1

New Economy and PovertyPresentation by

Pietro A. Vagliasindi

“New Media” & “New Economy”:

Institutions, Regulations and

Implications for Growth and Development

2

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.

3

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

4

Source: WB report

5

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

6

US revolution

Adopter Countries’ revolution

Info

Inf

rast

ruct

ure

(sco

pe a

nd q

uali

ty)

Time

Latecomer Countries

Convergence

Divergence

7

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

8

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

9

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

10

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”

11

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

12Source: EU report

13

• 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

14

•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

15

• 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.

16

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

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

18Source: EU report

19

• 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

20

– 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

21

• 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.

22

• 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.

23

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

24

Poverty in the US by GenderPoverty Worldwide

Worldwide Perspective

Source: WB report

Source: US report

25

• 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.

26

• 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.

27

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

28

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?

29

Source: EU report

30

• 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

31

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

32

Thank you very much

for

your time and attention

33

34

• 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?

35

• 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?

36

• 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