Module 1: Introduction to Internet Use for Business Development

IV. A final point: the need for systematic and continuously updated data

Currently, there is no international database that provides comprehensive information on the use of ICTs by businesses in developing countries. Statistics can more easily be found for the developed countries. The Organization for Economic Cooperation and Development (OECD) and Eurostat have been compiling information on their respective member countries for a few years now.

On the other hand, for developing countries, only a few have started to collect ICT indicators through their respective statistical systems. However, the data collected are not always comparable across countries, or with those of developed nations.

There is, therefore, a need for collective action at the international level to coordinate the methodology and work towards a global database of ICT indicators.

From a country level, policymaking will benefit from systems that enable the collection of ICT indicators and that yield better knowledge about the adoption of the Internet and e-business in developing country firms, particularly SMEs.

For example, in 2001, The Asia Foundation carried out a project to survey the use of the Internet and e-commerce in four South-East Asian countries: Indonesia, the Philippines, Sri Lanka and Thailand. Obviously, the data could very well be dated by now, but for purposes of illustration, consider how observations (if properly backed by reliable data) could lead to better policy conclusions:

1.Observation: Neither cost nor technical ability (to use the Internet) was found to be the main barrier preventing SMEs from going online.

Policy conclusion: Subsidization to SMEs to encourage them to adopt ICTs, therefore, might not be necessary. Rather, governments should concentrate on the regulatory or legal changes, such as e-commerce legislation and deregulation of the telecommunications industry, to increase access outside the major cities.

2. Observation: The main perceived barrier for Internet uptake is very similar across companies from both developed and developing countries: lack of network security, and slow and/or unstable connections.

Policy conclusion: Clearly, these are areas where the government can and must take action. Legislation to promote network security and instil confidence in the same would be critical. Universal access strategies to enable SMEs in unserved or remote areas to obtain reliable, low cost connections (note that dial-up connections would often be sufficient) could be developed.

3. Observation: SMEs generally find it relatively easy to use PCs and then connect to the Internet to use email and set up web pages. However, the introduction of the Internet into their business activities (including e-commerce) does not follow easily, and larger companies are more likely to automate their business processes (and to do so earlier) than smaller companies. Note that some studies have found a positive relationship between profitability and the level of intensity of ICT tools, with firms using more advanced e-business tools achieving higher profitability.

Policy conclusion: While, as stated previously, SMEs would make investments if they thought it made business sense, making or encouraging SMEs to make the leap from simple (and low-cost) Internet use to building e-business systems fully integrated with customers and suppliers requires additional investments, as well as technical and managerial skills that the SMEs might not yet have. It also demands some competence in designing and implementing e-business strategies. There are areas where public and private agencies can support SMEs, through assistance for educational and training.