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The internet has penetrated many aspects of business and culture in developed countries, but there is limited availability in many poor countries. Do you think that this technology is going to widen the economic development gap between rich and poor countries? Is there a way that developing countries can use such technologies as a tool for economic development? Justify and illustrate your arguments by referring to appropriate case study examples.
A brief introduction:
In recent years globalisation has brought all the countries together, and the developments in the information technology made the world as a single unit in the aspects of economy, finance and trading.
Talking about the internet technology, it dates back to the time of the computer technology, and the development in computer and internet technology was hand in glove. The internet technology was brought into the world of business in the late 90's, and since then it had a great effect on different avenues such as business, culture, education, banking, health, entertainment, and so on.
And, nowadays, the use of internet technology's become so common by introducing the technology into the mobile phones, that is helping every individual to communicate depending on their purpose i.e., business, personal etc.,
Presently, it is a very popular fact about the internet/information technology being used as a tool and being implemented in various business organisations and industries. Automation of the organisations by adopting this technology becomes a very vital issue in order to improve the financial & economical status locally and globally as well. A small example that has brought a drastic change to the economic growth is the call centre business that has linked two countries i.e., India and the United Kingdom.
In fact the United Kingdom is one of the largest economies in the globe, which basically has manufacturing industries that has taken over by the service industry such as e-commerce. The major income in this country is from the service industry that depends on information technology and call centres. This is a result of the globalisation that allows the UK organisations to serve their customer requirements with a very minimal cost.
Call centre business is absolutely based on the internet technology serving the customers requirements and queries that can be processed from any corner of the world. Hence, the United Kingdom has chosen India to establish their business process offices because of various reasons:
One of the reasons for the UK organisations to move their operations to India are the shortage of IT professionals and also the favourable immigration laws. Though the immigration laws are encouraging the IT professionals from India, they prefer to work for a shorter time in the UK or work from India.
There is one big advantage for the UK organisations, that they do not have to depend on the IT professionals who demand higher salaries, else which might force them to employee similar skilled people from India.
Apart from this major benefit, the low salaries that are ten times lower compared to the salaries in the UK, and the low cost of living in India are making the UK organisations to focus and establish the call centres in India. Also, comparatively they may find more qualified professionals for the similar jobs to the UK.
Usually, the remuneration for these kinds of jobs in the UK is very low, and also does not require any basic qualifications. On the other hand, in India, the employees can make good earnings than normal that means it is easy for the organisations to engage people for the same vacancies.
The other advantage with the employees in India is that the English is their first language, apart from that, they are also hard working. (Working long hour shifts a day).
It can be derived, based on the above mentioned facts, that internet technology plays an important role in developing the economic conditions of a nation.
To summarize, every business has its own benefits and drawbacks. Internet technology if used in the right way and the right purposes, it can bring about major changes in achieving the economic development as well as play a key role in the nations development.
But, it is not the same situation in the underdeveloped countries, where the internet technology is still not implemented in most of the establishments or organisations for varied reasons.
To understand in more detail about the role of the internet technology in changing the economic condition of a nation, it can be analysed from the following case study.
This report is based on a few aspects from one of the economic research papers on the Information Technology and the challenge of Economic Development in Africa by T.W. Oshikoya and M. Nureldin hussain.
In their report, they emphasise on the information technology that has brought changes to socio-economic development. Also, describes how this technology brings forward the development through exchange of information, trading, and financial status of other service sectors, apart from efficient use of the human and organisational capabilities in the public and the private sectors. It can also be seen how the networks of individuals, organisations and countries are linked together electronically and are dependent on each other since the world is heading towards knowledge based economic structures and information societies.
Various development challenges have been discussed regarding the economic development of the country. The basic concern that has been focused is the poverty that can be brought down based on the economic growth contributing in the social development and the improvements in the welfare of the African community. The main priorities were being the investment in physical and human capital, with regards to education, health and nutrition.
In order to achieve the economic growth, some of the issues that have been prioritised were as: Integrating Africa into the global trade & finance, Effective macroeconomic & public sector management, Promoting private enterprise development, Achieving agricultural development and food security, Ensuring environmental protection, Promoting Human capital development.
Integrating Africa into the Global Trade and Finance:
It is a known fact that trade is the main point to be focused for any country to progress their economic growth. Since the African economy had encountered a drastic fall in the year 1995 compared to 1980 in their trade & business export such as coffee, cocoa, cotton, timber, and iron ore that are the main resources.
Then it was decided to introduce the information technology into their businesses that were in demand to improve their business performance, and also to recover the losses to a possible extent in the world trade. This fact was also supported by one of the researchers 'Hussain in his African Development Report 1995': 'price competitiveness explains only about 25% of the decline in Africa's market share. Non-price factors were found to be responsible for about 75% of the decline in Africa's market share.'
The reasons that had affected the market share have been specified as lack of marketing, poor information on markets & prices, slow process of deliveries, inefficient distribution network & low after-sales service, issues of quality & reliability and so on. Also, the exchange of trade information among the African countries was not sufficient and being the main aspect for the growth in the economy. The economy could have been enhanced only through proper knowledge sharing about the products, demand & supply across various parts of the country and abroad.
Hence, in these kinds of critical situations, implementing information technology can prove worthwhile to overcome the hurdles faced in any business, irrespective of the place/country. By utilising internet technology, many benefits can be experienced such as obtaining international market information, marketing globally, and outsourcing potential business partners, also getting information on imports & exports to various countries.
Furthermore, implementing computer technology in business organisations helps in catalysing the processes to a very great extent. Information technology has helped in reducing their time for delivery, processing time, improved internal & external networks, dealing in export processes, customs operations and to a great extent reduced the transaction costs. 'As mentioned about Mauritania, implemented computer based trade management system with an investment of US $1 million, which has reduced their transaction costs associated with external trade as customs processing time was reduced from 48 hours to 30 minutes, and the time taken to declare goods to between one to two days from 5 to 20 days.' (Talero and Gaudette 1996). On the other hand, implementing information technology also eliminates middlemen in the general export businesses which obviously reduce overheads to a very great extent and time as well.
It becomes essential to organise trading/business communities with the information technology which enables to exchange information with other establishments, increases accuracy, and increases the growth of the country. The government has also put in efforts by organising some bodies to research and implement the technology in various sectors to enhance the economical growth. It also focused to introduce the technology into the banking & finance sector in order to improve the payment systems, with strong regulations and legal framework. It has led to provide fast & efficient payment systems with automation, and improved the services rendered to the customers.
Apart from the trade & business sector, the implementation of the internet technology has spread into various other sectors such legal, accounting, medical, education and most professional services across the country. Also, the internet technology gradually started capturing the other areas such as hotel, tourism, courier, advertising, entertainment, insurance & financial services, and news & information services.
Finally, the information technology has been implemented accordingly into the other aspects as mentioned earlier: Effective macroeconomic & public sector management, Promoting private enterprise development, Achieving agricultural development and food security, Ensuring environmental protection, Promoting Human capital development. All these sectors are equally important so as to improve the developing country's social and economic conditions with the implementation of the internet technology as discussed in the main report.
In brief, because the information technology is growing and rapidly improving the social and economic conditions, it provided many opportunities and challenges to bring down poverty in Africa. With the latest developments and infrastructure, the students could carry out research using the internet technology by reaching universities & libraries. Similarly it has also helped in the medical field in diagnosing and consultation with others through the internet. The top management in the business organisations could make the right decisions with effective economic management and governance. Also, the technology has helped most of the business establishments by improving their productivity by reducing process times, delivery time, market information, international marketing and so on.
Changing the infrastructure by implementing the information technology, the African government & community has to take advantage of the developing market opportunities and accelerate the development in all aspects.