The role of technology in socio-economic development

Technological innovation and Information Communication Technologies (ICTs) represent a way for nations within the developing world to foster economic development, improve levels of education and training as well as address gender issues within society. In many emerging nations it is a major challenge to gain access to capital and market information.
Developing nations specifically do not have functioning infrastructure or much in the way of financial resources. According to a recent UNECA data, in Sub Saharan Africa for example, approximately 29% of roads are paved, barely a quarter of the population has access to electricity, and there are fewer than three landlines available per 100 people.
The combination of poor infrastructure and poverty makes it difficult for citizens to access financial resources and information. However, a basic form of technology, such as a simple mobile phone, has been proved to assist people communicate with one another, access market information, sell products across geographic areas, reach new consumers, enter mobile payment systems, reduce fraud and crime and empower women and the disadvantaged.
With mobile phones and tablets proliferating at a significant rate, these communications tools enable women, the disadvantaged and other individuals to access a broader range of investors, suppliers, and customers. Combined with social media platforms, people can extend their reach through mobile devices and pool resources in meaningful ways.
The Ethiopia Commodity Exchange (ECX) is a case in point. Since its establishment some years ago, ECX has helped entrepreneurs expand their markets. Before 2008, 95% of farmers sold their products in local markets and were not able to access other areas. Transaction costs were high and they had problems getting fair prices due to lack of market competition. With the advent of the ECX, agricultural producers gained access to external buyers and were able to negotiate better prices. This boosted their incomes and improved the quality of their products.
Access to mobile technology is particularly important for females because there are, globally, 300 million fewer women than men who own mobile devices. According to the World Telecommunications Organization, overall, there is a 21% gender gap in owning a phone worldwide, but this number rises to 23% in Africa, 24% in the Middle East, and 37% in Asia.
A survey undertaken by the United Nations Development Programme (UNDP) found that 55% of women around the world earned additional income due to possession of a mobile phone and 41% increased their income and professional opportunities. Mobile payment systems represent a way to reduce the cost of financial transactions and thereby help entrepreneurs. If people can transfer funds quickly and efficiently, it becomes easier for small and medium sized businesses to sell their products.
This improves the efficiency of the marketplace and removes barriers to growth. Reducing “friction” is very important in African, Asian, and Latin American financial markets because barriers to financial transactions remain quite high. Analytical reports by the African Development Bank revealed that only 30% of those who live in developing African nations have bank accounts.
In short, mobile technology offers extensive help in various forms of social and economic development. Wireless communications broaden access to information, improve capital access, overcome geographic limitations, and expand market access. However, the continued and equitable expansion of Information Communication Technology (ICT) depends on electricity. The real divide over the next 20 years will be between those who have access to reliable electricity to power these devices and those who do not.
To promote technological advances, developing countries should invest in quality education for youth, continuous skills training for workers and managers, and should ensure that knowledge is shared as widely as possible across society. In a world in which the Internet makes information ubiquitous, what counts is the ability to use knowledge intelligently. Knowledge is the systemically integrated information that allows a citizen, a worker, a manager, or a finance minister to act purposefully and intelligently in a complex and demanding world.
The only form of investment that allows for increasing returns is in building the stocks and flows of knowledge that a country or organisation needs, and in encouraging new insights and techniques. Adopting appropriate technologies leads directly to higher productivity, which is the key to growth. In societies that have large stock and flows of knowledge, virtuous circles that encourage widespread creativity and technological innovation emerge naturally, and allow sustained growth over long periods.
In societies with limited stocks of knowledge, bright and creative people feel stifled and emigrate as soon as they can, creating a vicious circle that traps those who remain in a more impoverished space. Such societies stay mired in poverty and dependency. The investment climate is crucial, as are the right incentive structures, to guide the allocation of resources, and to encourage research and development.
Successful countries have grown their ability to innovate and learn by doing, by investing public funding to help finance research and development in critical areas. Everyone is involved – big and small, public and private, rich and poor. The benefits that are certain to flow from the technological revolution in an increasingly connected and knowledge intensive world will be seized by those countries and companies that are alive to the rapidly changing environment, and nimble enough to take advantage of the opportunities.
Those that succeed will make substantial advances in reducing poverty and inequality. Access and application are however, critical. Service and technology are the differentiators between countries that are able to tackle poverty effectively by growing and developing their economies, and those that are not. The extent to which developing economies emerge as economic powerhouses depends on their ability to grasp and apply insights from science and technology and use them creatively. Innovation is the primary driver of technological growth and drives higher living standards.
As a concluding remark, my humble reminder goes to the Ministries of Science and Technology, Information and Communications Technology as well as Ethio Telecom and Ethiopian Electric Power Corporation to seriously note all of the above.