Foreign ownership restrictions constrain ICT growth in developing countries

Poor countries including the Philippines continue to lag behind the developed world in making information and communication technology applications commonplace in government, schools, and business despite global progress in improving peoples’ access to ICTs, the World Bank said yesterday.

In its recent report entitled Information and Communications for Development 2006: Global Trends and Policies, the World Bank (WB) noted that while developing countries have considerably increased ICT access particularly for telephone services in the past 25 years, there remain considerable barriers to investments like foreign ownership restrictions, thus preventing them from maximizing the economic benefits offered by ICT.

“In 1980, developing countries accounted for only 20 percent of the world's telephone lines. In 2005, 60 percent of the world's phones were in developing countries. Such expansion has been driven by the technological revolution of mobile telephony as well as private competition,” said the WB Report.

The WB report, however, has noted that these gains in ICT have largely benefited a limited number of people.

“Although progress has been made reaching out rural areas and the urban poor, in many countries, these groups still lag behind,” said the WB report. “And the advanced information and communication services available through the Internet initially reach mainly better off groups.”

In the Philippines, the WB said 194 people per 1000 have access to telephone lines and 248 people for every thousand are mobile subscribers. There are also 13.4 persons for every 1000 persons who have access to broadband or high speed internet, yet there are observations that these ICT facilities are largely concentrated in major urban centers like Metro Manila, Calabarzon, Cebu, Davao, and other secondary cities.

“While the developing world has seen huge progress in rollout of basic ICT infrastructure, the picture is more mixed for advanced use of ICT,” said the WB Report. “Worldwide, Internet use more than quadrupled between 2000 and 2005, but differences in the number of secure Internet servers, a proxy for the availability of e-commerce, remain stark. While developed nations have more than 300 such servers per 1 million people, developing nations have fewer than 2.”

Extending the reach of ICT to the broader segments of the population, the WB report argues, could boost economic growth and address poverty in developing countries by creating more growth opportunities for the private sector. Citing it’s survey of 56 developing countries including the Philippines, the report observes that “firms that use ICT grow faster, invest more, and are more productive and profitable than those that do not.”

The first step to boost the growth of the ICT sector and take advantages of this economic benefit, the WB Report said, is to allow the markets to work complemented by regulatory measures such as open entry, cost-based pricing, access to infrastructure and access to radio spectrum.

“Competitive, private-led markets go a long way toward making communication and information services available to the entire population,” the WB report said.