BOLD 2003: Development and the Internet

A small group of western trained digital entrepreneurs have been selected to use the technology in the capital city. This group has already produced some impressive advances, generating high quality software products that have the potential not only to fill domestic needs, but compete in an international market as well. However, you are in critical need of trained workers to grow the industry and tarriffs on hardware and software imports are slowing capital investment. Further, because foreign ownership is prohibited, sources of potential capital are limited. The digital divide within the country has increased and penetration of the technology outside this new industry remains low (i.e. other businesses are not adopting new technologies to grow their businesses). Rural areas remain largely untouched by new technologies.

You would:

(i) pass policy reforms to attract foreign capital and talent to this cluster (e.g. remove restrictions on the movement of certified software professionals, ensure that non-tariff barriers are minimized, etc.)

(ii) use government loans/subsidies to sponsor growth, eliminate import and export tariffs for IT products for local business and introduce tax incentives to keep local talent

Foreign capital and talent has alleviated much of the immediate problem, but it has come at a cost. Because foreign investors control the critical resources, much of the profit is being filtered back to multinationals. To be sure, some local jobs have been created but the most skilled jobs are being given to foreign talent. The promise of a thriving domestic organically grown industry has diminished and has been replaced with the vision of a multi-national corporation’s “foreign branch office”. (back to top)

A local industry is beginning to show signs of promise but capital and human resources remain an issue. The project remains insular, with little promise of expanding locally or internationally beyond its status as a small cottage industry. The government is not able to fund the project at the levels required to make the project internationally competitive. Further, although local talent has been retained, there is a critical need to grow the pool of talent through the expansion of IT education at all levels which you have not budgeted for. (back to top)