Introduction to ICT Policy discussions, fundamental understanding of ICT benefits.

1. INTRODUCTION TO
ICT POLICY DISCUSSIONS
Rene Summer
ICT BENEFITS

2. ICT BENEFITS | Public | © Ericsson AB 2014 | 2014-04-25 | Page 2
ICT BENEFITS AS WE COMMONLY
Quantify THEM TODAY
+ 1000 BB USERS > + 80 Jobs
+ 10% POINTS BB PENETRATION
> + 1% POINT GDP
+ 2 x BB SPEED > + 0.3% increase in GDP
+1% POINT increase in BB Penetration
> 3,5% INCREASE IN new business
registration
Sources: Chalmers Institute of Technology, Arthur D Little,
Stockholm School of Economics
EXAMPLES OF FINDINGS OF ECONOMIC IMPACT OF ICT

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ICT Benefits as we commonly
know them today
ICTBENEFITS
MARKET GROWTH
PRODUCTIVITYINNOVATION
INVESTMENTS
JOB/NEW BIZ
CREATION
TRADE
EFFICIENCY
Source: Economic Benefits of ICT

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Sources: Chalmers Institute of Technology, Arthur D Little,
OECD Broadband and the Economy, Future of Internet 2008
 Increased global market reach
expanding trade but also
intensified competition,
 General increase in economic
efficiency and labor productivity,
 Increased pace of knowledge
diffusion and increased positive
spill-over effects,
 Revised view of the role of
innovation (innovation-led
growth).
Economic Impact of ICTChanging Economic Thinking > ICT
Source: Jati Sengupta, Understanding Economic Growth, Springer 2011
DIRECT INDIRECT INDUCED
ICT BENEFITS AS WE COMMONLY
UNDERSTAND THEM TODAY

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ICT BENEFITS AS WE WILL RECOGNIZE
THEM IN THE NETWORKED SOCIETY
WELL BEING
STANDARD
OF LIVING
QUALITY
OF LIFE
SOCIAL
PROGRESS
NATIONAL
COMPETITIVENESS

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Increase in market size
Increase in investments
Technological progress
Causes of LONG TERM
ECONOMIC growth
TECHNOLOGICAL PROGRESS IS BY DEFINITION A NET
IMPROVEMENT TO THE ECONOMY*
* Source: Economist Joel Mokyr, The Levers of Riches.

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Relative significance of
Technological progress
CAUSING LONG TERM GROWTH
Imagine if we freeze technology, say at some point of the Victorian era
WHERE WOULD WE BE TODAY IN TERMS OF WELL-BEING?

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technological
progress
Growth Change
INNOVATIONINVENTION DIFFUSION &
ADOPTION
KEY COMPONENTS OF A TECHNOLOGY CHANGE
incremental, radical and
disruptive innovations
ECONOMIC PERFORMANCE
Evolutionary
micro-innovations
Revolutionary
macro-innovations

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Technology Revolutions
macro innovations of special kind
Source: Professor Carlota Perez Universities of Cambridge, Tallinn and Sussex
Single generic and
recognizable
1771-
The industrial
revolution
1829-
Steam, coal, iron &
railways
1875-
Steel & heavy
engineering
1908-
Automobile, oil, mass
production
1971-
IT &
telecommunication
FIVE SUCCESSIVE TECHNOLOGICAL
REVOLUTIONS 1770 TO 2000S
GENERAL PURPOSE
TECHNOLOGIES (GPT)
Broad scope of improvement
Wide range and variety of use
Abundant spillovers

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Transformational power
of technological Progress:
Source: World Economic Forum, Global
Competitiveness Report 2010-11
Characteristics
of a factor-
driven economy
Source: Jati Sengupta, Understanding Economic Growth, Springer 2011, OECD Broadband and the
Economy, Future of Internet 2008; Lipsey, Richard; Kenneth I. Carlaw & Clifford T. Bekhar, Oxford
Press 2005; Brynjolfsson, Erik, and Adam Saunders (2010) MIT Press and Ericsson Analysis
BASIC REQUIREMENTS
› Institutions
› Infrastructure
› Macroeconomic environment
› Health and primary education
DIRECT IMPACT
› Availability and quality of ICT Infrastructure
› Digital Readiness
Characteristics
of a efficiency-
driven economy
EFFICIENCY ENHANCERS
› Higher education and training
› Goods market efficiency
› Labor market efficiency
› Financial market development
› Technological readiness
› Market size
INDIRECT IMPACT FROM ICT
› Improving development of human capital, e-
education
› Increased access to knowledge
› Increasing market efficiency/ reach e-commerce
› Increase efficiency in existing processes/value
chains
Characteristics
of an
Innovation-
driven economy
INNOVATION &
SOPHISTICATION
› Business sophistication
› Innovation
INDUCED IMPACT ICT
› Decreasing barriers to creating of new knowledge
(inventions)
› Decreasing barriers to innovation in new
products, services, processes, and markets
COMPETITIVENESS OF NATIONS IMPACT FROM ICT
ICT AS TRANSFORMATIONAL GPT

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Mastering
transformations
Source: Manuel Castells, The Rise of the Network Society, Second Edition, 2010
IS A STRATEGIC SOCIETAL CAPABILITY
Technology (or lack of it) embodies the
capacity of societies to transform
themselves
The ability or inability of societies to master
technology largely shapes their economic
destiny and social well-being
The state can suffocate or enable an
accelerated process of technological
transformation
UNTAPPED OPPORTUNITIESCHANGE
TIME
Institutions
(Governance)
MARKET
Technology
Growth
Opportunities
Reform
Opportunities

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Why policy makers need to
act?
Benefits are
not automatic
No deterministic built
in design in to
technology
There are also
challenges that
must be addressed
Which shapes the size
and sustainability of
benefits
Must be backed
by resilient &
adequate policy
Technology can’t
do it alone
WELLBEING
FIRM AND DURABLE POLICY COMMITMENT CAN DELIVER
STRUCTURAL CHANGE WITH LASTING BENEFITS

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› Quantifying
› Knowing
› Understanding
› Long view, broad & deep change as a source of value creation
› Technological progress as a cause of long term growth
› ICT = GPT
› Transformational power of GPT
› Long term gains are not automatic
Summary
ICT BENEFITS FUNDAMENTALS
A STRATEGIC UNDERSTANDING OF ICT BENEFITS