Digital
Entrepreneurship and Innovation:
A Framework for Policy,
Legal and Regulatory Action
Prepared for the
World Economic Forum Annual Meeting 2002
New York, 31 January - 4 February
By the
Open Economies Project at Harvard Law
School
In cooperation with
The Digital
Hewlett-Packard Company
Tele
This
paper has been prepared by the Open Economies Project at Harvard Law School,
affiliated with the Berkman Center for Internet and Society. Special thanks to
Finnbar Livesey, Diane Cabell, Justin Chan, Sarah Guerrero, Sarah Hsia, Kristin
Hughes, and Rohan Kariyawasan. Correspondence on the paper should be addressed
to the Principal Investigator Dr. James Moore by mail at Open Economies,
Berkman Center for Internet and Society, Harvard Law School, Pound Hall 511,
1563 Massachusetts Avenue, Cambridge MA 02138, or via email jmoore@cyber.law.harvard.edu.
Executive
Summary
Innovation is a major impetus to economic growth. A
nation that can innovate will be a consistentlleader among nations.(dc
note—Singapore doesn’t innovate; is it falling further behind other
societies?) Information and communication
technologies (“ICT”) are central to economic innovation, and may provide the
opportunity for nations to leap ahead.
We believe that the rewards can be great for nations possessing the
vision and the will to embrace the twin goals of economic innovation and ICT
for development.
The shorthand for ICT has become the ubiquitous term
“digital”—as in “digital business” and “digital development”. In this paper we adopt this language as
fitting the spirit of adventure and boldness appropriate to the digital
opportunity. The Open Economies project
at Harvard Law School seeks to work with leaders in developing nations, from
government, business, and non-profit organizations, to promote digital
development, digital entrepreneurship, digital transformation of local sectors
such as manufacturing and agriculture, and trade in digital goods and
services.
Open Economies is working in close cooperation with
the G-8 Group of Nations’ Digital Opportunity Task Force (the DOT Force), the
United Nations Information and Communication Technology Task Force, and the
World Economic Forum Digital Divide Task Force.
Open Economies is able to draw on the expertise of
a variety of partners. These include
staff and faculty at the Harvard schools of law, computer science, public
policy and business, as well as those at other universities. We also draw on pro bono contributions of
attorneys and other professionals who are generously giving of their time. Our
goal is to promote economically, environmentally, and socially sustainable
development for people in the least developed nations in the world—as indeed in
all the nations of the world.
Table of Contents
Executive Summary
II. The Open Economies
Approach
Actions to support Digital
Development
A.
Balance ICT Investment with Non-ICT Spending for Basic Needs
B.
Build Political & Administrative Capacity to Lead an Innovation Economy
C.
Support New Local Business Formation
D.
Enable Trans-National Involvement in Local Industry
E.
Strengthen Developing Countries International Negotiation Capacity
F.
Develop Local Production Capacity for Digital Goods & Services
G.
Reduce the Costs of Being a Global Digital Business
H.
Pilot Programs & Technologies for Entrepreneurship & Trade
I.
Encourage Education for Entrepreneurship
I. Introduction
Over the past year, several
international efforts have emerged that focus on bridging the global digital
divide and how information and communication technologies (ICT) can help
address inequities in economic development.
The G-8 Group of Nations’ Digital Opportunity Task Force (the DOT
Force), the United Nations Information and Communication Technology Task Force,
and the World Economic Forum Digital Divide Task Force have been particularly
effective in forging an international coalition of representatives from the
public, private and not-for-profit sectors whose principal objective has been
to take action plan on these issues. The current worldwide focus on the
problems of development, combined with the potential for new technologies to be
able to radically change the process of development, has generated tremendous
momentum for action – a momentum we must nurture and grow.
The Open Economies Project at the
Berkman Center for Internet & Society, Harvard Law School, in conjunction
with its partners, seeks to promote economically, environmentally, and socially
sustainable development for people in the least developed nations in the world.
Working closely with the G-8 DOT Force, UN ICT Task Force, and WEF Digital
Divide Task Force, we have focused on identifying specific policy, regulatory,
and legal initiatives that promote successful incorporation of information and
communication technologies in economic development. We work with a broad systemic model based on the proposition that
economic growth is generated through innovation and entrepreneurship. In order
to ensure that the overall goals are kept in focus, the approach is defined
with an overarching goal of triple sustainability in society, the economy, and
the environment.
Our focus is on digital goods and
services as they provide the greatest potential for rapid economic growth in
developing countries. In the coming year, the comparative advantage of
developing countries will expand beyond low labor costs. Greater and cheaper
bandwidth will be available at a scale more representative of the developed
world. This will mean that the combined cost of production and dissemination of
digital goods and services from developing countries will make them competitive
on an international level.
This white paper identifies
critical actions to support a sustainable digital economy. These actions
include the initial assessment of the innovation capacity of developing
countries. We also outline policies and programs that will support and
encourage entrepreneurship and innovation within developing countries.
II. The Open Economies
Approach
The Open Economies project promotes
economically, socially, and environmentally sustainable development for people
in the least developed nations and regions of the world. The project is not
designed to produce merely reports. We
wish to see significant advances made in policy, regulation, and law in
developing countries.
We focus
the attention of policy makers on entrepreneurs who drive forward technological
and economic innovation. We share
with other policy observers the conviction that business must lead.
On the other hand, business must be provided with an attractive climate
for investment and risk, and to do this, government must employ a variety
of means., as emphasized by long-time students of policy, Branscomb and Keller,
in the text box at right. We draw on an extensive body of economic research
on how innovation occurs in societies—research that focuses on understanding
and promoting innovation as means to economic development.[1]
We also draw on the experience of
high technology business leadership, and studies of competitiveness in the
most innovative industrial nations, to help understand how ICT-based innovation
in particular might be promoted. We
have been particularly inspired by work on “economic clusters”[2] “business ecosystems”[3]
and the role of social conditions in high technology innovation[4].
We have taken these ideas and
sought to use them as inspiration for actionable recommendations, accessible to
any nation that wishes to adopt them.
At the highest level, our ideas can be summarized in the following
principles:
Open Economies Guiding Principles
1. Innovation
is the key to economic growth. By promoting policies and actions that develop
innovation economies in the developing world, these countries will be able to
catch up rather than continually lag behind developed economies.
2.
Economic expansion
based on digital products and services will bring special benefits to developing
countries, and may accelerate economic evolution in these nations. Therefore,
our focus will be on encouraging such ‘digital businesses’[5]. These businesses emphasize knowledge, information
and technology. The impact of the application of knowledge and information
technology to traditional businesses is central to our argument.
ICT applications will make developing economies more internally efficient,
and provide opportunities to trade in information-technology rich goods and
services produced in the developing world. In addition, we believe that, in
general, digital businesses are the best means of approaching the three goals
for sustainability—that such businesses are not only fast growing, but can
be more environmentally sound, and more supportive of human rights and human
options, than traditional industries such as textiles or consumer goods manufacturing.
3.
Some of the most difficult barriers to overcome are not
technological, cultural, or even inherently economic, but rather have to do
with a lack of government policies (both national and trans-national) and rule
of law to support digital entrepreneurship and investment. Our
project concentrates on the policy environment for digital business in the
developing world, providing advice on government policies affecting funding,
laws and regulation, and enforcement.
Our project is based at Harvard Law School, and draws on extensive
specialized expertise in legal matters.
We are mobilizing a network among law schools and professional services
firms around the world. We provide
policy support to other organizations with a complementary strategy, including
the DOT Force and the United Nations.
4.
In our work we will
balance the role of facilitating discussion and providing objective,
non-partisan advice, with advocacy for a limited set of policies that we
believe are important for our partners to consider—and/or that we and our
partners have agreed warrant support.
Development based on ICT, in short timescales and respecting the goals
of triple sustainability, will require the input and support of many actors
from the public sector, the private sector, and civil society. We believe that
the key to creating and implementing digital policies is direct cross-sector
conversation among leaders. Thus we are
working closely with leaders of governments, businesses, non-profit
organizations, multilateral organizations and international financial
institutions.
III. From Strategy to
Action
Currently, there are many high
level strategy statements that developing countries can use, but there is less
support for concrete actions that can be instituted immediately on the
ground. The Open Economies project will
promote specific policies and actions that it believes will spur economic development,
supported by the use of ICT and aimed at the goal of triple sustainability. The
Open Economies project will provide concrete actions and steps that countries
can implement so that there is integration between setting goals and strategies
and moving forward with new policies.
Actions to support Digital
Development
Our current advocacy embraces the
following policy initiatives. These
initiatives go beyond the normal trade opening, to empowering developing
countries to compete on a near-equal footing with businesses in the advanced
world.
Each of the action sections is laid
out in the following manner –
·
Introductory paragraph to explain the focus of the
section
·
List of action points that can be applied
·
List of outstanding research questions within the focus
of the area
·
Deliverables from this section within 12 months
A. Balance ICT
Investment with Non-ICT Spending for Basic Needs
There is a continuing debate in the
development community about whether ICT investments make sense when basic human
needs such as food, water and shelter are not met. In general, we believe that ICT can greatly help in the provision
for such needs—and that wise investments in ICT do not “take food from people’s
mouths” but in practice make it more likely that food gets to those who need
it. Moreover, digital entrepreneurs
will often contribute to such solutions, and thus a vigorous ICT industry
sector can be helpful even in countries with serious shortages of basic
goods. We wish to recognize the need to
focus on achieving the proper combination of basic goods, ICT for provision of
basic goods, and ICT industry development.
Moreover, while our project is focused on helping a nation operate as an
innovation economy focused on digital goods and services, we recognize that
countries will take different paths to development, and will decide
individually how to evolve their social and political institutions, and so the
balance of these types of investments will need to be contextualized for each
country.
Actions:
1.
Make the strategic combination of the three types of
investments a focus of immediate and continuing study and policy making by
relevant government agencies. Each
country will have different immediate needs, and some will not be ready to
pursue an innovative digital sector. Each country should clarify where it
should focus immediate efforts of development in the three following
categories.
i.
Basic services such as water, electricity, sanitation, and
healthcare.
ii.
ICT infrastructure and services in support of basic needs and
improving societal outcomes.
iii.
ICT as part of supporting innovation and entrepreneurship
within the economy.
2.
Examine the infrastructure needs for an innovation economy.
Each country has to understand the strengths and the limitations that it may
have in producing digital goods and services.
As part of a country's overall economic planning, the manner in which
utilities are structured should be revisited with the needs of digital
producers in mind. The assessment
should be done as a partnership between external agencies that have an understanding
of innovation economies in developed countries and local representatives of the
private and public sectors and civil society in the developing countries.
3.
Support projects which make available critical intellectual
property necessary for using ICT to meet basic needs. Basic information on such topics as health and health care,
nutrition and agriculture can have a large impact in developing countries and
may be made widely available through ICT.
However, restrictive application of intellectual property rights to this
information can sometimes erect barriers to its use. Governments, NGOs and companies need to support initiatives that
open access to such information. For
example, by providing a shared resource of such information, issues of ownership
and physical access might be resolved simultaneously for a number of
countries. Such shared access would
then make way for subsequent localization of the information in terms of
language and culture and other specific features of local application.
Research topics:
·
To what extent must a society meet a certain level of
basic need provision in order to support, and benefit from, digital
entrepreneurship, applications, and trade?
·
In societies where “islands’ of digital
entrepreneurship have flourished, such as India, what is the relationship of
these successes the rest of the country?
·
To what extent can a local ICT industry gain its start
working for development projects and with NGO and government funding, and then
subsequently become an engine of trade and a basis for creating a strong middle
class?
·
Are the environmental standards developed through
industrialization in the West appropriate for developing countries going
through the same changes? Can ICT-based
development help countries advance while also substantially conserving energy
and other resources?
12 month deliverables:
TBC
B. Build Political &
Administrative Capacity to Lead an Innovation Economy
The structure and operation of an
innovation economy requires government commitment and understanding, as well as
the commitment of the private sector and civil society within a country. The
action points below focus on providing developing countries with assistance if
they decide to pursue a “national innovation” plan for economic development.
This section is
grouped under three headings: the first is “Ministerial Actions” and relates to
changes to be made within the government; the second is “Policy Network
Formation” and is where connections are formed between the government, the
private sector, and civil society in bringing about the changes required to
support the innovation economy; and the final section is “Industrial Policy”
which includes legislative actions that can be taken to support specific
digital business within the innovation economy.
Ministerial actions
1.
Establish an Innovation Board which will be tasked with
creating, maintaining and protecting national incentives for innovation. This
Board can be independent of the government or be a semi-state body. Membership
of the Board will be drawn from the public and private sectors and from civil
society in order to generate cross-sectoral support in the actions of the
Board. The Chairman of the Board will report to the Ministers of Trade,
Finance, and Post and Communications (or similar ministries as they exist in
different countries). The Board should be appointed in an open and transparent
manner, and should have a longer term than that of the government.
2.
Prepare a national innovation strategy. A crucial first step for the Innovation
Board will be to draft a strategic plan for innovation in the country. Such a
strategy will have to outline the overarching goals for development within the
country, the sectors that the country will focus on, and the main tools that
will be employed to bring about economic development. Because the impact of ICT can be immense in creating new market
opportunities and in improving the efficiency and productivity of traditional
industries, an eStrategy will be a key input into this national innovation strategic
plan.
3.
Increase the fiscal incentives for innovation.
Developing countries should provide targeted new businesses with tax subsidies,
exemptions and deductions to assist in their incubation for fixed periods of
time. Fiscal policy should create incentives
for investment in development-critical types of new businesses, both by
nationals and foreigners.
4.
Implement measures designed to maintain and protect
incentives for innovation. The Innovation Board, in conjunction with the
government, should be responsible for proposing policies and implementing
measures designed to maintain and protect incentives for innovation. A key focus for this initiative is the
support of nation-wide anti-corruption measures, especially those that would
have positive effects on the formation and incubation of new businesses in
targeted sectors. This may include
creating police or governmental task forces dedicated to monitoring corruption,
embezzlement and other white-collar crime, imposing stiff sentences for those
convicted, and empowering citizens by providing them with information on how to
pursue such a case. Developing
countries should include a review of the local intellectual property regime and
make revisions that are favorable to innovation (such as sui generis protection
for software).
5.
Promote Inclusive Policy Formation. In order to engage
the private sector and civil society in the development of the innovation
economy, the Innovation Board should promote conferences and other interactive
events at least semi-annually to bring together the key actors from public,
private and civil society. The conferences should be used to develop
legislation with broad support from those attending, and to enable the various
actors to meet and develop relationships that will support the networking that
is key to a thriving innovation economy.
(Links to governance and the formation of policy networks)
6.
Train key officials. Ministers and civil service
officials must understand and gain expertise on the issues of innovation and
incentives to bring together the network of actors from the private and public
sectors. A series of seminars (provided locally, through distance learning, or
by bringing officials to other countries for executive sessions) should be
provided by leaders in the field.
Policy network formation
7.
Promote policy networks between private sector, public
sector, and civil society actors within the country. As we have stated
previously, many of the actions that will enable the economy to be innovative
and expand into this new digital sector will require the input and agreement of
multiple actors spanning all sectors. These networks can be promoted through
conferences and through legal incentives that allow different actors to work
together.
8.
Monitor private sector groups that influence international
standards and regulations within individual industries. By understanding
how such groups form, and sending delegates where possible, developing
countries can participate in decisions that impact their region and/or move to
preempt adverse action through engagement with the relevant groups.
Industrial policy
9.
Expedite new business formation procedures. A strong
incentive for new businesses in certain sectors is an expedited path to obtain
permissions, certifications and other necessary approvals for their
formation. It may help to centralize
these formalities in a single office or department within the government. Furthermore, the existence of a single
office in charge of new business formation could facilitate the gathering of
data related to innovation initiatives, which could be used in evaluating and
measuring effectiveness. Streamlined
government procedures can also help anti-corruption measures, as studies have
shown that opportunities for corruption and the number of steps in bureaucratic
processes are positively correlated.
10.
Revise tax structure. Developing countries should
reform tax legislation to promote capital-intensive industries focused on high
technology by allowing loss carryovers, adjusting rules on the depreciation of
machine capital and modifying the expensing rules on capital investments.
11.
Secure proprietary rights in other economies. Provide
economic assistance for developing countries to secure patents in developed
countries, covering the costs of filing in multiple expensive jurisdictions,
and accessing expert advice in order to file properly.
12.
Develop effective privatization strategies. Developed and developing countries should
work together to distinguish between those strategies that are most successful
if implemented through private ownership and those where nationalization would
be more effective and develop appropriate strategies.
13.
Provide new businesses whose major products or services are
digital with tax incentives to assist in their incubation. These companies
will range from remote call processing centers to companies developing digital
content.
Research topics:
·
What are the most successful models of innovation –
local, regional, national, or global?
·
How can we develop new innovation models for developing
countries?
·
Can we use models of entrepreneurship developed in G-8
countries, or do we need to rediscover what entrepreneurship means for
developing countries?
·
How can policy be developed in a multi-actor way that
preserves openness, but is relatively fast and inclusive?
·
Is modern liberal democracy a prerequisite for an
innovation economy?
·
Are current intellectual property treaty regimes
favorable to developing digital economies?
·
Can model legislation from one country be imported into
another?
12 month deliverables:
TBC
C. Support New Local
Business Formation
Entrepreneurs face many
difficulties in both developed and developing countries when forming new
companies. However, new company formation is especially difficult in developing
countries where a number of the protections and resources that the developed
world takes for granted do not exist.
While culture will play a
significant part in how the private sector of a country operates, studies
suggest there are policies which are of help to companies in all developing
countries, such as labor mobility, stability of procedures and reduction of
expense for redress in courts.
1.
Expedite commercial justice. Developing countries should establish special courts with
streamlined procedures and expert personnel to handle business claims quickly
and efficiently. Initiatives should
include (a) processes for swift action on crimes that discourage
entrepreneurship and innovation, (b) special protections for businesses whose
credit flows are at risk due to non-paying debtors, (c) promoting inexpensive
dispute resolution alternatives such as arbitration, mediation or small claims
tribunals that cater to small businesses, and (d) training and empanelling
expert judges and blue-ribbon juries to handle complex intellectual property
claims.
2.
Establish registration information centers. Developing countries should provide easy
access to intellectual and physical property registration data by setting up
publicly accessible, digitized databases of ownership and registration.
Innovation builds on prior art and is accelerated by access to such
information, as seen in the use of patent databases and other archives of
innovative techniques. Such databases
are also the foundation upon which the business claims courts will operate, and
thus the two policy initiatives must be completed in parallel.
3.
Protect incentives and minimize risks for entrepreneurship.
The legal protections of corporate ownership must be strengthened so that
companies can operate in a stable and predictable environment. This implies
strong communication between the private sector and governments so that changes
to legislation and regulation are announced and agreed upon with sufficient
time for businesses to respond positively.
It also includes bankruptcy laws and arrangements, such as Chapter 11 in
the United States, to reduce the downsides of failure for entrepreneurs.
4.
Promote government regulation and self-regulation through
disclosure. A regulatory
environment must be in place that requires companies and their officers to
disclose detailed information about the companies' finances, corporate history,
material agreements, stock and the like.
This type of disclosure reduces transaction costs, promotes
self-regulation and helps regulatory authorities monitor for violations.
5.
Reduce barriers to job mobility. The digital economy and digital businesses
move faster than their traditional counterparts. Two years out of a field for an ICT-trained worker can mean a
complete loss of marketable skills.
Laws should thus be in place restricting the length of time ICT workers
can be forced not to compete in non-competition agreements and restrictive
labor contracts. Mobility brings
knowledge from group to group and provides a competitive wage market for
workers with high-tech skills, raising wages and encouraging more people to
become technically capable.
Research topics:
12 month deliverables:
Develop a model fast-track business
court to settle legal issues quickly and inexpensively.
Identify and develop database
applications, online interface and training program for registry services and
personnel including those identified in Section F, below. (dc notes: Is this
possible?)
D. Enable Trans-National
Involvement in Local Industry
The power of foreign direct
investment, technology transfer, and the cooperation of foreign companies in
local development are some of the significant methods for bringing needed
capital into a developing country. However, investors from outside of the country
need to be able to predict and when possible minimize their investment risk,
and need a stable fabric of laws and regulations within which to operate.
1.
Clarify rules for foreign companies entering the country. Developing countries should focus on the mechanisms
through which foreign companies can invest and repatriate their profits and
returns, and they should clarify the rules of foreign ownership of companies
within the country.
2.
Set up legal structures that support international
investment vehicles. Work with
business, government, and NGOs to establish transnational legal structures will
ensure that investment from abroad can be brought into the country and profits
can be repatriated. For example,
establish company forms that can be set up in developed nations, for investors
in those countries, that are in turn able to invest in, help to shape, and
profit from entities in developing countries.
3.
Establish an independent review board that has
regulatory and oversight powers over investment agencies to ensure openness and
the security of investment flows.
4.
Establish mechanisms for investors, from the developing
country or from abroad, to achieve liquidity or exit investments after creating
economic value. Any broad policy that does not allow for repatriation of
profits or which restricts the exit options of investors will raise their risk
and lower the amount of investment capital available to entrepreneurs.
Research topics:
·
What are the barriers currently experienced by
investors from developed countries seeking to invest in specific developing
countries and regions, specific industries—especially digital businesses—and a
particular scale enterprises, especially small and medium-sized.
·
Given the above, what general ways can private funds be
encouraged to invest in developing countries?
·
What combination of factors can enable developing
countries’ markets to provide a return that will be attractive to international
investors, while also creating wealth in the developing areas themselves?
12 month deliverables:
TBC
E. Strengthen Developing
Countries International Negotiation Capacity
As developing countries continue to
expand and develop their economies, there are elements of their relationships
to other nations that must be negotiated. Part of convincing developing nations
to open their economies to the world, is critical to be able to support them in
international venues where key decisions will be made that will affect their
economic development.
1.
Form regional delegations to ensure effective
representation at international negotiations. By pooling national
resources, LDCs will have enhanced capability to negotiate favorable
permissions for use of protected technology, coordinate national intellectual
property policies that will encourage easy exchanges of such material, and
effect international treaties that enable the free exchange of critical
information. The most important upcoming negotiations include –
·
Redrafting of the TRIPS agreement
·
Continuing discussion of trade commitments in telecommunications
2.
Overcome barriers to foreign markets. Clarify the regulatory barriers that
developing countries face on entering the US and other developed markets,
specifically in the area of the classification of materials as pharmaceuticals
versus dietary supplements.
3.
Use the international technical standards bodies to promote
developing county policies. There are a number of technical standards
making processes that have implicit policy implications for developing
countries. Countries and their supporters
should find ways to become actively involved in these venues, to make
transparent not only their processes but also their broader policy
implications, and to take action accordingly.
Such venues include –
·
ICANN, both for the transition to IPV6 and for
continued support of IPV4 as long as developing countries need to maintain the
address space.
·
IETF meetings (to which the Center for Democracy and
Technology has started to send students to track activity for developing
countries).
4.
Make better use of the WTO special appropriations for
developing countries. Under WTO rules there are a variety of special
provisions that may be evoked by developing countries to their benefit. Create NGO/national partnerships to better
understand these provisions and their potential for supporting digital
development and trade. For example, use
trade commitments in telecommunications made at the level of the WTO,
regionally, and in bilateral trade agreements to promote trade in developing-country
originated knowledge-based services.
5.
Publish triple sustainability metrics each year. A key
issue is whether development based on innovation in digital goods and services
is sustainable. In order to be able to monitor the development of the economy,
and to engage the international community, triple sustainability data should be
collected. This data may be part of the countries reporting to the UNDP Human
Development Report or a similar report. These metrics will include but will not
be restricted to –
·
GDP growth
·
Change in per capita income
·
Number of new companies created
·
Number of new jobs created
·
Number of patents filed within the country and abroad
·
Change in foreign investment flows
·
Level of national private equity
Without these targets it
will be very difficult to hold the minister of innovation, and others involved
inside and outside of government, responsible for the changes that are needed.
The setting of such metrics will also engage large NGOs who wish to have a
method of accountability and impact assessment for their programs in developing
countries.
Research topics:
·
How do developing countries make better use of trade
commitments in telecommunications made at the level of the WTO, regionally, and
in bilateral trade agreements to better promote trade in developing-country
originated knowledge-based services?
·
How are the different metrics related, and can we
define a leading set of indicators for triple sustainability?
12 month deliverables:
Develop an online Treaty Consultation Portal for
ministry and other officials in developing nations. In addition to providing
alerts, information and analysis on looming treaty issues, this virtual policy
center should include a discussion forum for participants and methods for
Q&A interaction with experts in related fields.
F. Develop Local
Production Capacity for Digital Goods & Services
While working on the high-level
structuring of national policy and international negotiations, we must also
support the capability of developing countries to produce digital goods and
services. In this section, we outline some of the actions that will help
increase the production capacity of the developing countries for digital goods
and services. This includes the knowledge base and skill base of the country,
and the human capital that exists within the country.
Knowledge for digital industry
1.
Document local knowledge base. Intellectual property rights are gained largely through the
documentation of innovation, not innovation itself. Because many innovations in the developing world, for example
uses of traditional plants as medicines, are not documented-- individuals and
entities in developed countries can sometimes receive rights for works that
have already been created in developing countries but whose existence has not
been formally documented. We should
promote initiatives that will protect traditional indigenous practices and
locally created intellectual property through aggressive documentation to
establish “prior art” barriers to usurpers, as well as proactive publication
and protection under intellectual copyright, trademark and patent regimes to
gain such rights for those in developing regions.
2.
Support use of non-proprietary technologies. Developing countries must be afforded
access to inexpensive productive information and materials (for example,
operating systems code) if they are to advance. In the developed world, innovators have access to a wide range of
free “common” information and knowledge, from which new technologies,
applications and businesses are formed.
We need to support initiatives to make similar pools of open knowledge
available throughout the world.
Resources that are already in the public domain, or the commons, should
be identified (such as open source software and non-proprietary drugs) and
those that are most useful highlighted to developing countries. At the same time, efforts need to be made to
widen the commons, so that there are more productive resources available to
developing countries as they increase their innovative activities.
Local industrial base
3.
Promote an open local manufacturing base for information
technology systems. Developing
countries should (a) open local markets to electronic components that can be
used to manufacture personal computers, cellular phones and other technology
necessary to create information or technology systems; (b) encourage small-scale assembly of such
systems by favorable tax treatment and business licensing; (c) use national and
regional government purchasing power to promote local sources of information
technology systems; (d) use the same purchasing power for local communications
services and for systems integration services; and (e) encourage development of
technology parks that promote the sharing of physical resources as well as the
exchange of intellectual capital.
4.
Invest in development of digital business processes locally.
Management institutes will be able to train managers and their employees in
advanced business process improvement, include current state-of-the art process
improvement ideas for agriculture, manufacturing, services, and especially
knowledge work. Developing countries
should participate in international quality process standards, such as ISO 9002
for manufacturing and SEI rating for software engineering, and participate in
investment quality improvement efforts in cooperation with established
multinational investors.
5.
Regional sharing of best practices. Developing countries should promote the
sharing of best practices in evolving digital businesses. This exchange can be enabled through efforts
such as eASEAN and other transnational bodies, as well as proposed exchanges
such as the ECHO Project of the World Economic Forum.
6.
Encourage technical knowledge sharing, professional
societies and other forms of social networking and cooperation. Social
networking and cooperation will speed up the learning process for businesses
and will expand the knowledge base of the country. Collaborative projects with
multiple partners across the private sector can serve to enable the sharing of
business methods and processes that would otherwise remain locked within a
small number of successful companies. In some cases this may require changes to
existing law to allow competitors to act together.
Local human capital
7.
Develop a visa program for foreign nationals with specific
skills in ICT and management. Establish a fellowship program, to entice
skilled workers to move to a developing country for a period of time to teach
advanced skills to local workers and entrepreneurs.
8.
Adopt policies that bring the skills and investment of
those that have been educated or trained abroad back to their countries. Repatriation may be supported by
underwriting individuals' first year back in their countries of origin through
fellowship programs. A fellowship may
allow an individual to leave her native country again without having increased
her debt load or leaving a year gap in her resume.
9.
Revisit visa requirements. Developed countries, especially the U.S., should revisit their
immigration laws so that these countries are not inadvertently creating skill
shortages in developing countries.
Research topics:
·
How has the movement of the most technically skilled
away from developing countries impacted their ability to develop digital
markets now?
·
Has the movement of skilled people stopped, and is
there anything that we can do to stop the shifting of these people away from
developing countries?
12 month deliverables:
See proposals for online
consultation portals and database design in Sections C and F above.
G. Reduce the Costs of
Being a Global Digital Business
One of the most significant
comparative advantages for developing countries has historically been low
production costs. However, this
advantage has not been achieved in the digital markets as the cost to access
Internet and telecommunications services in developing countries has been
extremely high, and there is a lack of bandwidth into and out of
countries. The physical connectivity
situation is changing rapidly (for example, the SAFE project will connect from
Malaysia to many points in southern and western Africa and up to Europe),
however access costs for digital businesses, especially small and medium-sized
enterprises, remain in question.
1.
In order to encourage adoption of components and devices
manufactured at world scale and the lowest possible unit cost, align countries'
current technology infrastructure, licensing and regulatory structure to world
standards. Where possible, for
example, map spectrum allocations to those used internationally and adopt
wireless standards to ensure that there is conformity (Link to Action points 3 & 8)
2.
Reduce overseas telecommunication charges in order to
promote trade in developing-country originated knowledge-based services. Such services include software development,
advanced clerical work (e.g. medical transcription, financial accounting,
insurance claims processing), and call processing (customer service and
technical support, telemarketing and order taking). Developing countries can be competitive in servicing customers in
the more developed nations and regions, but only when their already low wage
rates are joined with low-cost international connectivity. A specific opportunity exists in southern
and western Africa in 2002. Many
nations are becoming connected to undersea fiber optic transmission facilities
for the first time this year. Special
discounted rates for access should be explored for particular types of digital
businesses, in order to promote trade and local entrepreneurial capabilities.
3.
Reduce the price of Internet access by liberalizing key
markets such as international leased circuits, domestic leased circuits, and
VSAT connections, or by reducing the price directly in the case markets
dominated by government carriers. As part of the rationale for such pricing
actions or liberalization, analysis needs to be carried out to estimate the
degree to which telecommunications revenue shortfalls will be offset by rapid
expansion of the economy as a whole, with consequent increases in total GNP and
tax receipts to government.
4.
Assist the local Internet Service Provider (ISP) industry
in setting up localized Internet exchange points (IXPs) so that ISPs can
exchange national traffic locally. In modern Internet-based and wireless networks small scale
networks can be cost effective and rapidly deployed. However, these networks
are not of great value to customers unless other customers are reachable. By facilitating local network-to-network
interconnection, proliferation of small networks can be encouraged, with resulting
benefits in access and pricing. Work
with national telecommunications regulators together with local ISPs and ISP
associations in selected developing countries to put in place pilot technology
projects for implementing Internet exchanges.
5.
Insist on interconnection of local communications networks
on favorable terms to all service operators. The incentive in creating more interconnection relationships from
the incumbent’s perspective is that special charging arrangements from for
example non-geographic numbers (e.g. 0845 numbers) opens the door to
a variety of new commercial deals between the local telephone company and
ISPs[6], and in turn
between ISPs and end users, which will lead to increased telecommunications
revenue for the incumbent.
6.
Provide telecommunication services that will support
innovation in digital goods and services. Work closely with state-owned
networks, by leading the way to hybrid state-private services provided by
partnerships, advising on new business models to allow revenue sharing between
incumbent and new entrants, and nationwide numbering plans to implement
non-geographic calling. For example, in
developed nations considerable benefits did flow to small businesses from the
provision of special (non-geographic) numbers for dial-up Internet access,
charged at uniform rates throughout the entire country. Extending similar such services in
developing nations will allow small entrepreneurial businesses in both rural
and urban areas to gain access to the Internet at rates only slightly above
current local rates without overall revenue loss to the incumbent network.
However, this would require interconnection of local ISP networks and other
smaller telecommunication networks (such as VSAT networks) to the incumbent’s
network.
Research topics:
·
How much more bandwidth will be available to developing
countries in the next year? How can we further reduce the cost of international
bandwidth and make it available to all entrepreneurs in the region?
·
What is required to reduce the cost of domestic
internet access in developing countries to facilitate innovation?
12 month deliverables:
TBC
H. Pilot Programs &
Technologies for Entrepreneurship & Trade
The transfer of technologies from
one country to another without any customization has traditionally failed. Part of the DOT Force responsibility is to
ensure that appropriate technology is deployed within developing countries
according to the needs and the goals of the countries themselves.
In terms of producing goods for
developing countries, the developing countries themselves must be leaders in the innovation process from the
outset. On the other hand, companies
and individuals in the more developed world may have much to offer. Thus we see potential in alliances between
individuals in developing and more developed countries to promote the
innovation process which will lead to new digital goods and services produced
in the developing world for export or use in the local economy.
Examples of projects and programs
in this category include the following.
·
E-Inclusion - World e-Inclusion is a business
initiative with a clear social mission. Working with a range of local and
global partners, HP is developing and delivering sustainable information
solutions in partnership with people with very low incomes in the developing
world. Involved regions include Africa, Asia, Central and Eastern Europe, Latin
America and the Middle East. See www.hp.com/e-inclusion/.
·
DigitalDividend.org - Digital
Dividend is a Web site dedicated to exploring creative business approaches,
public-private partnerships, and other sustainable ways to bridge the global
digital divide and create lasting economic, social, and environmental benefits.
See www.digitaldividend.org.
·
BusyInternet - BusyInternet is an initiative to
develop large-scale Internet development centers throughout Africa. The centers
comprise a mixture of training facilities, office space and public internet access.
See www.busyinternet.com.
1.
Study the experience of pilot programs promoting digital
innovation, and identify legal and regulatory issues that present hurdles to
such initiatives. Open Economies is working closely with other
centers of digital experimentation to stay in touch with and promising
experiments. By working as legal
advocates and legal researchers to help those in pilots solve their legal and
regulatory issues, we are able to catalogue issues and develop both legal
support materials plus policy recommendations for nations.
Research topics:
·
What are the legal and regulatory issues of most
importance to innovative pilot projects and technologies? How can these be addressed in specific
cases, and how can we generalize from these issues to make policy
recommendations to governments?
12 month deliverables:
TBC
I. Encourage Education for
Entrepreneurship
Entrepreneurship may not yet be
part of the culture of some developing countries, thus support should be
provided to develop entrepreneurial skills in these emerging markets.
1.
Promote technical education. Establish specialized educational tracks, starting in elementary
school, that will help produce students who are capable of excelling at the
application of information technology to a variety of businesses and which will
result in a substantial number of students being able to go on to higher
education in science and engineering. (link to Action Point 3)
2.
Develop educational incentives. Establish scholarships
in partnership with major NGOs and developed nations to provide training for
teachers in technical subjects either within their home country or abroad.
These scholarships would be merit based and would be subject to the person
returning to their home country and teaching for at least three years.
3.
Adopt distance learning. Engage in educational
partnerships with overseas universities to provide distance learning of
technical subjects to support the development of digital businesses.
Research topics:
·
Will the education of individuals in developing
countries take a generation, or are there ways to speed up the development of
needed skills?
·
Can a world-class innovation economy develop without a
world-class science and technology university base within a country? If not,
how can one best create both at the same time?
·
How are culture, education and entrepreneurship
intertwined?
12 month deliverables:
TBC