Economic impacts of information & communications
technologies (ICT)
 

We have from time to time read and heard from writers and speakers in the industry or government officials that:

• ICT can benefit economies of a society--increase GNP, productivity, etc.
• ICT can contribute in a value chain
• without using ICT, economic growth would be difficult
• an economy will have no future without E-Commerce/E-business

However, I have so far seen no good studies on the cause-effect and cost-benefits relationships. Without showing them, messages that glorify ICT cannot go into the hearts and minds of the recipients,  as they are more like empty promises.

The following are some examples of useful studies which I believe are lacking today:

• how the amount spent on buying/renting ICT products and services in a society can be balanced (and overweighed) by the economic benefits derived from utilising them (starting from tangible elements: cost savings, income generated, etc.)

• how to work out (mathematically) the relationship between the GNP of a society and its total amount spent on buying/renting ICT products and services

• how to work out (mathematically) the relationship between transborder electronic flows and trades of countries at both ends

• HOW (through the use of models or simple mathematical formula) after its installation, an electronic information system can make positive economic impacts on an organisation or society e.g. on enhancement of productivity, return on investment

• good models that show HOW electronic flows can add value STEP-BY-STEP in a production process  (matching with the popularity of value-chain concepts)

Without good analyses and understanding, the following would continue to be myths rather than realistic thinking:

Myth One: once a high-tech ICT system is adopted, a business would prosper

We have learnt from the experiences of adopting Integrated Services Digital Network (ISDN), WAP services, etc., where terminals and systems of end users and user organisations were not compatible with those of the network providers.

Also in many user organisations, advanced electronic information systems installed by ICT experts cannot meet end user needs nor offering user friendly services. After installation, perhaps only a small proportion of all the features can be used.

Some originally thought that the more colourful and fashionable the homepage, the better would be the business. Unfortunately, it has become a reason for the collapse of the web site.

High tech. cannot make a business proper, but appropriate/useable technology can.

Myth Two: the faster are information flows, the higher would be the productivity

Faster flows at the Internet, broadband networks, 3G services, etc. can no doubt convey more information per unit time. However, how well they can be received and consumed, together with other flows relevant to an organisation for production is another matter. Flows critical for organisational success include: money, materials, products, documents, energy and decisions.

The mismatch of these flows is a key reason for dotcom failures.

Myth Three: the more the consumption of electronic information, the more informed would be a person

The abundance of information received may not mean the same amount of information can be processed to become knowledge; knowledge generated may not mean knowledge retained and applied. We have yet to see whether large electronic information consumers would become wiser and higher quality human beings after encountering waves of  information overload, psychological pressure and physiological stress.

Myth Four: the more advanced ICT systems are installed, the better would be a society

Some sectors seem to be more conservative than others in respect of adopting high-tech ICT systems: government, hospitals, police force, banks, etc. They seem to be more concerned about how proven and secure some ICT are before adopting them. Are they slower but wiser than other sectors? Would consumers get a better or poorer service?

How beneficial is an ICT e.g. 3G, broadband, should be judged by how satisfactory the services generated can meet the needs of the users (the general public for societal systems). The critical success factors are therefore: needs pull (not technology push), and user participation in the planning process.

Concluding remarks

Good analyses and experiences which show that high-tech ICT systems can benefit an organisation or society economically will certainly increase their adoption and diffusion rates. So that myths could be converted to acceptable logics, we need to prove that hypotheses are in fact real-life relationships and workable solutions.

I welcome readers of this article to give critical comments. My email address is: clam@kamching.com
 

Dr Charles Lam
July 2001