routine drudgery, like factory work, Leebaert said. "There is no reason for any group of people, any nation, to be stuck just doing data processing," Leebaert said.

He praised the Indian government for its policy of offering inducements to foreign companies if they send increasingly sophisticated jobs to Indian IT companies.

"It is no accident over the years that the Indian work force has become every bit as sophisticated in software development as any work force in the United States, or anywhere," Leebaert said.

A U.S. diplomat who has just returned from an extended assignment in India says U.S. companies such as General Electric and Compaq are partnering with Indian technology companies on sophisticated projects. He said the person picking up the phone for many technology trouble-shooting telephone numbers is at a technology center in India.

Leebaert said Zimbabwe has the human capital to become a technology center because of its high literacy rate. But he said Zimbabwe is thwarted from realizing its potential by an over-centralized government.

"The impediment in Zimbabwe's case has been, in the perception of many professors and business people whom I encountered in Harare, the over-centralization of government, the inability of many of these smart, highly literate people to unleash their brain power and become entrepreneurial," Leebaert said.

Leebaert said a leading international management company, McKinsey and Associates, has opened a computer programming center in Harare to take advantage of the highly educated work force despite the government impediments.

Leebaert said francophone Africa has not developed any significant technology centers, with the possible exception of Senegal, which has a strong business relationship with the U.S. telecommunications giant, MCI. Leebaert said the French language could be considered a minor, though not major, obstacle to IT growth in developing countries.

He said France is having trouble developing its own high-technology industry, primarily because of its centralized bureaucratic system, which discourages entrepreneurship. He said many French technology workers are migrating to the United States and Britain where it is easier to start and grow businesses.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

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