ICTs and Economic Growth Session 4 ICTs for

ICTs and Economic Growth Session 4 “ICTs for Development” course

Life Expectancy (years, 2014) Life Expectancy vs. Income Richard Heeks, GDI, University of Manchester, UK Gross National Income per capita (US$, 2015)

Routes to Economic Growth a) b) Economy ↑ Efficiency↑ Inputs Process c) Profitability↑ Outputs d) Upgrading Inputs e) Restructuring (New Sector) New Process Outputs Value Added Value Richard Heeks, GDI, University of Manchester, UK Inputs Process Outputs Value Added Value

Typical Enterprise Value Chain Administration Purchasing Operations Sales Richard Heeks, GDI, University of Manchester, UK Adapted from Laudon & Laudon 2016; itself developed from Porter 1985

CIPSODAR Model of Key Enterprise Processes Developing Countries Absence of Information Knowledge Uncertainty of Information Asymmetry of Information Learning Cost of Information Poor Quality of Information Data (capture, input, process, store) Richard Heeks, GDI, University of Manchester, UK Information (output) Decision Action -Purchasing -Operations -Sales -Admin. Results (economic growth)

Levels of ICT-Enabled Change Transform Structure Processes System Reorganise Content Technology Improve Agency (Motivation and Capacity) Richard Heeks, GDI, University of Manchester, UK Digitise

Journey Substitution Savings Farmers and rural entrepreneurs in Niger would, an average, require a three-hour round trip to the nearest main market. Substituting that with a phone call in order to gather information would save around 300 CFA (US$0. 5) (Aker & Mbiti 2010). Micro-entrepreneurs in Nigeria typically spent up to N 250 (US$1. 25) on a phone call but saved N 1, 000 (US$5) on the typical cost of a taxi journey; a net saving of US$3. 75 (Jagun et al 2008). Richard Heeks, GDI, University of Manchester, UK Smallholder farmers in Malawi were estimated to save an average of US$1 per purchase/sales transaction as a result of using ICTs (in this case, an online trading platform, with savings calculated in terms of both time and transport) (Katengeza et al 2014).

Impact of Price Information Systems 7 -10% increase in price for maize and groundnuts (Courtois & Subervie 2015). Design-Reality Gaps -Trust - Middlemen ? Impact of price information on income and sales of potato farmers was “statistically indistinguishable from zero” (Mitra et al 2015). Richard Heeks, GDI, University of Manchester, UK Broader Impact - Production mix No difference in price for ICT-using and non-ICT using farmers (Fafchamps & Minten 2012).

Enterprise Reorganisation Richard Heeks, GDI, University of Manchester, UK Image sources: http: //www. nationalgeographic. com/foodfeatures/land-grab/; http: //www. heidiwoodman. com/goldfever/; http: //www. heartforuganda. com/microfinance/; https: //www. wbginvestmentclimate. org/advisory-services/regulatory-simplification/tradelogistics/learning-from-developing-country-experiences-to-implement-successful-agri-tradereforms. cfm

Reflections on ICTs and Micro. Economic Growth - Limited Change - Risk/Reward Ladder - Drivers to Change Richard Heeks, GDI, University of Manchester, UK

Impact of ICT on Price Dispersion Variation in fish prices across different markets in South Kerala fell from 65% to 15% (Jensen 2007). Price variations across grain markets in Niger fell by 10% with introduction of mobile phones (Aker 2010). Use of the Reuters Mobile Light price information app led price dispersion of crops across different rural markets in India to fall by 12% compared to just presence of mobiles alone (Parker et al 2015). Richard Heeks, GDI, University of Manchester, UK

Mobiles and Cloth-Weaving Supply Chain INTEGRATED STRUCTURE Concentric rings of ‘absolute’ geographic space Indirect link via third-party No access to mobile telephony – communication accomplished by physical movement between locations Thread Dealer Access to mobile telephony – certain types of information communicated by phone. Weaver Sub. Weaver Master. Weaver Intermediary NON- INTEGRATED STRUCTURE Buyers Intermediary Weaver Physical move following call OUTSOURCED STRUCTURE Richard Heeks, GDI, University of Manchester, UK Weaver/ Co-ord. Thread Dealer COORDINATED STRUCTURE Source: Jagun et al 2008

Internet Users as % of Population (2015) Internet Usage vs. Gross National Income Richard Heeks, GDI, University of Manchester, UK Gross National Income per capita (US$, 2015)

ICTs as a Cause of Economic Growth “ 10 more mobile phones per 100 people would increase GDP per capita growth by up to 0. 6 percentage points” (Deloitte 2012: 4). “an increase in the broadband penetration rate by 10 percentage points raised annual growth in per capita GDP by 0. 9 -1. 5 percentage points” (Czernich et al 2011: 530). Richard Heeks, GDI, University of Manchester, UK

Where is ICTs’ Economic Impact Greater? Richard Heeks, GDI, University of Manchester, UK Image source: http: //www. campusministrytoolbox. org/journals/gobilizing-a-new-missionsparadigm/

Extensive Use of ICTs ICT Consumption/Application Higher Productivity Than Other Sectors Millions Employed Content Double Digit Annual Growth Services Goods Software Retail c. 3% of GDP (midincome) c. 1. 5% of GDP (lowincome) Infrastructure Richard Heeks, GDI, University of Manchester, UK Source: Heeks 2008 e