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Who gains in the Internet age?

The stage was set for a stellar performance: Miguel Angel Rodríguez, president of Costa Rica, a country bent on transforming its farm-based economy into a regional technology powerhouse, was scheduled to deliver the keynote speech at an international seminar on information technology.

The event, organized by the Inter-American Development Bank prior to the annual meeting of its Board of Governors in New Orleans, was intended to showcase the use of new technologies in projects designed to accelerate sustainable development and equitable economic growth in Latin America and the Caribbean.

However, as Rodríguez himself was to acknowledge in his presentation, the seminar was hobbled by the sort of obstacles the region will have to overcome in order to take full advantage of the technological revolution that is changing how the world works, trades and communicates.

The president could not come to New Orleans due to an outbreak of demonstrations against his government’s plans to foster competition in telecommunications and energy, two sectors monopolized by state-owned companies. Rodríguez had to make his presentation via a teleconferencing system installed in his office in San José, Costa Rica. But while the audience in New Orleans could see him at his desk, it could hardly understand his badly distorted voice. After several attempts to fix the glitches at both ends, the president finally resorted to a speakerphone to transmit his message.

Rodríguez described Costa Rica’s huge bet on the oft-repeated prediction that information technology will touch nearly every aspect of the lives of people lucky enough to have access to those new tools. His government plans to hook up half of its schools to the Internet within two years. In that time, access to the World Wide Web should rise to at least 25 percent of the population. “In the future,” he added, “all Costa Rican citizens will have their own email address, just as today they have identity documents.”

While such a rise in the rate of connectivity would be an impressive achievement for a country where only one percent of the population now has access to the Internet, it would still leave it far behind industrialized nations like the United States. In fact, the gap between the U.S. and Latin American countries like Brazil is forecast to grow even wider over the next few years, pointed out David Katz, director for Global Market Development at the 3Com Corporation and one of the panelists of the seminar.

Katz, a former educator, said it was crucial for developing countries to invest in technological development in order to bridge that gap, as the global economy is becoming more and more dependent on knowledge-based technologies. “Sixty percent of all new jobs created today in the U.S. require high tech skills,” he said. “By the year 2015, it will be 90 percent.”
In order to take full advantage of the information revolution, countries should invest more in training older workers, students and teachers so they may acquire the sort of skills required in the new economy, Katz said. In turn, governments should scrap any barriers that stunt the development of high tech enterprises, such as regulations that stifle competition in the telecommunications sector, import duties that make equipment more expensive and restrictions that limit access to the broadband spectrum.

Costa Rica has long made education and training top national priorities. Those investments paid off handsomely when U.S. semiconductor giant Intel chose San José to build a new computer chip factory. Largely thanks to the output of that plant, the value of Costa Rica’s high tech exports has soared past the earnings brought in by such traditional exports as coffee and bananas.

However, the country faces structural bottlenecks that could hamstring its efforts to develop a world-class information technology industry. According to a report by the U.S. consulting firm Toffler Associates, Costa Rica has fallen behind even some of its Central American neighbors in key areas such as regulatory framework reform and digitalization of its telephone network.

Contrary to many other Latin American and Caribbean countries that have liberalized their telecommunications sectors and encourage competition among service providers, Costa Rica’s telecommunications are run by a state-owned monopoly, the Costa Rican Institute of Electricity (ICE). Internet service is monopolized by an ICE subsidiary called RACSA.

According to the Toffler report, which was commissioned by Costa Rica’s Coalition for Development Initiatives and the General Secretariat for Central American Economic Integration, ICE and RACSA are encumbered by laws and rules that prevent them from reacting more swiftly to the constant changes and innovations in the telecommunications arena. Purchase orders can take up to two years to wend their way through the bureaucracy—an eternity in the age of the Internet.

The rate of digitalization of Costa Rica’s telephone network is an especially weak point, the Toffler report notes. “In this area, Costa Rica’s low rate generates higher operation costs for ICE and RACSA, besides reducing the range of added value services available throughout the country for Costa Ricans and for multinational firms weighing the possibilities of investing here,” it says. Corporate customers such as banks frequently complain that Internet service is unreliable and slow in Costa Rica. It is also considerably more expensive than in other Latin American countries.

In a bid to address these and other structural shortcomings, Rodríguez’s government drafted legislation to modernize ice and gradually introduce competition in the telecommunications and energy sectors. The bill, which ruled out privatization, won broad bipartisan support in the legislature. Nevertheless, it sparked some of the most heated demonstrations Costa Rica had seen in decades, bringing the country to a near standstill for almost two weeks. The public outcry prompted lawmakers to shelve the bill and establish a special committee, with representatives from labor unions, university students and the Catholic Church, to discuss a new bill. In May, a constitutional tribunal ruled that the original bill was null and void, charging that legislative procedures had been breached during its passage.

“This reform is indispensable for our country,” Rodríguez told the daily La Nación shortly after the demonstrations. “If others forge ahead and gain competitive advantages, we will become poorer; if we stay behind, companies will no longer come to generate jobs.”

A work in progress. The IDB seminar showed that, notwithstanding the region’s relative scarcity of resources, the new information and telecommunications technologies can help Latin American and Caribbean countries overcome old barriers to development. Using modern tools, they may start to overcome such hurdles as the low quality of public education, the poor access to health services, and the low productivity of small and medium-size enterprises. Applied to government, information technology can make public sector management more efficient and transparent, reducing the opportunities for corruption. These new technologies could even bridge such social problems as the exclusion of women and young people from the benefits of economic progress.

“Our region cannot ignore this revolution,” said IDB President Enrique V. Iglesias. “It should particularly take advantage of it to achieve three concrete goals: grow more, grow in a better way, and strengthen systems of democratic government.”
As in other parts of the world, one of the chief concerns in Latin America is to avoid making its deeply skewed income distribution patterns even worse by the adoption of modern technologies. At the conference, speaker after speaker addressed different aspects of the “digital divide,” the gap between those who have access to these tools and those who do not.

Many of the initiatives showcased in New Orleans are aimed precisely at allowing poor people to secure the benefits of the information revolution. These programs are flourishing thanks to efforts made by the public and private sectors as well as by not-for-profit civil society organizations.

E-commerce is a case in point. Even in remote places where telephones—let alone computers—are rare, e-commerce allows indigenous people to market their handicrafts far beyond their villages. Samajel B’atz’, a cooperative formed by nine groups of Guatemalan artisans, has set up its own webpages with the help of PEOPLink, a U.S.-based nonprofit organization. Through the Internet, the cooperative can deal directly with consumers and retailers, ensuring that a greater part of the revenue goes to the weavers, potters and producers in the field rather than to middlemen. This technology allows the artisans to generate more sales and helps them keep abreast of consumer tastes and trends. While in the past their production was driven by the marketing equivalent of a shot in the dark, the artisans can now tailor their wares to customers’ specifications. The increased cash flow has even made it possible for the cooperative to offer small loans to its members.

Another example of how these new technologies can empower even the poorest communities is the crusade led by the Brazil-based Committee for Democracy in Information Technology (CDI).

Founded in 1995 by Rodrigo Baggio, a young Rio de Janeiro entrepreneur, CDI has opened 117 computer schools in shantytowns in 14 Brazilian states. More than 35,000 people have already received training in technologies that can make them more employable. Baggio, who has also taken his computer classes to prisons and Indian tribes in Brazil, announced at the New Orleans seminar that he would expand his program to other Latin American countries with the help of the IDB and funding from the StarMedia Foundation.

On a larger scale, Mexico’s Telesecundaria program is using modern telecommunications technology to bring high school education to its most remote areas, at a fraction of the cost of building, staffing and maintaining a traditional school. With just three teachers and $2,500 for a satellite dish and a few television sets, Telesecundaria can serve students in rural hamlets such as San José de Avino, in the state of Durango, where the closest high school is a two-hour drive away. One million people, from teenagers to adults, are enrolled in the Mexican distance-learning program. According to test results, Telesecundaria students’ scholastic achievements are on a par with those of their peers in traditional high schools.

Information technology can also help countries run their public sectors more efficiently. Across the region, governments are deploying online systems at the federal, provincial, and municipal level, to handle such tasks as state procurement and contracting, tax collection, and payments. In the case of public sector purchases, governments can fuel more competition among providers and make the process more transparent.

While enthusiastic about these new tools, leaders in the region are also quick to underscore that information technology is no silver bullet. Offering some historical perspective, José Octavio Bordón, education minister of the Argentine province of Buenos Aires, read at the conference the congratulatory telegram Argentine President Domingo Sarmiento sent when the first trans-Atlantic cable was laid over a century ago. In his message, Sarmiento hailed that achievement as the first step toward creating a truly global community.

Countries are keenly aware of the need to guarantee the broadest access possible to the new technologies’ benefits. Barbados Education Minister Mia Amor Mottley said that one of the guiding principles of her nation’s education reform was to ensure that the information revolution transforms its citizens into technology producers, and not simply end consumers.
“Technology on its own will not generate equality,” Mottley said. “But it does offer opportunities to countries like Barbados, because now geographic size or location doesn’t matter.”


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