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Technology and Development: The Real Digital Divide

Marcus Didius Falco (
Sun, 13 Mar 2005 03:55:57 -0500

Cute picture of an African boy holding a "phone" made of clay at:

Technology and development

The real digital divide
Mar 10th 2005
From The Economist print edition

Encouraging the spread of mobile phones is the most sensible and effective
response to the digital divide.

IT WAS an idea born in those far-off days of the internet bubble: the worry
that as people in the rich world embraced new computing and communications
technologies, people in the poor world would be left stranded on the wrong
side of a digital divide . Five years after the technology bubble burst,
many ideas from the time that eyeballs matter more than profits or that
internet traffic was doubling every 100 days have been sensibly shelved.
But the idea of the digital divide persists. On March 14th, after years of
debate, the United Nations will launch a Digital Solidarity Fund to finance
projects that address the uneven distribution and use of new information
and communication technologies and enable excluded people and countries to
enter the new era of the information society . Yet the debate over the
digital divide is founded on a myth that plugging poor countries into the
internet will help them to become rich rapidly.

The lure of magic

This is highly unlikely, because the digital divide is not a problem
in itself, but a symptom of deeper, more important divides: of income,
development and literacy. Fewer people in poor countries than in rich
ones own computers and have access to the internet simply because they
are too poor, are illiterate, or have other more pressing concerns,
such as food, health care and security. So even if it were possible to
wave a magic wand and cause a computer to appear in every household on
earth, it would not achieve very much: a computer is not useful if you
have no food or electricity and cannot read.

Yet such wand-waving through the construction of specific local
infrastructure projects such as rural telecentres is just the sort of
thing for which the UN's new fund is intended. How the fund will be
financed and managed will be discussed at a meeting in September. One
popular proposal is that technology firms operating in poor countries
be encouraged to donate 1% of their profits to the fund, in return for
which they will be able to display a Digital Solidarity logo. (Anyone
worried about corrupt officials creaming off money will be heartened
to hear that a system of inspections has been proposed.)

This sort of thing is the wrong way to go about addressing the
inequality in access to digital technologies: it is treating the
symptoms, rather than the underlying causes. The benefits of building
rural computing centres, for example, are unclear (see the article in
our Technology Quarterly in this issue). Rather than trying to close
the divide for the sake of it, the more sensible goal is to determine
how best to use technology to promote bottom-up development. And the
answer to that question turns out to be remarkably clear: by promoting
the spread not of PCs and the internet, but of mobile phones.

Plenty of evidence suggests that the mobile phone is the technology
with the greatest impact on development. A new paper finds that mobile
phones raise long-term growth rates, that their impact is twice as big
in developing nations as in developed ones, and that an extra ten
phones per 100 people in a typical developing country increases GDP
growth by 0.6 percentage points (see article).

And when it comes to mobile phones, there is no need for intervention
or funding from the UN: even the world's poorest people are already
rushing to embrace mobile phones, because their economic benefits are
so apparent. Mobile phones do not rely on a permanent electricity
supply and can be used by people who cannot read or write.

Phones are widely shared and rented out by the call, for example by
the telephone ladies found in Bangladeshi villages. Farmers and
fishermen use mobile phones to call several markets and work out where
they can get the best price for their produce. Small businesses use
them to shop around for supplies. Mobile phones are used to make
cashless payments in Zambia and several other African countries. Even
though the number of phones per 100 people in poor countries is much
lower than in the developed world, they can have a dramatic impact:
reducing transaction costs, broadening trade networks and reducing the
need to travel, which is of particular value for people looking for
work. Little wonder that people in poor countries spend a larger
proportion of their income on telecommunications than those in rich

The digital divide that really matters, then, is between those with
access to a mobile network and those without. The good news is that
the gap is closing fast. The UN has set a goal of 50% access by 2015,
but a new repor from the World Bank notes that 77% of the world's
population already lives within range of a mobile network.

And yet more can be done to promote the diffusion of mobile
phones. Instead of messing around with telecentres and infrastructure
projects of dubious merit, the best thing governments in the
developing world can do is to liberalise their telecoms markets, doing
away with lumbering state monopolies and encouraging
competition. History shows that the earlier competition is introduced,
the faster mobile phones start to spread. Consider the Democratic
Republic of Congo and Ethiopia, for example. Both have average annual
incomes of a mere $100 per person, but the number of phones per 100
people is two in the former (where there are six mobile networks), and
0.13 in the latter (where there is only one).

Let a thousand networks bloom

According to the World Bank, the private sector invested $230 billion
in telecommunications infrastructure in the developing world between
1993 and 2003 and countries with well-regulated competitive markets
have seen the greatest investment. Several firms, such as Orascom
Telecom (see article) and Vodacom, specialise in providing mobile
access in developing countries.

Handset-makers, meanwhile, are racing to develop cheap handsets for
new markets in the developing world. Rather than trying to close the
digital divide through top-down IT infrastructure projects,
governments in the developing world should open their telecoms
markets. Then firms and customers, on their own and even in the
poorest countries, will close the divide themselves.

Copyright 2005 The Economist Newspaper and The Economist Group.

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