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New Economy and PovertyPresentation by
Pietro A. Vagliasindi
“New Media” & “New Economy”:
Institutions, Regulations and
Implications for Growth and Development
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Market system facilitated by the interactions between:
• technology (high-speed communications, powerful network of computers and the Internet,
• globalisation reflecting also a deliberate policy to reduce barriers to the mobility of goods and capital.
It implies:• new rules of the game (new way of organising
production and delivering value to consumers),• long term growth when markets are supported by
appropriate regulatory frameworks.
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Building Blocks:Building Blocks: Telecom Infrastructure + Internet Telecom Infrastructure + Internet Availability/Affordability + E-services Readiness; Availability/Affordability + E-services Readiness; Connectivity (Access),Cash (Financing), Competition, Connectivity (Access),Cash (Financing), Competition, Competencies (Human Resources), Creativity, Competencies (Human Resources), Creativity, Communities, CooperationCommunities, Cooperation
•IssuesIssues:: turbulence, instability, complexity, interdepend. regulation but also openness and freedom time is “accelerating”: convergence or inequality knowledge is the essential driver of development significant opportunities for new entrants
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Source: WB report
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There are benefits and risks in joining, but not participating may imply greater losses:
• Costs of being left out may be permanent: poverty and marginalisation may increase
• The forces of globalization are making this one economy and one world
• Probably there is no longer an alternative.
Opportunities: Overcoming geographical barriers Cutting transaction cost Streamlining the distribution chain
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US revolution
Adopter Countries’ revolution
Info
Inf
rast
ruct
ure
(sco
pe a
nd q
uali
ty)
Time
Latecomer Countries
Convergence
Divergence
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Access is Concentrated in a Few Countries
0
10
20
30
40
50
60
70
High Income
Upper Mid.Income
Low Mid.Income
Low IncomeM
ain
lin
es p
er 1
00 I
nh
ab.
in 1
998
Urban Rest of the Country
v
High Income
62%
16%
Population
Mainlines (inc. cellular)
Divide Between Divide Within
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High Income
Upper Middle Income
Low Middle Income
Low Income
World Average
Telephone Lines per 100 Population
Teledensity Urban Rest of the Country
49.5 60.2 47.8
15.4 24.3 13.8
8.0 23.3 6.6
1.4 5.7 1.0
10.3 25.0 9.1
Source: ITU, World Telecommunication Development Report, 1999
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0
5
10
15
20
25
30
LatinAmerica
EastAsia
Baltics CEE SEE CIS EU USA
ITU (2000) Internet host (computer linked to the worldwide Internet network) per 1000 inhabitants
293
49
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Canada & US
64.1%
Europe
24.3%
LAC*1.2%
Africa0.5%
Developing Asia-Pacific
2.9%Other4.6%
Australia, Japan & New
Zealand7.0%
Developing:6 host per 10’000
people
Developed:312 host per
10’000 people
Data Source: ITU 1999 “Challenges to the Network: Internet for Development”
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Internet diffusion in EU accession countriesInternet diffusion in EU accession countries
Source: ITU(2001) Internet hosts per 1000 inhabitants
0
5
10
15
20
25
30
35
40E
ston
ia
Cze
ch R
ep
Hu
nga
ry
Slo
ven
ia
Slo
v R
ep
Pol
and
Lat
via
Lit
hu
ania
Bu
lgar
ia
Rom
ania
19952001
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12Source: EU report
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• Favour economic growth and develop enterprise. - enhanced competitiveness- increased business opportunities - access to market for rural communities- human resource policies are critical- proactive approach to promote investment in poor areas
• Improved public and social services- improved responsiveness & efficient services- better health/education/environmental services - reducing vulnerability to natural disasters
• Empower the poor and break marginalisation. - cut costs, speeds delivery of gov’t services- equal access to government for all- allowing the poor to better communicate their concerns
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•Make the population part of governance process, guaranteeing greater transparency.
- improved efficiency on government procurement- reduced corruption - increased civil society participation
Digital Public Service Quality
Source: EU report
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• The US miracle can be in part credit to ICT and its impact on the rest of the economy.
• It may represent a great opportunity for Italy, EU and other countries to accelerate development.
Enhanced telecoms facilitate participation in the information economy and international trade.
Internet adoption is strongly correlated to innovation, foreign competitive pressure, export orientation and to better performance in terms of employment and sales growth.
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Consumers PartnersEnterprises
Government
(at hom
e or abroad
)
B to CB to C B to BB to B
B to G : public procurementtrade procedures (Customs)
B to B : Internet, Intranet, ExtranetEDI-based transaction (tenders)
B to C : Internet sales, interactiveTV and telephone sales, etc...
C to C: eBay (auctions)
Tangible productsIntangible (digital)Services
C to G
C to G
B to G
B to G
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17Full- Discount Online
0
20
40
60
80
100
120
140
160
Full-service
Discountbroker
Onlinebroker
Cost of trading transactions
Branch ATM Internet0
0.2
0.4
0.6
0.8
1
1.2
1.4
Cost of banking transactions
$150
$69$10
Source: Andersen Consulting
US$0.01
US$1.27
Web presen
ce
E-com en
abled sit
e
Digital d
eliver
y
E-paymen
t
Ingredien
ts:
US$0.27
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18Source: EU report
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• for sellers:– lower barriers to entry and transaction costs– world-wide access to buyers– faster adjustment to changing market
conditions– more information on transactions and
customers• for buyers:
– More information on available goods and services
– Lower prices and more choices– Time saving and convenience and 24 / 7
access
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– Access to hardware, software, Internet– Taxation, government licensing &
regulation– Speed of Internet connections– Skills needed to use new systems – Privacy, consumer protection– Security, payment mechanisms,
authentication– Spamming and other advertising issues – Adjustment to constant, rapid change
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• Development is characterized by choices and influenced by institutional diversity.
• Multi-dimensional and path-dependent.• Technological and institutional changes.• Learning process and imitation.• Social transformation and power of ideas.• Mechanisms linking growth and poverty are
time-dependent and context-specific.• Public and private sectors critical to growth
and poverty.
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• Shared prosperity and a fair economic system.
• Broader participation in shaping socio-economic future.
• New policies and institutions for workers, families and communities in the new economy.
Trough policy, legislation and regulatory reforms.
Spreading knowledge and new technologies.
Incentivating research, education, training and foreign investment.
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Economic Growth
• “The size of the pie”
• Total output
• Per capita (average) income
Redistributive Issues
• “Who gets the biggest and smallest slices”
• Decent standard of living for all?
• Shared prosperity and a sound economy
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Poverty in the US by GenderPoverty Worldwide
Worldwide Perspective
Source: WB report
Source: US report
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• Assist in info gathering and dissemination• Many health problems (cf. HIVpandemic)
are related to prevention and access to info• Help controlling epidemics and contagious
diseases, improving health care for the poor and remote population.
• Telemedicine can bring medical expertise to local communities by direct diagnosis, X-Ray reading, etc.
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• Economic develop. and poverty reduction are strongly correlate with education
• Applications to teacher training and updating in remote areas
• Overcome problems of empty libraries and inadequate staff in higher education
• Can reach areas and individuals where traditional Universities do not
• Information and feedback are key to adaptation and learning.
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StudentsLocal Support
WWW Site
ContentProviders
Lectures via Internet
On-LineLibrary
• Full-text journals
• Abstracts with index
Textbooks
Course notes
Journals
Live Sessions / E-mail Interaction
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Who is lagging behind?
• Education: do income rise with higher degrees?
• Gender: is gender gap still relevant?
• Older: are pensioners’ conditions worsening?
• Geography: do we have large north-south gaps?
• Union: do union members earn more?
• Ethnicity: do whites earn more?
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Source: EU report
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• Greater participation in the labor market – more women in the labor market
• Increasing part-time work in low-wage industries and occupations?
– 1 out of every X workers lives in poverty– almost 1 out of Y children lives in poverty– poverty in the South is significantly higher
• Unemployment remains high– significantly higher in the South and Island– especially for young and women
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to: bridge the digital divide and knowledge gap with EU and US increasing access and education by: providing a proper legal and regulatory
environment improving infrastructure, infostructure and
trust enhancing human resources and know-how
through education and training reforming social security, labour market and
taxes
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Thank you very much
for
your time and attention
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• How is the structures of our economy changing?• Using ICT to increase pro-poor quality of growth?
• Do the socio-economic systems and families meet the challenges of the new economy?
• Are benefits of economic growth widely shared?
• Which ‘indicators’ adequately describe the development and poverty trends?
• Are we investing enough in poverty and self-sufficiency?
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• Can we keep up with the changing nature of trade and competition?
• In this more globally competitive world, is economic growth widening inequality?
• Is the digital divide growing or shrinking?
• Revolution in knowledge: are gaps widening?
• Transformation of jobs and lives: working and living longer in the new economy ?
• Which consequences on poverty and exclusion?
• Which implications for public policies?
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• ICT can be used to organise knowledge, information and education to reduce poverty.
• Reforming institutions supporting socio-economic security and career develop.
• Investing in education, health care, child care, housing, transportation