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BOLD 2003: Development and the Internet

Module I
Module II
Module III
Module IV
Module V



by Diane Cabell and Geoffrey Kirkman
with Rebecca Brackley

Required Readings
Case Studies
Discussion Questions
Additional Resources
Decision Tree


The first three modules of this series have set out a number of strategies for using information and communications technologies (“ICTs”) as development tools. Whether the focus is developing an ICT infrastructure, leveraging ICTs to promote learning, or encouraging local digital entrepreneurship, policy is essential both to support these strategies and to decide among them in the allocation of limited resources. You have already looked at some specific policy levers that can be used in the pursuit of these strategies; in this module , we locate these strategies in the broader context of policymaking and provide a framework for understanding the difficult choices and tradeoffs that decision-makers face as they assess proposals for and develop policies aimed at tapping into the potential of ICTs for economic growth and development.

First, we will explore frameworks for decision-making that highlight some key factors that should be taken into account in designing strategies for bringing the Internet and other ICTs to the developing world and in constructing models for decision-making that bring together multiple stakeholders. We will examine the critical role of technological infrastructure, culture, politics, economics, the law, leadership and vision and demonstrate their complex interaction in the real world. We will then illustrate how these difficult choices are being made in the context of a debate concerning the appropriate role of intellectual property rights (“IPR”) in support of ICT for development.

As you work through this module, consider how the perspective of the policymaker and/or stakeholder impacts the way choices are framed, what interests are considered relevant and the decisions that are ultimately made. How would your decisions be affected by your position as a consultant to the United Nations, a policymaker for an NGO, the president of a European software company or ISP seeking foreign investment opportunities, the CEO of a western aid organization providing humanitarian relief, the Minister of Communications of an African nation, an elementary school teacher in Latin America or a representative of the World Trade Organization? What solutions would you propose for reconciling the divergent interests of multiple stakeholders to promote the economic and social development of the country as a whole?

Required Readings

Frameworks for Decision-Making

The Networked Readiness Factors

The Networked Readiness Index is an attempt to quantitatively assess a country’s capacity to exploit the opportunities of ICTs relative to other countries. In doing so, the index sets out the factors that contribute to the ability to leverage ICTs. The confluence of the enabling factors (Network Access, Network Policy, Networked Society and Networked Economy) provides a basis for analyzing the ability and potential of a country/community to participate in the Networked World, taking into account the interplay of factors and the larger social, political and economic context. In this way, the index was designed to assist policymakers by providing critical information for more informed decision-making and encouraging decision-makers to think through the relevant stakeholder interests and tradeoffs a priori to avoid unintended consequences that may be difficult or impossible to reverse.

Please read Chapter 2 of the “Global Information Technology Report 2001-2002: Readiness for the Networked World,” at

As you are reading this chapter, consider the following: What factors may be missing from the index? What do the Networked Readiness factors suggest for designing and evaluating an ICT strategy? Do the relative strengths and weaknesses highlighted in the index and the sub and micro-indexes provide a basis for prioritizing ICT initiatives (e.g. choosing between investments in infrastructure, education or the creation of incentives for foreign investment in local business)? What can you extrapolate about the impact that ICT’s have on local competitiveness, economic growth and social development? What are the elements that must be present in order to realize the “digital dividends” of ICTs? What are the disadvantages? How does the difficulty of predicting future technologies affect the decision-making process? How much value does the index add to a national policy decision-making process?

One thing should be clear after reading the Networked Readiness Index chapter – ICT policy is not exclusively about ICTs. Rather, the ways in which any community adopts new technologies depend on both ICT-specific issues such as cost and connectivity, but also on a range of policies, environmental conditions and factors that make up the backbone of that community’s economy and society more generally. ICTs are merely a tool that is available for use by all sectors of a community. This would suggest that as many voices and stakeholders that can be brought into the planning discussion, the better.

Decision Making Processes: Balancing Multiple Stakeholder Interests in the Allocation of Limited Resources

Creating a dialogue within local communities

Understanding the factors that impact ICT and development is an important first step toward informed and meaningful development decisions. However, selecting, developing and implementing digital development initiatives also requires a dialogue among and balancing of the interests of multiple stakeholders, including governments, the local private sector, foreign investors and end users. Geoffrey Kirkman describes how the development community can play a role in facilitating the decision-making process by bringing together multiple stakeholders in this audio clip.

Consider alternative ways of bringing together multiple stakeholders in a participatory and transparent process. See, for example, Section 3.2 of “Creating a Development Dynamic: The Final Report of the Digital Opportunity Initiative”, discussing the need for “strategic compacts” to support decision-making in this area: [go to page 40]. Camella Rhone, Director of General of Jamaica's Ministry of Industry, Commerce and Technology explains the critical importance of strategic partnerships in this audio clip. See also the suggestions made by the UNED Forum for designing multiple stakeholder processes (“MSPs”) in the sustainable development context and consider their application to the development of ICT strategies: Finally, see the recommendations of Geoffrey Kirkman and Jeffrey Sachs in the following article calling for national leadership that brings together the public, private and non-profit sectors:$523.

As you think about alternative MSPs, consider the following: Who is best placed to coordinate the process? How important is democratic politics to the process (e.g., Does it matter whether the government has the institutional structures and expertise in place to organize the process? Do all the stakeholders have the necessary skills and education to represent themselves in the process?) How would you define the relevant stakeholders? What interests are likely to be left out or underrepresented in the process? How would you deal with differences in power? How would participation be linked to official decision making processes (e.g., Will a consensus be required? Will there be a conflict resolution process? How will bias and corruption be dealt with?)? How important is coordination (e.g., If each industry developed its own ICT systems without regard to others, what impact would this have on interconnectedness, access and future development)? And perhaps most importantly, is a collaborative decision-making process realistic in most countries?

Creating an ICT vision

Bringing together multiple stakeholders requires leadership and a vision for how ICTs can enhance the opportunities within a country. This vision may come from government, from international development organizations, from the local private sector, from the NGO community/civil society or from a joint vision among any of these actors. As you read this section, consider the factors that determine which model works best in a particular country and what each model means for the kinds of strategies and MSPs that are likely to be adopted.

  • Government Leadership

A variety of approaches have been taken by national level governments to deal with the incorporation of ICTs into their economies and societies. The preponderance of “e-strategies” around the world has led some governments to create new Ministries or Secretariats that are meant to coordinate overall ICT strategies. For example, Egypt created a new Ministry of Communications and Information Technology to implement its national ICT plan (see

Other governments have given existing government bodies, such as the Ministry of Commerce, Finance, Telecommunications or at the level of the head of state, effective control over ICT issues. For example, the Secretary of Transportation and Communications and the Secretary of the Economy are spearheading the implementation of the E-Mexico strategy (see Consider the advantages and disadvantages of each of these approaches in terms of coordination, complexity, cost, territory, politics and control.

Still other countries have not centralized the process within government, with little effort to coordinate the myriad organic ICT initiatives and projects that have arisen within the government and the country-at-large.

  • Private Sector Leadership

In the absence of government leadership, the private sector may take the lead in creating and implementing an ICT strategy. See for example, the following recommendations regarding the potential input of the private sector in the Dominican Republic (please read the Introduction and Chapter 2 - page 38): Given the lack of political continuity and the scarcity of public funds for technology projects in many countries, is it appropriate or advisable for the private sector to take a major role in providing leadership in the area of ICTs?

  • International/Non-Profit Leadership

In some cases, where neither the government nor the private sector within developing countries have shown initiative to develop their own policies for ICT , international organizations such as the World Bank, the International Telecommunications Union, and the United Nations Development Programme have stepped in to jumpstart an ICT strategy. See for example, the role that the UNDP is currently playing in Vietnam at

  • Symbiotic Relationships

Finally, in some countries, strategic ICT plans have grown out of the symbiotic relationships between government, the private sector and non-profit organizations. See for example, the following e-learning strategy that emerged out of the relationship between Coca-Cola, the UNDP and the local government in Malaysia:

The Importance of Sustained Leadership

Lack of sustained leadership can be fatal to a promising “e-strategy”. Without sustained leadership and commitment of resources, many strategies are not realized. We have to critically analyze the global efforts to implement e-strategies in terms of delivering results – this is certainly needed to better understand how policy intentions have had a real input. Shaukat Valitov, the Global Internet Policy Initiative representative in Uzbekistan, describes some of the challenges of implementing ICT initiatives in these audio clips: clip 1; clip 2.

Striking the Balance: Some Examples

The ICT strategies that have emerged out of these complex decision-making processes are varied, nuanced and contextual. They illustrate two critical points about decision-making in this context: (i) the possibilities are endless – decisions may be limited to some degree by specific contextual factors, but even within those limits there is no shortage of potential goals, innovative approaches or allocations of resources from which to choose , and (ii) there is no “one size fits all” solution to ICTs as a source of economic growth and development.

Compare for example the approach taken by Costa Rica which focuses on ICT as a production sector and potential export market ( or the Cyberpark initiative of the Dominican Republic to create Internet related jobs and attract high tech investment and innovation ( with the approach taken by Estonia to leverage broad-based ICT connectivity and access to further national social and economic objectives ( or the Jamaican focus on fostering access (audio clip).

Some final questions about the question of top-down approaches to developing a national ICT strategy – is it necessary for every country to map out how it will use ICTs as a national resource? Has the movement to create national e-strategies been successful in creating economic growth and opportunity? Should countries rely on more laissez-faire approaches and let the diffusion and use of ICTs be determined purely by market mechanisms?

In a recent interview, Camella Rhone, Director General of Jamaica's Ministry of Industry, Commerce and Technology, describes her experiences as a decision-maker in this field. As you listen to these excerpts from the interview, think about the dynamic interplay of the factors discussed in this section and how they relate to official decision making. What are the critical challenges that decision makers face in implementing a national strategy? Do you agree with Camella's prescription for success? Is a national vision that has the support of multiple stake-holders the most important factor?

Excerpt 1 | Excerpt 2 | Excerpt 3 | Excerpt 4

Intellectual Property Policies for ICTs

In the previous section we looked at the role that policy plays in providing an overarching framework for deciding among ICT strategies.

But policy also plays a critical role in support of other digital development strategies and as a strategy in its own right. For this reason, Network Policy is one of the key enabling factors under the Networked Readiness Index. Many countries do not have appropriate telecommunications policies, laws that enable e-commerce transactions, a domain name system for the administration of top-level country-code domains or even basic laws regarding contracts and property that are a necessary backdrop for local digital entrepreneurship, foreign investment and the development of an ICT infrastructure (see discussion in Module 2). Policies can also shape incentives for and the direction of ICTs in important ways. The controversy surrounding the appropriate role of IPR in digital development is an example. It is a debate that illustrates the important role of policy to support and shape ICT strategies. It also exemplifies the complexity of decision-making in this field, bringing to light the interplay of law, technology, politics, economics and culture and highlighting the important trade-offs that are inherent in policy choices.

If you are unfamiliar with the basic concepts of intellectual property, the following overviews of US law may provide some useful background for this section of the module: Copyright:
Database protection in the US: compared with database protection in the EU:

Current Trends: The Push for International IPR and Harmonization

Many ICT proposals encourage southern nations to accede to and comply with international intellectual property (“IP”) treaties. Among the most prominent IP treaties are the Berne Convention for the Protection of Literary and Artistic Works ( and the World Trade Organization’s Agreement on Trade- Related Aspects of Intellectual Property Rights (“TRIPS”) ( In order to comply with these treaties, signatories must implement a prescribed set of minimum IP protections in their national laws. While harmonization of IP laws may facilitate international trade and foreign investment, these treaties are not without their critics. In this audio clip, Diane Cabell discusses the advantages and drawbacks of TRIPS for developing countries, emphasizing the problems inherent in adopting a single policy for all contexts.

Framing the Debate: Do IPR Regimes Help or Hinder Development?

Please read Chapter 5 of the multinational Commission on Intellectual Property Rights’ report, “Integrating Intellectual Property Rights into Development Policy,” at

As you read the chapter, consider the following questions: What interests are really being protected and what interests are being harmed by international IPR regimes? Is there any empirical or other evidence that suggests that IPRs help or hinder development? How do intellectual property laws interact with the politics of power, local culture and economics? Can a single policy fit diverse nations with diverse industries, economies, cultures, etc.? What are the costs of implementing international treaties? Can these costs be justified in the context of limited resources? What other factors are necessary for an IPR regime to produce the promised benefits in terms of innovation and production (e.g. what educational and financial resources are necessary to support innovation)?

In the following sections we will focus on five aspects of the debate that are receiving the most critical attention in the ICT development context: the implementation of TRIPS in the developing world, international IP piracy, digital IPR, the protection of indigenous culture and open source software. The answers to these questions will likely differ in each nation. A treatment of e-commerce policy is outside the scope of this module.

(a) Implementing TRIPS

Under its terms, TRIPS is slated to be implemented (with some exceptions) in a number of developing countries within the next four years (see

The implementation of TRIPS raises important questions and creates critical policy choices for developing countries. For example, will the threat of trade sanctions or the lure of tied aid be sufficient to encourage enforcement of these laws once they are on the books, or will there be a significant gap between what the law provides and the reality of everyday practice (see, for example, the situation in China described below)?

Assuming that developing countries comply with TRIPS, how should they implement these directives? Note that TRIPS sets out certain minimum standards but leaves it open to countries to provide more protection and allows them some discretion in implementing even the minimum standards. Some have argued, for example, that developing countries should adopt stronger protections for indigenous traditional knowledge (see discussion below under “Value Laden IPR and the Protection of Indigenous Culture”).

Consider what role developed countries should play in the implementation of TRIPS in the developing world. Article 67 of TRIPS provides for the technical and financial cooperation of the developed world to ease the cost and burden of TRIPS implementation. Similarly, Article 66.2 provides for the developed country members to provide incentives with a view to promoting and encouraging technology transfer to the developing world. How can these provisions be meaningfully enacted?

Is the training and technology that will be traded in exchange for increased IPR protections too outdated to make local industry competitive with other nations? Is it too sophisticated to be absorbed by local industry or does it provide too few rights to allow sophisticated local industries to effectively use, adapt and improve it? Does access to the published patent actually provide all the information necessary to use the invention locally, or is critical unpublished “know how” excluded? Is the technology that the receiving nation really needs even protected by patent or copyright or is it more likely to be a trade secret that would never be shared?

(b) Intellectual Property Piracy

Intellectual property piracy in the developing world ranks among the most contentious issues in the IP and development communities. How would you balance the concern that IPR will stifle ICT development (because developing countries cannot afford the required technology and know-how at market prices) with the need to encourage foreign investment in the ICT sector, support domestic innovation and promote a viable export market in technology and creative products? Are there alternatives to TRIPS that would accomplish these goals more effectively (for example, implementing IP protections selectively for some IP products or for some nations)?

Consider the possible short and long term benefits of IPR for developing countries and the developed world. Is the developed world (as net-exporters of IP) the primary beneficiary of IP harmonization at the cost of developing nations (as net-importers of IP who find pirated material much more affordable)? Should the developed world (or the particular industries that most benefit from IPR protection) donate their IP or tolerate piracy to promote third world development in its early stages and to develop a market base for the future or will it be impossible to turn the tide later once a culture of piracy has become entrenched in the third world? Do digital technologies that facilitate piracy globally, make this debate moot? (see discussion below under “Digital IPR”).

How might international IPR treaties be revised to protect the “raw materials” of development (and thereby reduce the need for piracy)? There are protections, commonly built into IPR regimes and permitted by TRIPS, that could potentially protect the developing world’s access to certain fundamental tools of technology and information necessary to support development. These protections take the form of limitations on the scope and term of IP protection. It may be argued, however that these protections do not go far enough – TRIPS, for example, does not provide a mechanism for registration or identification of works in the public domain, does not harmonize terms of IP protection, requires database protection, restricts fair use where the use may affect the market of the copyright holder, gives translators a copyright in translations, limits fair use for educational purposes to non-commercial uses (thereby excluding many development projects that are self-sustaining) and cuts short the first sale doctrine which protects the activities of libraries. For an expression of the need to permit local overrides of TRIPS, see the Doha Declaration (

(c) Digital IPR

Developments in digital copyright have the potential to limit access to digital resources, including public domain materials, in cyberspace even further than traditional IP laws are able to do in the real world. Because the Internet operates without borders, domestic policy can and does have a global impact. For example, under U.S. laws that address (or fail to address) copyright in a digital environment:
1) opening a webpage in a browser window involves making a RAM copy of the content which can be an infringement,
2) the first sale doctrine which permits the owner of a legal copy of a copyrighted work to share that copy with others is undercut,
3) copyright holders are not required to incorporate fair use rights into digital rights management technologies,
4) there is no meaningful concept of fair use under the Digital Millenium Copyright Act ( that would permit circumvention of a digital rights management system for reasons that the local nation considers to be socially beneficial purposes, and
5) in Europe (and under TRIPS), databases are protected by copyright, notwithstanding that they are mere compilations of facts which are not in themselves protected by copyright.

All of these policies limit worldwide access to and use of digital materials. As developing countries come into compliance with TRIPS and define their own digital IPR regimes, they too will define the rights of access to and use of their national works globally.

The extra-jurisdictional application of domestic IPR regimes in the digital context, raises some important questions for development. Will international enforcement of IPR in cyberspace be effective or will international piracy be facilitated by digital technologies? Will the promise of the Internet to provide unprecedented access to information resources in support of development be destroyed by technology through the use of “trusted systems” that allow copyright owners to lock up their works and demand access fees? In the absence of global harmonization, will the complexity of multiple IPR regimes chill the use of foreign works (e.g. due to the transaction costs and risks involved in ascertaining what is in the public domain and what ones rights are in relation to the work)? What effect will the development of technologies that reintroduce geographic boundaries on the Internet have on development?

Developed and developing countries alike are struggling with these questions, but little attention has been paid to how the solutions to these issues will impact development. UNESCO is involved in a number of projects that attempt to harness the potential of the Internet to bring information and technology resources to developing countries through the digitization and archival of public domain works (see A critical barrier to the success of these and similar projects will be IPR. Can you think of ways that the international copyright regime could be restructured that would make the public domain more easily identifiable and accessible?

Consider whether alternative IPR regimes or incentive structures are possible that would be better suited to digital environments or to the unique needs of developing countries. If we simply eliminated IPR in the digital world, would works of scientific and artistic merit diminish or would existing and new business models be adequate to support these industries? What problems would result from government sponsorship of domestic arts and sciences? What if a tax was imposed on digital recording media and ISPs that would in turn be used to compensate copyright owners in digital environments? Does digital IPR require an international solution or could national schemes be effective? What kinds of national legislation would promote the development of the Internet? For example, consider whether service provider immunity from copyright infringement would be beneficial for developing countries with IPR regimes.

(d) Value-Laden IPR and the Protection of Indigenous Culture

What values are implicit in international IPR? There is a growing body of thought suggesting that international IPRs do not protect indigenous cultures and may in fact be antithetical to the values and culture of some indigenous peoples which do not recognize private property or individual authorship. Indigenous works are frequently denied protection because they do not fit easily within the dominant paradigm – oral, unfixed, communally produced works, works that strive to maintain the integrity of earlier works and works where the idea and expression merge are outside of traditional copyright protections. The western world is free to appropriate those elements of indigenous knowledge and culture and turn them into commodified works that meet the requirements of copyright and patents.

In response to the growing concern that indigenous knowledge and culture is being exploited by western IPR regimes, particularly by patenting biotechnology for pharmaceutical use, some have suggested that special protections should be afforded to indigenous cultural productions. For example, the Bellagio Declaration suggests that while IPRs generally should be reduced, greater protection should be afforded indigenous works (see Indeed, many African countries have long-standing laws that protect their folklore and traditional resources (see However, these laws are largely enforced locally (v. internationally) which may result in costs being assessed primarily against local people who want to develop and build upon their own resources. An increasingly important question for domestic and international IPR regimes is how to balance protections for indigenous cultures in a way that preserves those cultural resources for the benefit of indigenous peoples. If these issues are not addressed, the potential of the Internet to facilitate local knowledge sharing could be undermined because of indigenous concerns about international exploitation of traditional knowledge and works.

The new methods of collaborative peer production that have emerged with the Internet (discussed below) have some interesting parallels to cultural production in indigenous communities. The idea of a common resource that is collectively produced and controlled and preserved for the benefit of the group (rather than “owned” in the traditional sense) is challenging the assumption of the individual author as creative genius that underlies current theories of intellectual property. As western IPR regimes find ways to accommodate (and even encourage) this new model of production, we may find that indigenous cultural productions find more protection as well. As we discuss in the next section on open source software, the symmetry between peer production on the Internet and indigenous modes of production may also suggest the appropriateness of some tools for development over others.

(e) Open Source v. Proprietary Software

Open source software is the product of a promising new model of production made possible by the Internet, which has been aptly termed “peer production.” In the software context, peer production involves the open sharing of source code with the public and encouragement of the development of derivative improvements by that public (which improvements may in turn be contributed back to the commons for further development). This eliminates the social and financial cost of having to create common software routines anew for each client. The kernel of common source code is free to all. Some open source communities impose a “viral licensing” scheme whereby anyone who uses the open source code to develop modifications must offer those modifications back to the community on the same free basis. The most widely used example is the Gnu General Public License ( Other open source communities will permit private ownership of these modifications which may provide an open source programmer’s main revenue supply. While access to free code greatly reduces the cost of acquiring software, many developing nations simply do not have enough local programmers to develop the necessary customizations and technical support for widespread use.

This development creates important policy choices for developing countries. Is open source software a more appropriate development tool? When is this the case? What is the best way to facilitate the right mix of proprietary and open source development? Are local laws technologically neutral so they do not lock the nation into software that can become rapidly outdated? These are important questions for countries that are in nascent stages of technological development as these choices have the potential to shape other choices, creating domino and network effects that are not easily reversed.

Some developing countries, convinced of the advantages of open source software over more traditional proprietary software, have sought to encourage or even mandate open source software. For example, in 1998 the Mexican government decided to run only Linux in 140,000 computer labs in its elementary and secondary schools. Peru has introduced legislation requiring use of open source alternatives. (

As you listen to the following debate regarding the appropriateness of open source software for the developing world, consider how a policy favoring open source would impact infrastructure, entrepreneurship, learning and other policy choices:

Case Studies

1. Readiness for the Networked World: An ICT Strategy for Uzbekistan

Uzbekistan is a country with a primarily agricultural economy and severely underdeveloped ICT infrastructure. The percentage of Internet users is only .6% of the population (rising to 5.5% in the capital city of Tashkent). At the end of 2000, there were 1.8 million main telephone lines, constituting an average of 6.8 lines per 100 people. The mobile telephone network is even more poorly developed with only 0.4 telephones per 100 people. In 2001, the United Nations Development Programme identified ICT as a priority area for intervention in support of national development and, with the support of the national government, commissioned a report on e-readiness in Uzbekistan. The report outlines a strategy for stimulating ICT use in the Republic to achieve its development goals of “economic growth, raising living standards and modernizing cultural activity”. Please skim the report, at

Among the reports proposals are a plan to improve ICT infrastructure, adopt policies that encourage private investment and privatization of state owned ICT enterprises.

What values are implicit in the proposal? Consider the proposal’s assertion that a “genuine commitment to the free flow of information in society speeds the transition to a market economy and dramatically improves social welfare.” Should the international development community seek to harness the democratizing effects of new technologies in Uzbekistan or is this a form of cultural imperialism? To what extent does the report assume that Uzbekistan wants what the developing world has? Are cultural and political differences respected?

Are compromises between competing interests reflected in the proposal? Consider whether education and training are adequately prioritized. What factors are missing in the proposal? Consider whether there are cultural barriers to implementation that are not addressed (for example, is it possible that the people of the Republic will fear government misuse of new technologies as tools of censorship and control given the uneasy political history of the country and uncertain political future).

Who will be the beneficiaries of the reports proposals? Consider how the initiatives may be financed.

What are the advantages and disadvantages of private versus public ownership of ICT infrastructure?

Do you agree with the report’s assertion that the greatest threat to a national ICT strategy is “to not act fast or aggressively enough”?

In a recent interview, Shaukat Valitov, the Global Internet Policy Initiative (GIPI) representative in Uzbekistan, describes GIPI's projects in Uzbekistan to foster Internet development. As you listen to these excerpts from the interview, think about the role of NGOs in the development process. What are the important contributions? Are there any risks?

Excerpt 1 | Excerpt 2 | Excerpt 3

2. China’s Intellectual Property (Piracy) Regime

China has had intellectual property laws that meet the minimum standards of TRIPS for a number of years. Yet despite formal recognition of IPR, the country is widely considered to be one of the leading IP pirates of the world. It is estimated that over 90% of computer software, music, home video and entertainment products in China are pirated ( In 1995, China purchased on average only $1 of legitimate software per desktop computer ( Piracy continues unabated because IP laws remain largely unenforced. With its recent entry into the World Trade Organization and under increasing international pressure, this may change. But a deeply rooted culture and economy of IP piracy may be difficult to overcome and it is not clear that it should be.

American industry loses an estimated $1.8 billion annually from lost sales due to IP piracy in China ( Currently, these loses are largely the result of analog copying. However, as broadband access becomes more widespread in China, digital theft is expected to eclipse analog theft, creating losses which are incalculable and which are already generating extraordinary anxiety among the executives of America’s creative industries (see, for example the recent testimony of Jack Valenti, chairman and CEO of the Motion Picture Association of America, before the U.S. House Appropriations Committee at To some extent these losses are overstated – they presuppose that Chinese consumers could afford and would purchase the genuine product if pirated versions were not available. They also ignore the potential offsetting benefits of piracy: the widespread availability of cheap US products in China may have created increased appetites for US goods in China which may in turn produce network effects that will allow the US to reap the financial rewards of this “investment” when and if intellectual property laws are ultimately enforced in China. Allowing developing countries to pirate US resources now, creates a market for the future that might not have otherwise existed. This may explain why companies like Microsoft, Dell and others continue to invest in joint ventures with Chinese software companies, despite lack of IPR protection (

More importantly for our purposes however is the question of how China’s system of IP piracy impacts development in China (particularly development related to ICTs)? Piracy has produced a number of benefits for consumers and creators alike in China. It is a highly profitable domestic industry which creates jobs. For many villages, it is the primary industry. Piracy has also increased the accessibility of goods that consumers might not otherwise have been able to afford or which might be blocked from legitimate distribution channels as a result of the Chinese government’s information policies. These goods may in turn be freely used as the building blocks for the development of China’s own industries. Futhermore, as concepts of individual rights and private property are relatively new to China, the current culture of piracy meshes well with the longstanding traditions of communism and Confucianism.

The drawbacks however are also apparent. The country suffers from a lack of direct foreign investment in the technology sector and may face trade sanctions through the WTO. Consumers may be denied access to the highest quality and latest versions of software which US and European companies refuse to release in China and the ability to identify quality goods has been diminished (although this latter problem may be more a question of insufficient attribution than soft IPR per se).

Perhaps the most interesting and challenging question relates to the impact of soft IPR on domestic innovation. Based on current IP theories, one might expect that domestic innovation would suffer from a lack of economic incentives. The evidence however is not that clear. China has failed to develop significant export markets for its technological and creative products (e.g. China’s global market share in computer software is less than 1.2% - Still, there is at least some evidence that China has maintained robust creative and software industries, made possible in part through piracy. Linux is much more common in China than in the U.S., with some industry watchers predicting that the biggest advances in Linux and open source development in the next year will emanate from China ( Zhongguancun (the so-called Silicon Valley of China) is said to be a thriving technology district, with over 4500 computer companies, “most of them seat-of- the pants start-ups trying to devise the world’s next computer gadget or killer application that will put Bill Gates to shame.” The district is reported to “have grown 30% a year for the past 11 years, with all its companies totaling 45 billion RMB (US$5.5 billion) in sales.”How is China sustaining such innovation and creativity in the absence of IPR? China provides an alternative model for providing incentives to creators by state sponsorship of its computer and creative industries and by providing non-economic rewards . See ( perspectives/perspective-072699.html).

What is the net effect of soft IPR in China for development (particularly the development of technology industries)? Does it help or hinder development? Does it help some industries more than others and, if so, which ones are more valuable to the local economy? This has yet to be determined in any empirical way, and may well depend on who you ask and what you consider to be the relevant timeframe and development goals.

Peter Feng addresses issues of IP piracy from the perspective of China, in the following lecture presented at the World Bank Conference on IP in Developing Countries: (optional) Compare this approach with the other approaches presented at the conference (for example, the WTO perspective at For more information, see the webcast lectures from the Internet Political Economy Forum on Internet and Development in Asia:

It is interesting to note that the US was at one time itself an “international pirate”. It used the IP tools of other nations to springboard its own IP industries. It was not until these industries were developed to a point where the US became a net-exporter of IP products, that the US began to be concerned with international enforcement of intellectual property. It has been suggested that developing countries should likewise be permitted to follow a similar path. Does this evolutionary model of IPR ring true or does it ignore important cultural and economic differences between countries?

Does the napsterization of the music industry in the US and elsewhere shift the question from “how do we enforce IPR in China” to “how do we protect intellectual property anywhere in a world of digital media and the Internet? ” Should the developing world be looking to China and other countries without effective IPR for alternatives to IP in the digital age?

Discussion Questions

The questions provided below are intended to serve as examples only. Please feel free to discuss any of the questions raised throughout this module or any other questions/concerns you may have.

1. ICT initiatives from the outside should respect and reflect the culture, values and preferences of the country being developed. Western values should not be presumed or imposed. Discuss.

2. ICT initiatives should focus on privatization of telecommunications infrastructure and attracting foreign investment. Discuss. Are there alternative economic models to tap into the potential of ICTs?

3. Politics, culture and education are among the largest barriers to ICT adoption in the developing world. How should ICT policymakers address and prioritize these issues?

4. Do intellectual property rights help or hinder development? Are there other IPR regimes or alternatives to IPR that make more sense for developing countries?

5. Is open source software a viable solution to the high cost of proprietary technologies? What are the alternatives?

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1. You are a clerk to the Minister of Education in Rwanda and have been asked to prepare a memorandum evaluating a proposal from Microsoft to donate 2 computers (fully equipped with the latest proprietary software) to every school in the country in exchange for an exclusive agreement to use Microsoft’s operating system and web browser throughout the government and a commitment to increase efforts (in cooperation with Microsoft) to crack down on software piracy in the country. Prepare a brief memorandum outlining your recommendations.

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Optional Readings/Additional Resources

Frameworks/Tools for Decision Making

E-readiness tools and resources:

The Global Information Technology Report 2001-2002: Readiness for the Networked World

Human Development Report 2001: Making New Technologies Work for Human Development:

Networked Readiness Profiles of 75 Countries, from the 2001-2002 Global Information Technology Report:

Regional Electronic Commerce Initiatives: Findings from Three Case Studies on the Development of Regional Electronic Commerce Initiatives:

Interview with Camella Rhone:

Interview with Shaukat Valitov:

Intellectual Property Rights and Development


Full text of the Report of the Commission on Intellectual Property Rights, Integrating Intellectual Property Rights and Development Policy, including reaction:

Panel discussion on how IPRs relate to economic development and the role of the World Bank:“Intellectual Property Rights and Economic Development: An Agenda for World Bank Group” at

Information and links to reports on IPR and development issues: the ELDIS Intellectual Property Resource Guide at

For information on the impact of IPR harmonization on developing countries, see Kim Nayyer’s “Globalization of Information: Intellectual Property Law Implications”:

Intellectual Property Piracy

Information and links on IP piracy issues:

Reports on piracy’s impact on China’s software industry:; ;;;;

Digital IPR

Kraig Hill et al, “Globalization of Intellectual Property in the 21st Century”:

Fair Use under the DMCA and the proposed Digital Media Consumers Rights Act:;

Digital First Sale:

Protection of Indigenous Knowledge in Digital Environments


Cultural Property Protection: International and U.S. Current Affairs, Molly Torsen:

Information and links on the protection of cultural expression and traditional knowledge of Indigenous people (communities and individuals) in the digital environment, see:
World Bank,

Traditional music in digital environment:

Indigenous Digital Libraries:;

Indigenous ownership of digital materials and museums:

Open Source Software and Collaborative Development

Peer production models:

Collaborative development of open content in Africa:

Reports on open source software in the developing world:;;;;;;;;;;;;

Decision Tree

The following exercise is intended to illustrate the complexity of decision making in this area. It is illustrative only and not intended to fully canvass all of the issues or possible outcomes. After you have made your choices, feel free to explore the other links.

The Choice between Proprietary and Open Software

You have been asked to advise the Government of Croatia, on a strategy for encouraging computer use in schools, businesses and homes throughout the country. In addition, the country would like to develop its own computer software industry as a potential export industry for the future. The government believes that the country has the human resources necessary to achieve this goal, but it lacks the financial resources to invest in the software.

You would (click on an answer):

(a) encourage (or even mandate) the development of open source software
(b) ask Microsoft and Dell to donate older versions of their proprietary software applications
(c) invest in the latest proprietary software but deploy it to a small group of technological entrepreneurs
(d) invest in one copy of the latest proprietary software and allow pirated copies to fill the remaining demand