D Gen Ict Sdgs.01 2017 PDF e

International Telecommunication Union
ICT-centric economic
growth, innovation
Telecommunication Development Bureau
Place des Nations
and job creation

CH-1211 Geneva 20
Switzerland
www.itu.int
Printed in Switzerland
Geneva, 2017
growth, innovation
and job creation
2017
Editors: Ahmad R. Sharafat
William H. Lehr
ISBN
978-92-61-24411-8 (Paper version)
978-92-61-24421-7 (Electronic version)
ITU 2017
All rights reserved. No part of this publication may be reproduced, by

any means whatsoever, without the prior written permission of ITU.
ICT-centric economic growth, innovation and job creation
FOREWORD
I am pleased to present this compelling book on ICTSDGs, which
focuses on ICT-centric economic growth, innovation and job creation.
The Sustainable Development Goals (SDGs), adopted in 2015 and
referred to as the 2030 Agenda for Sustainable Development, are
universal as they embody a universally shared vision of progress
towards a safe, just and sustainable space for all human beings.
Telecommunications and information communication technologies
(ICTs) cut across all SDGs and are an enabler for growth and
development. As the international community works towards achieving
the SDGs, it is important to remember that access to ICTs is key to
social and economic development: the work of the ITUs
Telecommunication Development Sector is therefore essential in
achieving the 2030 Development Agenda.
This study, written by leading scholars and experts from around the
world, aims to address the challenges and opportunities offered by ICTs
in the areas of innovation, governance, education, job creation and
economic growth. I highly recommend that all stakeholders, including
policy-makers, regulators, operators, and investors, as well as people in
the industry and academia, read and use the findings of this study, as it
sheds light on some of the greatest opportunities of todays world.
I would like to express my sincere gratitude to everyone involved in the
preparation of this book. In particular, I would like to express my
appreciation to Dr. A. R. Sharafat (Tarbiat Modares University, Tehran,
Iran), Dr. W. H. Lehr (Massachusetts Institute of Technology,
Cambridge, Massachusetts, USA), Dr. T. Unwin (Royal Holloway,
University of London, London, United Kingdom), Dr. E. Giovannetti
i
(Anglia Ruskin University and Hughes Hall College, University of

Cambridge, Cambridge, United Kingdom), Dr. G. Barker (London
School of Economics, London, United Kingdom, and Australian
National University, Canberra, Australia), Dr. P. Prapinmongkolkarn
(Chulalongkorn University, Bangkok, Thailand), Dr. S. Aramvith
(Chulalongkorn University, Bangkok, Thailand), Dr. J.-P. Auffret
(George Mason University, Virginia, USA), Dr. R. Katz (Columbia
Institute for Tele-Information, Columbia University, New York, USA),
and Dr. J. F. Larson (SUNY Korea Stony Brook University, Incheon,
Republic of Korea) for their unique insights and contribution, without
which this study would never have been possible. Special thanks to Dr.
A. R. Sharafat for his leadership, determination and vision, which have
allowed us to present this book on the occasion of the World
Telecommunication Development Conference (WTDC-17) and the 25th
Anniversary of the ITUs Telecommunication Development Sector.
Brahima Sanou
Director
Telecommunication Development Bureau (BDT)
ii
PREFACE
The idea for this book emerged not long after the United Nations
adopted the expanded set of Sustainable Development Goals (SDGs) in
2015 that were intended to motivate and coordinate international
development efforts through 2030. As anyone who has been involved in
Information and Communication Technologies (ICTs) has long known,
and increasingly everyone else involved in development efforts now
recognizes, ICTs are permeating all aspects of the global economy and
society. ICTs are transforming how all goods and services not just
digital or information goods - are designed, produced, distributed, and
sold. They are transforming how citizens, consumers, industry, and
governments acquire and share knowledge about the world. To
participate in the global information economy, one has to be a digital
citizen. ICTs must play a central role in developing solutions to address
climate change, respond to growing global competition, and to meet the
rising expectations and needs of all segments of society, including the
poorest, least skilled, or otherwise marginalized.
ICTs will also cause disruptions in traditional economic and social
structures, resulting in Digital Divides, that will need to be navigated
and the pains of disruptions mitigated if the positive benefits that ICTs
promise are to be realized. Although the potential for ICTs to contribute
positively is well-established, ICTs accelerate and amplify changes that
can also be negative if not countered. For example, ICTs can accelerate
growing income disparity and foster winner-take-all economics if
explicit efforts to ensure inclusion, universal accessibility, and support
for skills development are not adopted. In short, achieving the SDGs
will require designing and adopting ICT-centric strategies for economic
growth, employment opportunities, government policies, regulatory
frameworks, markets, and education.
iii
Whereas much of the earlier literature and efforts related to ICTs in

development focused on the deployment of basic telecommunication
and ICT infrastructure, the challenges facing the development potential
in the global digital economy are much far-reaching and extensive. The
SDGs focus on such lofty goals as eliminating poverty, improving
participation in government, and building a healthy society and
economy that is environmentally sustainable. Although ICTs are critical
to the achievement of the SDGs, the SDGs do not explicitly address
targets for ICTs nor explain how ICTs may best be employed to
promote achievement of the SDGs.
As the United Nation's ICT development partner, the ITU Development
Sector (ITU-D) has a central role to play in helping to promote and
coordinate the effective use of ICTs in achieving the SDGs.
Consequently, in anticipation of the ITU-D's 25th Silver Jubilee
Anniversary and the World Telecommunications Development
Conference (WTDC-17) in Buenos Aires in October 2017, the plan to
prepare this book emerged. The goal was to assemble in a single
volume, accessible to all development stakeholders, including both
those new to development efforts as well as seasoned professionals, a
fresh and realistic assessment of the social and economic implications
of ICTs for SDGs, and to offer practical guidance on how best to ensure
ICTs further progress toward the SDGs. An international team of
experts drawn from diverse academic and professional backgrounds
was assembled and together hammered out a framework for collecting
an integrated set of complementary perspectives in a single resource.
Each of the authors was tasked with providing a focused look from a
distinct perspective to cover select aspects of the ICTSDGs
challenge. The perspectives and approaches range from academic
discourses on the theoretical and empirical research to reviews of
current trends and practices so as to consider and collect in a single,
integrated volume the multiple ways in which ICT strategies need to be
addressed to be successful. Individual chapters focus on summarizing
the theoretical and empirical evidence of ICT impacts, on the role of
government, on the design of a healthy innovation ecosystem, on the
role of ICTs in education, and several other topics.
iv
Over two years, the team of experts collaborated in reviewing and

commenting on each other's chapters, in sharing sources, and in helping
to assemble a collection of illustrative case studies that supplement the
main text. The chapter authors were supported in their efforts by the
ITU and benefited from their discussions and outreach with their
colleagues in the academic and professional communities where they
each have their principal homes. We are honored to have been part of
this project and are pleased with the result. We believe it will provide a
good foundation and resource for on-going work on developing ICT-
centric strategies for the development community in the years to come.
Thus it is with pleasure that we present you with ICT-centric economic
growth, innovation and job creation.
We are indeed grateful to Mr. Brahima Sanou, Director of
Telecommunication Development Bureau (BDT) in the International
Telecommunication Union (ITU) who initiated the project and provided
us with encouragement and support to the fullest extent. He engaged
academia in a meaningful and unprecedented manner in this journey
and opened new opportunities for partnership with ITU. This work
could not have come to this point without the passionate and
unwavering engagement and support by Dr. Eun-Ju Kim, Chief of
Innovation and Partnership Department (IP) and Administrator of ICT
Development Fund (ICT-DF) in BDT/ITU, for which we are sincerely
thankful. Our thanks also go to the renowned and outstanding scholars
and scientists who collaborated in an exemplary way with us and
authored different chapters. Finally, we would like to express our deep
appreciation to Ms. A. Maia-Reboucas, Mr. M. Ba, Ms. M. A. Mozer
Corral, and Mr. M. Adea in the ITU who helped us enormously by
providing expert advice and ardent support throughout the entire
process.
Ahmad R. Sharafat &

William H. Lehr (Editors)
v
Table of Contents
FOREWORD ................................................................................... i
PREFACE ........................................................................................ iii
1 - ICT Engines for Sustainable Development ........................... 1

1.1 Background ....................................................................... 1
1.2 Sustainability: The New Focus in Development .............. 3
1.3 Review of Research Evidence of ICT Impacts ................. 11
1.4 ICT Ecosystem.................................................................. 23
1.5 Motivation: Need an Agenda for Action .......................... 26
1.6 Conclusions and Organization of This Book .................... 29
2 - ICTs, Sustainability and Development: Critical Elements ... 37

2.1 Introduction....................................................................... 37
2.2 ICTs, Sustainable Development and SDGs ...................... 39
2.3 Essential elements for Successful Application of ICTs
for Sustainable Development ............................................ 49
2.4. Stakeholders and Partnerships in Delivering SDGs ......... 58
2.5 Concluding Remarks: ICTs in Sustainable
Development ..................................................................... 61
Appendix A - The World Economic Forums Global
Education Initiative ................................................................... 66
3 - Digital Divide and Digital Multiplier: A Paradigm Shift

through Innovation ................................................................. 72
3.1 Introduction....................................................................... 72
3.2 Innovation Ecosystems ..................................................... 74
vi
3.3 Examples of ICT-Centric Innovation Ecosystem and

Their Relevance to SDGs ................................................. 81
3.4 Roadmap to Enhance Digital Multipliers ......................... 87
3.5 Concluding Remarks ........................................................ 89
Appendix A Fostering Innovation in Indian Institute of
Technology Madras Research Park .......................................... 95
4 - The Role of Governments in ICT-Based Sustainable

Development ............................................................................ 109
4.1 Introduction....................................................................... 110
4.2 Outline .............................................................................. 110
4.3 Objectives and Goals ........................................................ 112
4.4 The Organization of Governments and ICTs .................... 119
4.5 ICT Market Policy ............................................................ 123
4.6 Non-ICT Markets Policy .................................................. 156
4.7 Conclusion ........................................................................ 181
5 - Business Models for ICT-Centric Sustainable Development 193

5.1 Introduction....................................................................... 193
5.2 Business Models for ICT-Based Innovative Ventures ..... 197
5.3 Current Concepts in ICT-Based Products and Services ... 199
5.4 Business Model Design .................................................... 204
5.5 Conclusion ........................................................................ 210
6 - Job Creation and Sustainable Development .......................... 214

6.1 Introduction....................................................................... 2155
6.2 ICT Contribution to Job Creation ..................................... 215
vii
6.3 ICT Contribution to Labor Conditions ............................. 230

6.4 Public Policy Implications ................................................ 232
6.5 Concluding Remarks ........................................................ 236
7 - The Future of ICT-driven Education for Sustainable

Development ............................................................................ 239
7.1 Introduction....................................................................... 239
7.2 Education at Global Scale: Lifelong Learning, MOOCs
and Education Hubs .......................................................... 242
7.3 The Future of ICT Curriculum and Content: The
Innovation Imperative ....................................................... 250
7.4 Conclusion ........................................................................ 255
viii
Chapter 1
ICT Engines for Sustainable

Development
Ahmad R. Sharafat* and William H. Lehr**
This chapter discusses the origins of the Sustainable Development

Goals (SDGs) and their evolution from the preceding Millennium
Development Goals (MDGs). A review of the literature on the socio-
economic impacts of ICTs provides broad support for concluding that
ICTs will have a significant impact on the realization of SDGs. The
focus of this chapter is to highlight the range of coordinated actions that
are required to promote positive ICT-centric innovation, job creation,
and economic growth. This chapter also presents an overview of the
ICT ecosystem, the organization of the book, and a summary of some of
the key themes addressed.
1.1 Background
At the beginning of the new millennium, a summit of world leaders met
at the United Nations in New York in September 2000 to adopt a set of
Millennium Development Goals (MDGs) that were directed toward
alleviating poverty and ameliorating the widening gap between the rich
and poor that threatens the future of humanity and the planet. The
MDGs established a set of eight goals for improving the lives of people
in the least developed nations over the next fifteen years (see Table 1).
In 2015, the United Nations (UN) took stock of the progress made
toward meeting the MDGs (United Nations, 2015a). Relative to 2000,
*
Tarbiat Modares University, Tehran, Iran
**
Massachusetts Institute of Technology (MIT), Cambridge, Massachusetts, USA
1
Table 1: Millennium Development Goals for 2000 to 2015
GOAL 1: Eradicate extreme poverty and hunger

GOAL 2: Achieve universal primary education
GOAL 3: Promote gender equality and empower women
GOAL 4: Reduce child mortality
GOAL 5: Improve maternal health
GOAL 6: Combat HIV/AIDS, malaria and other diseases
GOAL 7: Ensure environmental sustainability
GOAL 8: Develop a global partnership for development
Source: United Nations (2015a).
the UN noted that more than one billion people have been lifted out of
extreme poverty and inroads have been made against hunger, 1 more
girls have attended school than ever before,2 new and innovative
partnerships have been formed, and decision making in developed and
developing countries has been reshaped. Nevertheless, in spite of these
important accomplishments, none of the MDGs have been fully
achieved. Inequalities persist and progress has been uneven. For
example, the majority of the worlds one billion extremely poor people
live in just five countries, women continue to suffer from inadequate
health and sanitation facilities, and disparities between rural and urban
areas remain significant. Further progress requires renewed political
will, and collective, long-term and coordinated efforts by all
stakeholders to ensure that appropriate development goals are adopted
and pursued.
In 2012, world leaders, including heads of state and civil society
representatives, met in Rio de Janeiro to renew their joint efforts to
1
In the developing countries, the proportion of the population living on less than
$1.25 per day declined from nearly half in 1990 to 14% by 2015, and over the
same period, the proportion of undernourished people fell from 23% to 13%
(United Nations, 2015, p. 4).
2
Primary school net enrolment rates increased from 83% in 2000 to 91% in 2015 in
developing regions, and the ratio of girls-to-boys enrolled in schools in Southern
Asia has risen from 0.74 to 1.03 from 1990 to 2015 (United Nations, 2015, p. 4).
2
promote an economically, socially, and environmentally sustainable

future for our planet and for present and future generations. The
manifest that emerged from this meeting, called The Future We
Want, articulates the participants common vision and established a
charge to develop a new set of Sustainable Development Goals (SDGs)
for the post-2015 era (RIO+20, 2012).
In 2015, senior government representatives met at the United Nations
headquarters in New York to adopt a resolution by the General
Assembly for transforming our world: the 2030 Agenda for Sustainable
Development (United Nations, 2015b) (see Table 2).
The 2030 Agenda also announced a total of 169 specific targets to
accompany the 17 SDGs. In addition to expanding the number of
development goals from 8 to 17, which included several SDGs that
specifically address planet-survival sustainability issues, the assembled
representatives also agreed to target the goals more broadly. Whereas
the MDGs were focused on the least developed countries, the SDGs are
intended to apply to all nations.
1.2 Sustainability: The New Focus in Development

The common thread across the 17 SDGs is sustainability in its multiple
dimensions. First and foremost, the development goals have to consider
the sustainability of resources, including the health of the planet
(environmental sustainability). In addition to protecting the natural
environment, it is also important to consider how to ensure that the
development goals are economically viable (economic sustainability)
and consistent with sound public policies that support healthy
governance systems (social and political sustainability). Although the
SDGs overlap and achieving sustainability in each of the three senses
noted above (environmental, economic, and social/political
sustainability) is important for each of the SDGs, some SDGs
emphasize one aspect more than others. For example, SDGs 13-15
emphasize the importance of environmental sustainability and the need
to take action to address climate change, promote biodiversity, and
protect our forests and oceans; whereas SDGs 4, 8, 9, and 12 focus
more on ensuring economic sustainability by promoting goals designed
3
to expand productive economic opportunities for all people; and

SDGs 1, 3, 5, 11, 16, and 17 target issues impacting social and political
sustainability by focusing on the stability, security, and openness of our
social and political institutions, the rule of law, and policy processes.
Table 2: Sustainable Development Goals
GOAL 1: End poverty in all its forms everywhere

GOAL 2: End hunger, achieve food security and improved nutrition and
promote sustainable agriculture
GOAL 3: Ensure healthy lives and promote well-being for all at all ages
GOAL 4: Ensure inclusive and equitable quality education and promote
lifelong learning opportunities for all
GOAL 5: Achieve gender equality and empower all women and girls
GOAL 6: Ensure availability and sustainable management of water and
sanitation for all
GOAL 7: Ensure access to affordable, reliable, sustainable and modern energy
for all
GOAL 8: Promote sustained, inclusive and sustainable economic growth, full
and productive employment and decent work for all
GOAL 9: Build resilient infrastructure, promote inclusive and sustainable
industrialization and foster innovation
GOAL 10: Reduce inequality within and among countries
GOAL 11: Make cities and human settlements inclusive, safe, resilient and
sustainable
GOAL 12: Ensure sustainable consumption and production patterns
GOAL 13: Take urgent action to combat climate change and its impacts
GOAL 14: Conserve and sustainably use the oceans, seas and marine resources
for sustainable development
GOAL 15: Protect, restore and promote sustainable use of terrestrial
ecosystems, sustainably manage forests, combat desertification, and
halt and reverse land degradation and halt biodiversity loss
GOAL 16: Promote peaceful and inclusive societies for sustainable
development, provide access to justice for all and build effective,
accountable and inclusive institutions at all levels
GOAL 17: Strengthen the means of implementation and revitalize Global
Partnership for Sustainable Development
4
The development community has come to recognize that without

ensuring sustainability, all development efforts will be short-lived, and
may cause more harm than good. One may argue that economic
development comes at the cost of consuming more resources, with
undesirable consequences on the environment such as climate change.
As we will describe in this book, development efforts that are based on
utilizing information and communication technologies (ICTs) have the
potential to be significantly more environmentally friendly, consuming
fewer resources, requiring less capital expenditure, and creating more
jobs than might be achieved in the absence of ICT-fuelled growth
strategies. However, if not used effectively, ICTs may actually make
things worse.
The research literature on the socio-economic impacts of ICTs is
extensive and provides ample evidence of the transformative potential
of information and communication technologies for society and the
economy.3 While empirical evidence demonstrates that the positive
effects of ICTs in terms of driving economic growth, enhancing
efficiency, and expanding markets are large; ICTs may also contribute
to social and economic problems by accentuating equity divides and
increasing the market power of dominant firms. Managing the growth
of ICTs so the net social benefits are maximized presents a complex
challenge.
A key characteristic of ICTs is that they facilitate richer, faster, and
more flexible communications and decision-making by enabling
electronic communication, information gathering, computation, and
control at a distance. ICTs make it possible to share information more
widely and more quickly, expanding the reach of markets across all
components of economic production chains from final goods and
services to raw materials, from domestic commerce to international
trade. This makes it feasible to more flexibly and dynamically
reconfigure, and hence transform all aspects of how resources are
3
For example, see Bresnahan et al. (2002), Cardona et al. (2013), Gruber et al.
(2014), Jorgenson (2001), Katz (2012), OECD (2004), Spieza (2013), Van Reenen
et al. (2010), Waverman et al. (2005), and World Bank (2016). The empirical
evidence is discussed further below.
5
produced and used, fundamentally restructuring the economy and

redefining how we as humans interact with each other and the world
around us.
ICTs enable just-in-time production, outsourcing, market-of-one
customization,4 and a host of other innovations that have helped expand
inclusion, enabled flexibility in production, including labor flexibility,
and expanded consumer choices, lowered quality-adjusted prices,5 and
contributed to consumer welfare gains globally. The rise of business-to-
business (B2B) and business-to-consumer (B2C) electronic commerce
has revolutionized how commerce is organized within firms, across
industries, and globally; helping to promote and sustain a huge
expansion in international trade. On the one hand, this offers the
promise of realizing specialization, scope, and scale economies on a
global level. The ability to share information makes it feasible for
lagging countries to catch up more quickly, and potentially leapfrog
earlier generations of technical development,6 as good practices can be
shared more readily. The increased dynamism of information-fuelled
market decision-making may reduce entry barriers and foster innovation
as entrepreneurs may exploit the ICT-enabled markets to rapidly scale
4
ICTs make it feasible to customize the production of goods and services to satisfy
the demand associated with individual transactions (i.e., market-of-one). For
example, on-line platforms exist to allow consumers to purchase made-to-order
clothing, to match workers with jobs on a per-task basis, or to negotiate prices on a
per-unit basis.
5
The benefits of ICTs in reducing consumer prices is evident in, but not limited to,
technology intensive products. The price/performance of personal computers, cell
phones, and other digital goods has fallen dramatically over time. In addition, the
Internet allows consumers to compare prices and goods to better identify low-price
suppliers (a price benefit) and goods that more closely match their tastes and
requirements (a quality benefit). On the other hand, firms with market power may
use ICTs to more effectively price discriminate so as to capture consumer surplus;
and in the absence of effective competition policies, may abuse ICTs to collude.
6
ICTs accelerate the obsolescence of older technologies, creating a late-comer
advantage for more recent adopters that can help close development gaps.
6
their businesses.7 Increasingly and worldwide, all sizes of businesses,

but especially Small and Medium Enterprises (SMEs), are taking
advantage of ICT-enabled capabilities and online platforms to enter new
markets, better manage their operations, and communicate better with
suppliers and customers. Governments can use ICTs to improve their
ability to communicate with citizens and expand the delivery of
government services. ICTs have a critical role to play in the real-time
management of essential infrastructures from the management of
energy grids to transportation networks, from water systems to public
safety. The positive benefits that ICTs can potentially deliver in the
future and have already delivered is evident in the progress we have
collectively made toward realizing the MDGs discussed earlier.
While the potential benefits of ICTs for achieving the SDGs are
significant, their realization depends on the existence of complementary
elements.8 First, the basic ICT infrastructure needs to be in place.
Today, that implies universal access to mobile broadband services, and
that requires that access be available, affordable, and adopted.9 Simply
having ICT equipment and facilities in-place does not produce benefits
unless ICTs are used, and used effectively. Across the world, significant
gaps in availability of basic ICT infrastructure persist, and while less
7
ICTs may also create informational asymmetries that can strengthen the
competitive advantages of incumbents. Consequently, the impact of ICTs on
competition depends on multiple factors and hence are inherently ambiguous.
8
The World Bank refers to these complementary components as the analog
complements for the digital economy (see page 29, World Bank, 2016).
9
In the development literature, these terms may be used in multiple ways. Here,
availability refers to the need to ensure that the basic infrastructure and services are
in place so that the potential exists for users to access the services. If a country has
no mobile networks, then there cannot be any mobile service subscribers.
Affordability, or accessibility, refers to the necessity for additional complementary
factors that make it feasible for users to adopt ICTs. If users cannot afford the
services or requisite devices or lack the skills to use ICTs or awareness of the
benefits of using ICTs, then users will not adopt and use the ICTs. If mobile
broadband services are too expensive or potential users do not know how to use the
devices or services, then they will not adopt the service. Finally, Adoption refers to
the necessity of users actually acquiring and using the ICTs for the ICTs to have
any material impact on economic and social outcomes.
7
developed countries are closing the gap with respect to basic services,
the quality and capabilities of the ICT infrastructure and services in the
most advanced countries continues to raise the bar in system
performance (see Figure 1). Thus, whereas much of the worlds
population has basic cell phone coverage, the goal now is to expand
access to mobile broadband that has greater capabilities, capacity, and is
more energy efficient.10
Figure 1. ICT Penetration Levels by Level of Development 11
10
While basic Internet and mobile phone adoption is approaching saturation in most
developed countries and growth in new subscribers has slowed, the growth in
adoption and new subscribers in the developing world is much higher, but that is
because significant digital divides continue to exist. Moreover, the pace of growth
toward what ultimately is hoped to be close to 100% adoption for basic Internet,
mobile phone and mobile broadband is much faster than the pace for adopting
improved water, electricity, secondary school (see World Bank, 2016, p. 5-6).
However, at the same time that basic access gaps are narrowing, gaps measured in
other ways are widening (e.g., in terms of monthly data usage).
11
See Chart 1.3: ICT Penetration Levels by Level of Development in ITU (2016),
Measuring the Information Society Report 2016, International
Telecommunications Union (ITU), available at http://www.itu.int/en/ITU-
D/Statistics/Documents/publications/misr2016/MISR2016-w4.pdf
8
ICT infrastructure alone, however, is not sufficient to realize the

benefits of ICTs. Consumers and workers need to have access to
devices and applications and have the requisite skills to utilize ICTs
effectively; businesses need to adopt ICT-appropriate business practice
reforms; and civil society and government institutions and policies need
to be in place to support and encourage the beneficial changes that ICTs
may bring, while helping to ameliorate and avoid the problems that
ICTs can bring. On the positive side, there is the promise of economic
growth expanding the global resource bounty that all might share. The
ICT-enabled flexibility in organizing workplaces can expand to support
gender equality and allow persons with disabilities or rural communities
that are distant from markets to participate in economic activities. ICTs
can expand leisure and allow consumers access a greatly expanded
global shelf-space of goods and services. ICTs can improve the
monitoring and control of how services from healthcare to power
plants, from agriculture to government are managed. ICTs can expand
inclusion and facilitate SME entry into markets by enabling secure
digital identities that can help in providing access to financial resources,
support for better transaction management, and help in securing markets
from fraud.
On the negative side, imbalances in access to ICTs and the requisite
complementary assets such as skills, can lead to unbalanced growth and
increased economic and social inequalities. At best, inadequate
attention to complementary assets will render investments in ICTs
ineffective. Broadband access to a household without a device to make
use of it, or the opportunity for a business to make use of B2B
eCommerce platforms that cannot hire employees with the right skills to
make use of the platform will prevent realization of the ICT benefits
that might otherwise be realized.
At worst, ICTs may actually harm delivery of the SDGs. For example,
ICTs currently account for approximately 10.5% of global energy
consumption, and with the growth in ICTs intensity worldwide, are
expected to consume upwards of 21% (or as much as 52%) by some
forecasts unless ICTs become substantially more energy efficient
(Andrae and Edler, 2015). ICTs will need to meet this challenge if they
are not to become a significant contributor to climate change problems
9
and sustainability in their own right. Luckily, the history of ICT

innovation reflected in Moores Law in price-quality performance,
which has characterized the history of ICTs more broadly, provides
hopeful signs that ICTs can meet this challenge. For example, the
evolution of cellular systems from second generation (2G) in 1991 to
fourth generation (4G) systems in 2013 has resulted in a 175-fold
improvement in spectral efficiency and reduced power requirements per
data bit transferred (Clarke, 2014). Although these improvements do
not translate directly into greener ICTs, the engineering community has
identified multiple promising strategies for significantly improving the
energy efficiency of ICTs (Bolla et al., 2011; Fettweis et al., 2008). In
addition to becoming more energy efficient themselves, ICTs also are
expected to play a critical role in ensuring all sectors of the economy
become more energy efficient a necessary requirement if global
aspirations for improving quality of life are to be realized sustainably.12
ICTs and the rise of the global Internet necessarily focus attention on
cybersecurity and the looming challenge that unreliable or insecure ICT
infrastructure and services pose for social and political sustainability.
As more and more of our basic infrastructure from traffic to power grids
and business and government operations become increasingly
dependent on ICTs, attacks on those ICTs pose a growing threat that
will have to be addressed if the gains from ICTs already realized are to
be sustained and future benefits realized. If citizens and consumers do
not trust ICT services and those who provide them, then ICT driven
market growth will stagnate and accentuate development gaps relative
to markets where trust is better assured.
Another threat to sustainable development is rooted in the very
efficiency gains that ICTs promise. Although the ability to automate
many tasks is a fundamental vector by which ICTs can contribute to
economic growth, the threat that future jobs may be done by machines
(e.g., via artificial intelligence, etc.) instead of people poses a
12
For example, a 2015 study by the Global e-Sustainability Institute estimated that
ICTs have the potential to cut global carbon dioxide emissions by 20% by 2030,
maintaining 2015 levels. (GeSI, 2015).
10
significant challenge for the future of work and social and political
sustainability.
Finally, and perhaps most important, if the ICT-enabled economic
growth proceeds without complementary improvements in the
sustainability with which we use other resources, the expansion in
global consumption of resources from water to energy will pose an even
greater challenge. For example, although global energy intensity,
calculated in terms of final energy use per unit of gross domestic
product (GDP), fell by 26% between 1990 and 2005, final energy use
per capita increased, principally due to the growing wealth which leads
to increased per capita demand for energy-using goods and services
(page 15, IEA, 2008). The energy use by data also highlights the
significant differences in per capita energy use by rich and poor
countries (Figure 2). ICTs have the potential to accelerate and amplify
threats to our environment, security, and sense of well-being that may
not be directly due to ICTs but may be worsened because of ICTs.13
ICTs make the world a smaller place. They have the potential to address
challenges on an increasingly local level customizing solutions to the
needs of particular circumstances in time, space, and context but also
increasing the potential for interactions at a distance. Promoting ICTs
that will succeed in advancing SDGs is a complex global challenge that
will require coordinated efforts by stakeholders across the ICT-centric
ecosystem. The right infrastructure will need to be matched with the
right business practices, consumer awareness and trust in the
innovations, and supportive government policies and institutions that
will allow market processes to proceed efficiently.
1.3 Review of Research Evidence of ICT Impacts

In the following sub-sections, we review the evidence in the economic
13
If global consumption grows without further decoupling of energy demand and
growth, if criminals or dictators are successful in their attempts to use ICTs to
extend their reach and power, or if the explosion of unfiltered information confuses
and frightens rather than informs citizens, then ICTs may aggravate existing
problems.
11
literature on the empirical economic impacts that ICTs have had already
on growth and the distribution of its benefits.
Figure 2. Total Energy Consumption per Capita, 200814
1.3.1 ICT Contributions to Economic Growth

There is a sizable research literature documenting the significant
contributions that ICTs have made to economic and productivity growth
and efficiency at the macroeconomic and microeconomic levels. This is
documented in numerous econometric studies of ICT impacts in cross-
national, national, industry, and firm-level analyses; as well as
numerous case study investigations of how ICTs transform productive
activities.15 While the overall conclusion is clear, the results vary
widely and precise characterization or quantification of the effects is
14
See Figure 2.6: Total Final Energy Consumption per Capita in IEA (2008),
Worldwide Trends in Energy Use and Efficiency, International Energy Agency
(IEA), available at
https://www.iea.org/publications/freepublications/publication/Indicators_2008.pdf.
Note: Other in Figure 2.6 includes construction and agriculture/fishing.
15
See Note 4 supra for list of cites to survey articles and seminal research on the
economic impacts of ICTs.
12
difficult for numerous reasons.16 First, ICTs are one of many inputs to
productive activities and so measuring their impact on outputs such as
GDP output or jobs is inherently difficult.17 Moreover, ICTs contribute
to production in multiple ways enhancing the efficiency of other
inputs such as labor (e.g., by enabling skilled employees to shift
attention from routine tasks that are automated to more complex tasks,
thereby increasing the productivity of labor, capital (e.g., by allowing
excess capacity to be more flexibly redirected to producing goods for
other markets), and changing the fundamental ways in which resources
are used (e.g., by allowing businesses to re-organize).
Second, the share of ICT factor inputs in total production is relatively
small in monetary terms, which makes it difficult to measure ICT inputs
accurately. This difficulty is further complicated by the rapid pace of
ICT innovation and performance-price declines.18
Third, ICTs have the potential to be general purpose technologies
basic infrastructure for the economy that can be used for many
different productive activities within an organization and so the impacts
of using ICTs spill over across the organization and its operations both
upstream with suppliers and downstream to consumers (Bresnahan and
Trajtenberg, 1995). For example, B2B eCommerce platforms can allow
16
In 1987, economist Robert Solow famously remarked that you can see the
computer age everywhere but in the productivity statistics. One of the key reasons
for this was the lack of suitable data to address the inherent measurement
challenges. Using firm-level data, Brynjolfsson (1996) and Lehr and Licthenberg
(1999) demonstrated excess returns from investments in ICTs, and Jorgenson
(2001) concluded that ICT investment explained a significant share of U.S.
economic growth after 1995.
17
A key theme of this book is the need to coordinate policies and ensure that the
necessary complementary assets are in place to enable ICTs to be productive.
Subsequent chapters focus on a number of these, including ensuring a healthy
environment for innovation (see Chapter 3), receptivity for new ICT-business
models (see Chapter 5), and appropriate support for education and ICT skills
development (see Chapter 7), among others.
18
To estimate productivity effects in value terms it is necessary to measure both the
quantity and price of the ICT inputs accurately. When the volume of inputs is
small, measurement errors loom larger. Identifying appropriate prices is difficult
because the rate of economic depreciation is high.
13
businesses to source labor and other resources more efficiently and at

lower costs; mobile phones can provide anywhere access to market
relevant information to enable businesses to better manage their
distribution chains; business decision systems enhance back-office
operations from accounting to payroll management; and computer-aided
manufacturing can directly contribute to the production of goods. The
potential for ICTs to support innovation and industry, market, business,
and production process restructuring is discussed further in Chapter 3.
Taken together, these measurement challenges have rendered it difficult
to precisely quantify the economic impacts of ICTs. 19 The best
estimates available are for more developed countries where the ICT
sector is larger (and hence measurement issues are less severe), where
there is a longer history of ICTs in productive use (and hence more time
for the impacts to be observed), and where the necessary data is more
readily available. For example, in a classic study, Jorgenson (2001)
estimated that ICTs added 1.2% to GDP growth and accounted for two-
thirds of the total factor productivity growth from 1995 to 2000, thereby
contributing to the explanation of the resurgence in economic growth in
the United States in the latter half of the 1990s.20 Moreover, countries
that did not use ICTs tended to not perform as well. Fuss and
Waverman (2005) attributed 60% of the slower labor productivity
growth experienced by Canada (relative to the US) in 2003 to Canadas
less intensive use of ICTs.
Although the results of studies vary significantly because of differences
in focus, estimation methods, data sources, and the time frames studied,
the general conclusion that ICTs have contributed significantly
positively to economic growth and productivity outcomes at the
economy, sector, and firm-level is generally well-supported in the
literature. For example, the World Bank (2016) concluded that the
19
The challenge of measuring positive economic effects in the face of continued
significant investment in ICTs by businesses has been termed the Solow Paradox
after Nobel-prize-winning economist Robert Solow's famous 1987 quip that you
can see the computer age everywhere but in the productivity statistics (Solow,
1987).
20
Jorgenson (2001).
14
accumulation of ICT capital accounted for almost 20 percent of global

growth between 1995 and 2014,21 but notes that these studies result in
a wide range of estimates. Other surveys which find both a wide-
dispersion in estimates, but also support the general conclusion of
significant positive effects include Cardona et al. (2013), Katz (2012),
Spieza (2013), and Van Reenen et al (2010).
Although the empirical evidence is less extensive, ICTs generally have
been found to produce similarly positive economic impacts in studies
that focus on less developed countries (Stanley et al., 2015; Aker and
Mbiti, 2010, Birthal et al., 2015; Fu and Akter, 2016).22 Indeed, because
the level of adoption and ICT capital stocks and investment are lower in
developing countries, there are likely to be an ample supply of under-
exploited opportunities that have the potential to deliver high social
returns from strategic ICT investments, even if macroeconomic studies
may fail to detect significant effects until critical mass is achieved.23
Moreover, while more recent studies conclude that ICTs are still adding
significantly to economic and productivity growth, the contribution is at
a lower level than what was observed before 2005, leading some to
downplay the potential of ICTs to drive economic transformations and
21
World Bank (2016), p. 55.
22
The developing market evidence is less well-established for multiple reasons. First,
reliable data is typically harder to acquire for developing countries. Second,
because the availability of ICTs is of more recent vintage and adoption is lower,
measurement errors make it more difficult to estimate effects precisely, and can
result in failure to observe measurable effects. Also, since it takes time for the
effects of ICTs to percolate through the economy, the full impacts have yet to be
observed in many markets. Third, the status of other infrastructures and
complementary assets (such as well-established legal frameworks, well-developed
industry supply-chains, etc.) that are required to exploit ICTs productively tend to
be less advanced in developing markets.
23
Koutroumpis (2009) and Roller & Waverman (2001) found that a critical level of
adoption needs to be achieved before broadband access produces significant
measurable economic growth impacts. While it is certainly plausible that certain
types of ICTs, including broadband, may demonstrate such a characteristic, it is
also plausible that this effect is due to measurement errors that fail to capture the
high-returns that may be associated with strategically targeted investments in low
ICT development contexts.
15
faster economic growth (Gordon, 2000, 2014). If global economic

growth is slower, then it will be more difficult to raise living standards
and reduce equity divides. This will make it harder to make progress
toward realizing the SDGs.24
Across most countries, ICT intensity is increasing.25 This is evidenced
by the near universal availability of mobile telephone services and the
rapid expansion in availability of broadband services. For example,
mobile broadband adoption globally was minimal in 2007, but had risen
to 40.9% by 2016; although differences between and within countries
are large with adoption exceeding 90% in developed countries but
only 19% in less developed countries.26 Moreover, the digital divides27
24
Economists are not in agreement whether economic productivity growth will return
to the higher rates observed during earlier periods, and what the role of ICTs will
be. For example, Brynjolfsson and McAfee (2014) tout the ability of robots and
other ICT innovations like Big Data to deliver significant productivity
improvements; and Branstetter and Sichel (2016) note that productivity growth has
stagnated in the past before returning to robust levels and note that innovation in
the ICT sectors continues at a rapid pace. Meanwhile, Acemoglu et al. (2014) find
that data on ICT-intensive manufacturing in the U.S. raises concerns about whether
ICTs are driving beneficial productivity outcomes.
25
Digital intensity may be measured in multiple ways. For example, the ITU uses
digital intensity to refer to the level of ICT usage and adoption and measures it
with three indicators: % of population using the Internet; number of fixed
broadband lines per capita; and the number of active mobile broadband
subscriptions per capita (ITU, 2016, p. 9).
26
See Broadband Commission for Sustainable Development (2016).
27
We are using the term Digital Divides here as short-hand to refer to differences in
access and/or adoption of digital infrastructure and services. Such differences may
be measured in many ways and are often summarized in terms of a weighted index
of multiple indicators. These are sometimes referred to as e-Readiness indices and
may include measures such as the number of computers per capita, Internet access
penetration, mobile network coverage by technology generation, etcetera.
Examples of such indices include the ITUs ICT Development Index (IDI), which
is a composite measure of ICT infrastructure and access indicators, ICT use or
intensity indicators, and ICT capability or skill indicators (ITU, 2016); the
Economist Intelligence Units digital economy or e-Readiness rankings index,
which is based on a weighted index of metrics clustered into multiple categories,
including Connectivity and Technology Infrastructure, Business Environment,
Social and Cultural Environment, Legal Environment, Government Policy and
16
are large within countries and across industrial sectors. The ICT sectors
themselves and certain other sectors like finance and insurance are
heavy users of ICTs, whereas certain other sectors like agriculture and
construction have been relatively slower adopters. Moreover, the poor,
rural, less educated, elderly, women and persons with disabilities also
tend to be less likely to be using ICTs. Addressing these digital divides
and making sure that digital literacy is widespread will be critical if
ICTs are to reduce rather than accentuate inequalities.
A key feature of digital technologies is that adoption can occur quite
quickly once the infrastructure is in place, which raises hope that digital
divides might be closed relatively fast and that the gaps between
developed and less developed economies may narrow.
Because the ICT sector represents a small share of the total economy
(about 6% of OECD countries, but a much lower share in developing
countries) and ICT jobs tend to require higher skills and education, the
potential for ICTs to lead to job growth is greatest in other sectors (see
Figure 3).
Moreover, since ICT workers tend to be both better skilled and better
paid, their increased income helps fuel job growth throughout the
economy (see Table 3). One study conducted using U.S. data found that
each new ICT job resulted in 4.9 additional jobs in other sectors
(Moretti & Thulin, 2013).
In addition to producing significant benefits in terms of economic and
productivity growth and jobs, ICTs also help deliver significant benefits
in consumer surplus. On-line information and markets make it feasible
for consumers to compare prices and product features from a wider
selection of vendors, not just those locally available but potentially
from around the world. The increased competition fuelled by ICTs
Vision, and Consumer and Business Adoption (EIU, 2010); the European Unions
Digital Economy & Society Index (DESI) which includes measures of
connectivity, human capital, use of the Internet, integration of digital technology,
and digital public services (see https://ec.europa.eu/digital-single-market/en/desi);
or the World Wide Web Foundations WebIndex that seeks to measure the Webs
global impact with a series of indicators on social, political, and economic metrics
related to use of the Web (see thewebindex.org).
17
helps enhance the quality/performance of goods and services, while

driving down prices. A study using U.S. data concluded that the median
individual in the U.S. saves $3,000 annually because of the Internet
(Goolsbee and Klenow, 2006); while a Boston Consulting Group study
found that the value consumers place on mobile technologies ranges
from $700 to $6,000 per user (BCG, 2015).28
1.3.2 ICTs and Skill Biases
ICTs can both complement and substitute for labor in the production of
goods and services. ICTs are most likely to complement higher-skilled
workers and hence there is a skill bias associated with ICT-centric
economic growth. The benefits of ICTs for higher-skilled and better-
educated workers can come in several forms. On the one hand, ICTs
can free more skilled workers from time-consuming routinized tasks
and allow them to direct their efforts to more complex, cognitively
machine tool may be able to out-produce a number of manual laborers.
Figure 3. ICT Sector as Share of GDP and Contribution to Growth 29
28
The BCG study looked at consumer behavior in six countries -- the U.S., Germany,
South Korea, Brazil, China, and India. Consumer valuations for mobile technology
were derived from conjoint analysis of survey response data comparing preferences
over alternative service bundles (BCG, 2015).
29
See Figure 0.10: The size of the ICT sector and its contribution to GDP growth is
still relatively modest, World Bank (2016), World Development Report 2016:
18
Table 3. Summary of Research Results on Skill-biased Change30
Alternatively, ICTs create new job opportunities in the digital economy

for those with the ICT skills required to undertake them. For example,
the rise of mobile broadband creates a market for local application
developers, but writing software applications requires ICT skills that
need to be learned. Additionally, the inherent flexibility of ICTs allows
them to help drive the innovation cycle across all sectors ever-faster,
meaning that ICTs contribute to accelerated obsolescence of skills. This
may be especially threatening to older workers who are unable to learn
new skills as the ICT-enabled economy continues to grow and evolve.
In the long-term, as ICT capabilities continue to grow, the range of
human activities that may be amenable to automation will expand. By
some estimates, up to two thirds of jobs are potential candidates for
automation. ICTs make jobs more geographically footloose as
multinational corporations chase lower cost labor around the globe.
While the threat of automation is a challenge, we will have to address,
Digital Dividends, released May 2016, available at

http://www.worldbank.org/en/publication/wdr2016
30
See Table 2.4: Recent evidence on skill-biased technological change in World
Bank (2016), World Development Report 2016: Digital Dividends, released May
2016, available at http://www.worldbank.org/en/publication/wdr2016.
19
in the near to medium term, that this is more likely a threat for the most
developed countries rather than developing nations. First, developing
nations with much lower ICT intensity still have a long way to go in
coming up the ICT intensity curve before the benefits of increasing
ICTs begin to slow. In many developing countries, economic growth is
limited by resource shortages across the board from labor skills to
medical supplies, from access to reliable power to supply chain logistics
support. ICTs can help with all of these and in so doing expand job
opportunities in bricks-and-mortar businesses. For example, on-line
platforms and more secure banking and finance services can fuel market
growth by allowing developing country businesses to tap into global
markets. Moreover, as ICTs help the economy grow, the growing
demand for consumer goods and services will help stimulate growth in
domestic jobs to satisfy those needs, especially for non-traded goods
and services.
Figure 4. Jobs Susceptible to Automation31

On a global basis, the increased domestic and international competition
that ICTs can help facilitate may benefit consumers by expanding their
choices for goods and services, but may harm workers to the extent the
31
See Figure 4. From a technological standpoint, two-thirds of all jobs are
susceptible to automation in the developing world, but the effects are moderated by
lower wages and slower technology adoption, in World Bank (2016), World
Development Report 2016: Digital Dividends, released May 2016, available at
http://www.worldbank.org/en/publication/wdr2016.
20
competition puts greater pressure on wages. Moreover, because ICTs

increase the flexibility with which work may be organized, ICTs can
help expand access to labor markets and thereby increase inclusion; but
the increased labor supply may contribute to additional downward wage
pressure. Many of the new flexible jobs, which ICTs enable (e.g., in the
sharing economy), come with reduced employer commitments.
Workers bargaining power may be reduced and social safety nets
rendered less effective. Finally, the accelerated pace of economic
change and flexibility in resource uses and management enabled by
ICTs is tending to reduce job tenure. Successful workers in the digital
economy are often those best able to reposition themselves with new
skills as markets shift on a faster and global basis.
1.3.3 ICTs Impact on Inclusion and Equity
ICTs have the potential to enhance inclusion by making information
more widely accessible and can allow individuals and SMEs to
participate more easily in economic activities by lowering transaction
costs and economic barriers to entry.32 ICTs enhance the flexibility with
which resources may be managed and shared. New platforms for on-
line labor markets can improve the matching between potential
employers and those looking for work, and on-line education can help
workers upgrade their skills. Enabling more flexible work schedules
and telecommuting can open labor markets to those previously
excluded. This can promote gender equality and expand options for
labor force participation from other disadvantaged groups such as
persons with disabilities. For example, the rise of the sharing economy
provides a vehicle for leveraging existing capital in economy to be
utilized to create additional jobs. The potential for ICTs to redefine
workplace opportunities and expand inclusion are addressed further in
subsequent chapters.33 Although the potential exists for ICTs to expand
32
At the same time, it can further reinforce exclusion of the unconnected individuals.
This echoes a recurring theme: while appropriate use of ICTs can result in progress
toward realization of SDGs; failure to adopt ICTs or to use ICTs appropriately can
lead to a worsening of conditions.
33
For example, Chapter 3 discusses how ICTs can contribute to the vibrancy of the
innovation ecosystem; Chapter 5 discusses new types of ICT-enabled business and
21
inclusion, and the improvements observed since 2000 demonstrate

some success in addressing those goals, ICTs also have the potential to
exclude.
From the prior discussion, it should be clear that ICTs pose a significant
risk of increasing income disparity unless countries are successful in
ensuring that the necessary complementary assets are in place. If
workers do not develop the skills, or if outmoded regulatory rules limit
the ability of enterprises to adopt best-practiced ICT strategies, then
workers and businesses in those markets will suffer. It is not an option
to sit on the sidelines while others adopt ICT efficient production
technologies. As noted before, countries that have lagged in deploying
ICTs have also lagged in economic growth. While ICTs help
developing countries catch up and narrow the gap with more developed
countries, failure to keep pace with ICT developments can result in
countries falling even further behind and at a faster rate. Peer countries
that are more ICT advanced are more likely to benefit from competitive
advantages wherever along the development scale those peers find
themselves.
The evidence that ICTs can accentuate income disparities is evident in
the declining share that labor has in national incomes.34 Capital and
ICTs have grown, while labors share has declined. The owners of
capital tend to be wealthier and the increasing income disparity has
been a by-product of increasing economic growth. Additionally, some
ICT markets give rise to winner-take-all type economics as first-
movers and those with the largest scale displace or acquire smaller
rivals. ICTs can help this happen by rendering historic limits to firm-
scale less effective. For example, corporate enterprise resource planning
(ERP) and other ICT management tools make it feasible for the largest
market models; and Chapter 6 focuses directly on the impacts of ICTs for
employment opportunities.
34
See Figures 5 and 6 or Karabarbounis and Neiman (2014). The World Bank report
notes that in the United States, at the technological frontier, the share of income
going to routine labor has fallen from 38 to 23 percent since the late 1960s, with a
simultaneous rise in the non-routine labor share from 24 to 34 percent. (World
Bank, 2016).
22
businesses to scale multinationaly, while keeping costs low. ICTs also

contribute to strategic agility, allowing the large multinationals to more
effectively target would-be competitors.
To date, it appears that the benefits of ICTs have accrued
disproportionately to the wealthy, who also tend to be the more highly
skilled, live in locations with easier access to ICT infrastructure, and
have the financial resources to adopt ICTs. The wealthy are typically
more likely to live in urban rather than rural areas, and with wealth
often come better access to education and reduced barriers to acquiring
the other elements that are needed to make productive use of ICTs.
Increasing disparities in incomes, education, and economic opportunity
pose a significant threat to sustainable development goals.
Figure 5. Falling Labor Share of Income, #2 35
1.4 ICT Ecosystem

A fresh look is needed at the interactions of major elements that affect
the ICT sector on a global scale. In the literature, such elements and
their interactions are collectively called the ICT ecosystem. The World
Economic Forum (2009) characterized ICT as a transformative
economic catalyst, and identified six key pillars for the ICT ecosystem
35
See Figure 6: Falling labor shares in national income are associated with rising
inequality, in World Bank (2016), World Development Report 2016: Digital
Dividends., http://www.worldbank.org/en/publication/wdr2016.
23
(WEF, 2009).36 The effects of ICTs spill-over across business functions,

sectors, and national borders means that ICT-enabled development
goals cannot be pursued solely on a sector-specific or national basis, but
need to be addressed holistically and globally as well as on a cross-
sectoral basis. Recognition of this fact motivated policymakers to
expand application of the SDGs to all nations. Moreover, the need to
consider the effects of complex feedback mechanisms that operate
across all layers of civil society, the economy, and across government
spheres, necessitates adopting strategies for sustainability that are
mutually reinforcing in order to be effective. The overall system
functions when multiple underlying factors align to reinforce one
another.
The above-mentioned underlying factors include infrastructure
investment, applications and contents, markets and competition,
policies and regulations, government budgets, and ICT skills and
education. Figure 7 is a pictorial presentation of the ICT ecosystem. In
this representation, the ICT ecosystem is viewed as having four major
pillars. The first pillar is the government, which sets the stage for other
players by determining policies, enforcing regulations, shaping markets
and enabling competition, and by enacting laws. Government policies
that affect the ICT ecosystem include environmental policy and
sustainability initiatives, trade policy, monetary policy, cultural policy,
intellectual property policy, cybersecurity policy, public safety policy,
disaster mitigation policy, and fiscal (taxes and incentives) policy. The
second pillar is the enabling elements that includes ICT skills and
education, the innovation environment, the markets for applications and
content and ICT goods and services, and the atmosphere for ICT-
enabled entrepreneurship. The third pillar is the ICT infrastructure
investment by the operators, service providers and the businesses that
adopt and use ICTs. Finally, the fourth pillar is comprised of the people
who are engaged in multiple roles as consumers, employees, and
36
The six pillars of the ICT ecosystem identified by the World Economic Forum are
(1) Infrastructure investment; (2) Applications and Content; (3) Markets and
Competition; (4) Policies and Regulations; (5) Government Budgets; (6) Skills and
Education for IT (WEF, 2009, p1-2).
24
Figure 6. Falling Labor Share of Income #1 37
37
See Figure 0.15: Labor shares of national income are falling in many countries,
including some developing countries, in World Bank (2016), World Development
Report 2016: Digital Dividends, released May 2016, available at
http://www.worldbank.org/en/publication/wdr2016.
25
citizens. In many cases, the interdependence and interactions between

the above mentioned elements that are vital in a healthy ecosystem are
often either misaligned or paid inadequate attention in practice,
resulting in the waste of valuable scarce resources and stagnation. In the
following chapters, important elements that form a vibrant, productive,
and agile ICT ecosystem that makes sustainable development a reality
are discussed in more detail.
1.5 Motivation: Need an Agenda for Action

Considering the pivotal role of ICTs in shaping the future, we need to
develop a carefully planned global agenda for action by different
stakeholders involved in the ICT ecosystem. Furthermore, an
appropriate long-term agenda needs to be cognizant of current trends
that are shaping how ICTs are evolving. These include such things as
the growth of the Internet of Things (IoT), cloud computing, future
wireless networks and services including 5G and beyond, big data
analytics, artificial intelligence, robotics, etc. Although the precise
future of such developments remains uncertain, the impact of those
transitions will be global. Consequently, all countries (not just those
that lead in the development and adoption of next generation ICTs)
should have plans to best address these trends. Since it is not possible to
plan for all contingencies, the plans need to be sufficiently flexible to
adapt as the uncertain future unfolds.
Moreover, the agenda for action depends on many socio-cultural-
political factors that are specific to each country/region, and because the
effects of ICTs spill across regional and national boundaries, the
interaction effects of national policies on a global and regional level
need to be considered.38 Hence, it is not possible to specify a single
universal set of actions that all countries should employ to promote
38
For example, ICT-enabled smart manufacturing in the United States that may
contribute to U.S. GDP growth but at the same time reduce U.S. multinational
demand for labor in developing markets where the activity might previously been
undertaken, resulting in a negative employment shock in those former-outsourcing
markets.
26
sustainable development in all situations. Nevertheless, it is reasonable

to specify certain broad guidelines.
In devising the necessary plan for action, policymakers need to
carefully assess the existing points of strength and weakness in each
case, and identify potential areas that can be considered as pivotal in
attaining realistic, yet sustainable development goals. In promoting the
development goals, it will be necessary to address the conflicts between
stakeholders that are a commonality in most change processes,
especially the ones as potentially disruptive and significant as those that
ICTs may enable. For example, the pace and success of ICT adoption
across consumers, businesses, and markets will be uneven. There will
be leading and lagging adopters and not all stakeholders will be equally
positioned to take advantage of the benefits of ICTs. Evidence shows
that firms that are better at utilizing ICTs and adopt ICTs sooner tend to
perform better. The shifts in market shares are likely to please some
participants while displeasing others. ICT-driven changes in the skill
requirements for work will force adjustment costs that will impact
markets asymmetrically.
Figure 7. ICT Ecosystem Representation
27
In subsequent chapters of this book, we will discuss specific actions that

different stakeholders need to undertake to further the SDGs, but here
we provide some rough guidelines for an action plan that groups
recommendations into three clusters. First, there are the things that
nations must do if they are to realize any significant benefits from ICTs
in progressing toward their SDGs. Some of these are obvious. We
might paraphrase those as stop doing things that are obviously counter-
productive and fix what is obviously wrong. Second, there are some
obvious capabilities that need to be proactively promoted and
universally embraced. And, third, there are certain challenges that we
know ICTs will confront us with, and which we know that no single
country can address on its own.
Examples of the first sets of recommendations include eliminating
obvious barriers to innovation and successful adoption and use of ICTs.
For example, to succeed in a connected world, it has to be possible for
workers, consumers and citizens to be connected. Basic affordable
access to mobile broadband is a minimum requirement and needs to be
part of any national SDG roadmap. Additionally, digital literacy and
appropriate ICT skills, which imply at least a minimum level of
educational attainment are necessary for ICTs to be productive. Basic
political stability and civil society security are necessary to enable
stakeholders (consumers, investors, business managers, government
policymakers, etc.) to have the minimal level of trust in the economy
and society to make planning even worthwhile. These are just some of
the essential base-level requirements that must be met before it becomes
reasonable to consider in greater detail how best to employ ICTs to
promote SDGs. Additional critical factors are addressed in subsequent
chapters.
Examples of the second types of things to do are those that all nations
will need to do to benefit from ICTs and minimize the harm from the
unavoidable disruptions that increasing ICT intensity will bring.
Avoiding ICTs is not really an option in a world that is becoming
smaller because of the globalization enabled by ICTs. ICTs are
transforming all aspects of our social and economic lives, and while the
effects on different stakeholders will vary, everyone will be impacted.
The rise of e-Commerce and the faster clock speed with which markets
28
and firms may restructure impacts all sectors in all countries.

Consumers who may never purchase goods online are affected when the
selection and prices of off-line goods from bricks-and-mortar providers
respond to the on-line competition. When all of ones peers, friends or
family go on-line with social networks, one can choose to follow or
become isolated. As ICTs make economic activity more geographically
and globally footloose, shocks in one market (labor, final goods, capital,
or other resources) can impact other markets more easily (whether in
the same or different countries). In such a world, the only way to be
successful is to adapt to ICT induced changes. If you know you have to
confront change, then you know you need systems that are capable of
flexible adaptation. In the digital economy, job tenures may be short
and markets may shift rapidly and unexpectedly. It is not enough to
master a static set of skills; instead workers should commit to lifelong
learning. Chapter 7 addresses the requisite changes in education
systems. Additionally, public policies are needed to minimize
adjustment costs that may include revising the social safety net. These
are addressed in Chapter 4.
Finally, to address the challenges that require a level of global
coordination, it is important that countries build capacity and multi-
stakeholder partnerships to engage with those looming problems.
Examples of those include addressing cybersecurity threats, global
inequality, and climate change. None of those problems can be
adequately addressed by any single nation. Actions by one country can
invalidate actions by another. Therefore, international cooperation and
multi-stakeholder partnership to promote SDGs will be critical, as
addressed by SDG 17. Ensuring ICT networks, platforms, and markets
to be interoperable and interconnected is one core element of any
successful strategy.
1.6 Conclusions and Organization of This Book
In this chapter, we explained why ICTs are indispensable for achieving
the SDGs and reviewed the evidence of the significant economic
impacts of ICTs, while noting the necessity of greatly enhancing the
energy efficiency of ICTs and of other critical resources across the
economy if future global growth is to be sustainable. The SDGs present
29
bold and difficult challenges, and realizing the SDGs require

international cooperation as well as the development and
implementation of new, ICT-enabled technologies, solutions, and
application across all sectors of the economy from water management
to retail trade, and from healthcare to education. Solutions that are
responsive to the development context and are capable of evolving in
the face of rapid change need to be crafted. We also presented our view
of the ICT-centric ecosystem for economic development and growth,
and highlighted the complex and interdependent technical, social and
business relationships that must interact productively to achieve
sustained progress. This ecosystem functions when multiple underlying
factors align to reinforce one another. These factors include government
policies and actions, infrastructure investment, applications and content,
markets and competition, government budgets, and ICT skills and
education. Stakeholders representing all of these interests need to
coordinate their activities to realize the SDGs.
In what follows, we present a brief description of the remaining
chapters.
Chapter 2 focuses on the basic pre-conditions and interfaces that are
needed to ensure that ICT initiatives are environmentally, economically,
and socially/politically sustainable. It focuses specifically on the
importance of universal infrastructure, the need for affordable
technologies, the need for appropriate skills and awareness, and the
importance of locally relevant content. The chapter emphasizes that
different stakeholders that are concerned with developing policies and
implementing programs and projects for using ICTs to promote
sustainable development, need to address issues of empowerment, focus
on the needs of the poorest, develop innovative technological solutions
and new business models, legislate new regulations through which
governments facilitate the ICT sector, and ensure that there is an
effective security and resiliency within the systems. The chapter
concludes with a brief analysis of the role of multi-stakeholder
partnerships in implementing such initiatives.
Chapter 3 explains how the digital divide can be transformed into the
digital multiplier if a multi-stakeholder approach is adopted to support
30
ICT-enabled innovation. The stakeholders include interests from

government, industry, academia, consumers, finance, entrepreneurs and
others. The interactions among these stakeholders and their role in
promoting productive innovation are best understood by focusing on
how the stakeholders interrelate, taking account of the potential for
positive spill-overs to create digital multipliers. In addition, Chapter 3
identifies the risks and the likely sources of failure that can prevent
establishing a vibrant, energetic, and forward looking ICT-centric
environment that will foster beneficial innovations and productivity
growth.
Chapter 4 focuses on the role of the government as a key stakeholder
and driver for the initiatives needed to promote progress toward the
SDGs. Governments have a critical role in catalyzing change,
promoting trust and assisting the management of risks and disruptions
associated with ICT-driven change, in helping to stimulate demand for
ICTs, in setting and leading public policies, in long term planning, and
in establishing and securing legal frameworks that are conducive to
sustainable development. In addition, government sponsorship of
universal service obligations and safety-net policies are important to
ensure equitable distribution of the benefits of ICT-driven growth, so
that all segments of society share in the benefits, including those who
are under-privileged or reside in remote areas.
Chapter 5 describes the potential for ICTs to empower new business
models and discusses their implications for making progress toward
realization of the SDGs. The chapter reviews business models for ICT-
driven ventures, the role for government initiatives, and how ICTs can
support innovative solutions to longstanding development goals. Key
issues that are addressed include stakeholder values and their alignment,
the implications of alternative ICT-enabled designs, and the importance
of appropriately managing channels and securing stakeholder trust and
awareness. The chapter concludes with a discussion of the scalability
and sustainability of these new business models.
Chapter 6 reviews the impact of ICTs on employment, and outlines
three types of employment effects: the construction effect which
yields direct, indirect and induced jobs resulting from the deployment
31
of telecommunication networks and data centers; the spill-over effect

on jobs in the traditional economy, which can simultaneously lead to
new jobs triggered by unlocking scalability in certain sectors while
reducing jobs through enhanced productivity in other labor-intensive
industries; and the innovation effect, which involves creation of new
jobs due to the development and introduction of new services and
applications. Additionally, empirical evidence is reviewed on the
impact of ICTs on labor conditions, emphasizing positive contributions,
such as flexibility and income growth. On the basis of this evidence,
public policy prescriptions are outlined to maximize job creation and
help mitigate any potential disruptions in labor markets that are likely to
occur as a result of the diffusion of ICTs.
Chapter 7 addresses the implications of ICTs for education and skills
development. The rapidly emerging ICT ecosystem plays a disruptive
role in education and conversely education has a vital influence on the
shape of the ICT sector itself. This interaction of education and new
ICTs creates a need for change in order to maximize possibilities to
achieve the SDGs. The needed changes encompass brick-and-mortar
versus virtual classrooms, modes of teaching and learning, curriculum
design and delivery, the need for introducing new courses that are
essential for making progress in the new job environment, and lifelong
learning.
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35
Biographies
Ahmad Reza Sharafat is Professor of Electrical and Computer

Engineering at Tarbiat Modares University, Tehran, Iran; Invited
Member of the Iranian Academy of Sciences; Chairman of IEEE Iran
Section; Chairman of ITU-D Study Group 2 in Geneva, Switzerland;
Vice-Chairman of Telecommunication Development Advisory Group
(TDAG) also in Geneva, Switzerland; Editor of the International
Journal of Wireless Information Networks; and Editor of Scientia
Iranica. He has 7 Iranian patents and one US patent, published three
books and more than 150 papers in refereed scholarly journals and
professional international conferences. He received his B.Sc. degree
from Sharif University of Technology, Tehran, Iran, and his M.Sc. and
Ph.D. degrees both from Stanford University, Stanford, California, all
in Electrical Engineering in 1975, 1976, and 1981, respectively. He is a
senior member of IEEE and Sigma Xi.
William H. Lehr is an Economist and Research Scientist in the

Computer Science and Artificial Intelligence Laboratory (CSAIL) at the
Massachusetts Institute of Technology (MIT), where he is part of the
Advanced Network Architectures Group. Dr. Lehr's research focuses on
the economic implications of ICT technologies for public policy,
industry structure, and the evolving Internet ecosystem. He is engaged
in multiple multidisciplinary research projects focusing on issues such
as broadband Internet access, cybersecurity, next generation network
architectures, and spectrum management reform. In addition to his
academic work, Dr. Lehr advises public and private sector clients in the
US and abroad on ICT strategy and policy matters. Dr. Lehr holds a
PhD in Economics from Stanford University and an MBA in Finance
from the Wharton School, and MSE, BA, and BS degrees from the
University of Pennsylvania.
36
Chapter 2
ICTs, Sustainability and

Development: Critical Elements
Tim Unwin*
This chapter examines the interface between ICTs and sustainability,

especially focusing on environmental issues and the conditions that
need to be in place for ICT initiatives to be sustainable socially and
economically. It focuses specifically on the importance of universal
infrastructure, the affordability of technologies, the need for appropriate
skills and awareness, and the importance of locally relevant content. For
these to be delivered, the chapter emphasises that those who develop
policies and implement programmes and projects to use ICTs to
promote sustainable development need to address issues of
empowerment, focus on the needs of the poorest, develop innovative
technological solutions and new business models, legislate new kinds of
regulation through which governments facilitate the ICT and
telecommunication sector, and ensure that there is effective security and
resilience within the systems being developed. The chapter concludes
with a brief analysis of the role of multi-stakeholder partnerships in
implementing such initiatives.
2.1 Introduction
This chapter builds on the discussions in Chapter 1 concerning the
interface between ICTs, sustainability and development. It seeks to
provide recommendations to address some of the concerns of those who
are critical of the role of ICTs in the sustainable development agenda,
*
Royal Holloway, University of London, London, United Kingdom
37
and focuses on the elements that are critically important to have in

place to ensure the successful use of ICTs for sustainable development
(Unwin, 2017). This duality of meanings of the word critical builds on
the observations in Chapter 1 that, although ICTs can indeed be used to
contribute positively to sustainable development, this need not always
be the case. We seek here to identify practical ways through which ICTs
can indeed contribute beneficially, whilst also reducing the inequalities
that have all too often been associated with the economic growth model
that has dominated the rhetoric associated with the use of ICTs for
development over the last two decades. The chapter highlights some of
the most important recommendations arising from academic critiques
and evidence of good practice relating to the use of ICTs for sustainable
development. It begins by expanding the discussion of Chapter 1 on the
interrelationships between the ideas of sustainability and development
in the context of ICTs, and then examines some of the environmental
impacts of ICTs, before highlighting critical factors essential for ICTs
to contribute across the board to the Sustainable Development Goals
(SDGs), and concluding with recommendations about the role of
partnerships in delivering such initiatives.
Whilst Chapter 1 has emphasised many of the contributions of ICTs to
development, several recent reports have recognized that these have not
always been as successful as their proponents had anticipated, and in
particular that their contribution to economic growth has usually been
associated with increasing inequalities. The World Banks (2016, p.2)
World Development Report for 2016 thus offered a more balanced view
of the impact of digital technologies, noting that Although there are
many individual success stories, the effect of technology on global
productivity, expansion of opportunity for the poor and the middle
classes, and the spread of accountable governance has so far been less
than expected. The UNDP (2015, p.24) in its 2015 Human
Development Report likewise focused especially on this increasing
inequality, commenting that
Even with all the economic and technological advancements at the
worlds disposal, people do not have equitable benefits from progress,
human capabilities and opportunities do not always flourish, human
security is at stake, human rights and freedoms are not always
38
protected, gender inequalities remain a challenge, and future

generations choices do not get the attention they deserve.
This chapter therefore examines how the contradictions between the
technological impact on growth and inequality (see also Oxfam, 2017)
can be resolved, and what needs to be in place to ensure that ICTs do
indeed contribute effectively to the SDGs, in all their diversity. It
focuses especially on the interests of different stakeholders in the use of
ICTs for sustainable development, and on the role of effective
partnerships in their delivery.
Recommendation 1. Stakeholders involved in delivering ICT-based
interventions intended to enhance sustainable development through
economic growth should ensure that these also explicitly address the
reduction of inequalities. For ICTs effectively to deliver the SDGs they
must be used to empower the poorest, and not just deliver economic
growth.
2.2 ICTs, Sustainable Development and SDGs

2.2.1 Sustainability and Development
The previous chapter provided an overview of the evolution of global
agreements mediated by the UN from the eight MDGs in 2000 to the 17
SDGs with their 169 targets in 2015. It also noted the differing ways
through which sustainability can be considered, focusing especially on
its environmental, economic and social dimensions. This section drills
down more deeply into these observations to explore the tensions
contained in the juxtaposition of the notions of sustainability and
development, to discuss some of the challenges of implementing the
SDGs, and to examine what needs to be done for ICTs to contribute
effectively to their achievement.
The notion of sustainable development has its formal origins in the
Our Common Future report of the Brundtland Commission (1987),
which encapsulated the core idea that sustainable development is
development that meets the needs of the present without compromising
the ability of future generations to meet their own needs. This was
based on three core concepts: the importance of bringing the
39
environment into discussions of development; a focus on needs,

especially those of the poorest; and the limitations imposed by existing
technology and social organisation. One of its advantages is that it is
sufficiently broad for different stakeholders to reach consensus by
including their own varying conceptualisations of sustainability and
development within it, but its over-defined character and openness to
ambiguity has meant that it has also been widely criticised (Redclift,
2005). The fundamental tension at its heart is that sustainability implies
the maintenance of certain characteristics or constancy, whereas the
central meaning of development implies change or growth. Any
consideration of sustainable development therefore forces a normative
consideration of what people want to maintain and what they wish to be
changed. ICTs as accelerators of change can be used to accentuate
different kinds of impacts, and this chapter therefore explores how they
can be used not only to deliver positive rather than negative aspirations
of change, but also to contribute to the maintenance of certain values
and characteristics. The SDGs are a valiant attempt to resolve these
contradictions, whilst also providing roles for different UN agencies to
perform in seeking to benefit their member countries.
It is important to highlight here that there are fundamental differences
of opinion about the meaning of development alongside the differing
meanings of sustainability already mentioned. The hegemonic position
encapsulated in the original MDGs is that economic growth is the main
vehicle through which poverty can indeed be eliminated, and this has
largely been carried forward into the SDGs (Sachs, 2005; Unwin, 2007;
Carant, 2017). However, as noted above, this economic growth agenda
has led to much greater inequality in the world, and there is now
increasing recognition of the importance of relative definitions of
poverty, as against the absolute ones associated with most growth
models (OBoyle, 1999). This in turn has led to growing support for
the notion that development needs to address the reduction of
inequalities as much as it does economic growth. One small step
towards recognising this has been the emphasis in SDG 10 on reducing
inequality within and among countries
(http://www.un.org/sustainabledevelopment/inequality/) (Freistein and
Mahlert, 2016). This chapter therefore lays the foundations for a wider
40
consideration of the ways through which ICTs can support the SDGs by
exploring ICTs and sustainability in the environmental context, and also
through the sustainability of ICT interventions specifically designed to
address both absolute and relative poverty.
2.2.2 ICTs, WSIS Process and SDGs
The World Summit on the Information Society (WSIS, Geneva 2003
and Tunis 2005) was of considerable importance in shaping the way the
UN system has incorporated ICTs into its development initiatives.
Subsequent WSIS Annual Forums, co-organised by the ITU, UNESCO,
UNCTAD and UNDP, have provided regular opportunities for all UN
agencies and others to meet to discuss progress on the 18 Action Lines
agreed at WSIS, and the 2015 meeting was particularly important in
shaping their integration with the emerging SDGs (ITU 2015a)
(Figure 1). Despite strong arguments that universal connectivity to the
Internet should have been one of the SDGs, the emerging agreement
among those involved in finalising them during 2015 was that they
should be treated only in a supporting or facilitating role, thus featuring
in but four of the final 169 Targets (Table 1). Only one of these
mentions (9c) was overtly directed to increasing access to ICTs; the
others focused on using them to enhance scholarships, to empower
women, and to operationalise the technology bank.
The failure to appreciate sufficiently that inequality in access to ICTs is
rapidly increasing social, economic and political inequality, all of which
threaten the stability of countries and thus their ability to deliver
economic growth, was a lost opportunity. The failure to have this core
requirement more prominently featured within the SDGs undermines
the very foundations of all of the other SDGs, and the consequences of
this may well exert a persistent negative impact in the long term ability
to achieve them. Without sufficiently addressing inequitable access, and
the reasons why people do not use the Internet more extensively, the
sustainability of the intended development interventions that are indeed
mentioned as Goals is brought into question. Indeed, it seems probable
that an increasing rate of inequality in access to ICTs will create
increasing economic and social disadvantage and inequality.
41
For many, the mention of increasing access to ICTs in Target 9c has

been a sufficient catalyst to initiate new projects to achieve this goal. It
is salient to note, however, that no expectations were set on the meaning
of significant or the levels to which countries might aim to increase
such access, and few countries have yet specified such targets. Figure 1
highlights the main areas of intersection between the WSIS Action Line
and the SDGs at Goal, rather than Target level, and shows clearly that
UN agencies are advocating and developing initiatives through which
ICTs can be used to influence all of the Goals; even those with the
fewest relevant Action Lines, such as Goal 7 (Ensure access to
affordable, reliable, sustainable and modern energy for all) and Goal
15 (Sustainably manage forest, combat desertification, halt and reverse
land degradation, halt biodiversity loss), each had three pertinent
Action Lines delivering on them. Interestingly, both these Goals were
overtly environmental, suggesting that further work is necessary on
exploring the links between ICTs and environmental issues.
Significantly for the arguments of this chapter, ICTs were also not
particularly prominent in the Action Lines addressing Goal 10 on
inequality.
The large number of SDGs and their associated targets are a reflection
of the desire for comprehensiveness, and for the interests of all UN
agencies to be included, but suffer from the drawback of being
cumbersome and difficult to remember. Moreover, individual countries
are meant to be developing plans with specific targets through which
they will end all forms of poverty, fight inequalities and tackle climate
change, while ensuring that no one is left behind (UN, 2017). Not only
is this optimistic, but the practical reality is that few poor countries have
yet embarked on the critical requirement to identify specific targets
from the 169 listed in the SDGs, and yet it is already two years into the
15-year period during which they are meant to be attained (OECD,
2016a). A critical first step through which ICTs can be used more
effectively to contribute to the SDGs must therefore be for each country
to declare specific target figures for the four actions noted in Table 1.
42
Matrix of WSIS Action Lines (C1-C11) WSIS Action Lines

and SDGs (1-17)
Figure 1. WSIS Action Lines and SDGs

Source: ITU (2015)
43
Table 1. ICT-related Targets in SDGs.
4b) By 2020, substantially expand globally the number of scholarships

available to developing countries, in particular least developed
countries, small island developing states and African countries, for
enrolment in higher education, including vocational training and
information and communications technology, technical, engineering
and scientific programmes, in developed countries and other developing
countries.
5b) Enhance the use of enabling technology, in particular information
and communications technology, to promote the empowerment of
women.
9c) Significantly increase access to information and communications
technology and strive to provide universal and affordable access to the
Internet in least developed countries by 2020.
17.8) Fully operationalise the technology bank and science, technology
and innovation capacity-building mechanism for least developed
countries by 2017 and enhance the use of enabling technology, in
particular information and communications technology.
Source: http://www.un.org/sustainabledevelopment/
Recommendation 2: Governments should urgently put in place clear
quantitative and qualitative national targets for delivering on SDG
targets 4b, 5b, 9c and 17.8, as well as for how ICTs can contribute to
the most locally relevant other SDG targets, supported where requested
by relevant international agencies. Delivery against these targets should
be carefully monitored by governments on an annual basis, and
appropriate actions taken to respond to differences in performance
against the targets. Relevant international organisations should
coordinate and report annually on national delivery against targets.
However, as indicated in Figure 1, ICTs can contribute very much more
broadly to the issues included in the other SDGs, and countries should
thus also consider specific targets for these. Failure to carefully monitor
these targets and act on them accordingly could mean that the unfettered
growth of the ICT sector might adversely affect the potential
44
achievement of some or all of these goals. This is particularly so with

respect to the environmental implications of ICT growth, to which
attention now turns.
2.2.3 Environmental Implications of ICTs
This book focuses primarily on economic aspects of the use of ICTs,
and particularly their contributions to economic growth, employment
and innovation (UNCTAD, 2013, 2015; Statistics Netherlands, 2015;
World Bank, 2016). However, it is important here to explore some
aspects of the environmental impacts of such activities, especially if
they are expected to contribute to wider sustainability. The fundamental
challenge is that many aspects of the ICT sector are themselves highly
unsustainable (Unwin 2017). Two main related issues are of concern
here, and need to be overcome if ICTs are truly going to be seen as
contributing positively to sustainable development: first their direct
environmental impact; and second the business model upon which
much of the sector is based (see Chapter 5).
There is considerable debate as to the extent to which the ICT industry
is indeed environmentally sustainable. Certainly, some strides have
been made in this direction, but there has not yet been a sufficiently
comprehensive overview of the sectors global environmental impact to
support a definitive judgement. Many companies are now much clearer
than they were a few years ago about their sustainability credentials,
and seek to promote themselves as being more sustainable. Apple, for
example, which was once widely criticised about its sustainability, now
claims that We take the same innovative approach to the environment
that we do with our products. We are creating new solar energy projects
to reduce our carbon footprint. We are switching to greener materials to
create safer products and manufacturing processes. We are protecting
forests and making sure they are managed sustainably. We are even
creating a more mindful way to recycle devices using robots
(http://www.apple.com/environment/). The company also publishes an
annual environmental responsibility report that summarises information
about their actions with respect to climate change, resources and safer
materials (Apple, 2016). However, comprehensive environmental
reporting across the sector is lacking, and the reality is that there
45
remains little certainty about the overall environmental cost-benefit

analysis of the ICT sector. Many companies have been able to show
that they contribute positively on specific aspects of environmental
impact, such as being carbon-neutral or their contribution to lowering
carbon emissions or footprints (Ericsson, 2015), and some have gained
ISO 14001 certification, which is intended as an assurance of
environmental friendliness, a means to reduce waste, and to
demonstrate environmental credentials.
However, this is fundamentally different from claiming that the sector
as a whole is contributing positively and sustainably to the physical
environment. Moreover, some of the raw materials that are essential for
mobile phone production are produced by people working in conditions
of slavery, which as Bales (2016) has argued lie at the interface between
environmental destruction and human trafficking. This is hardly
sustainable by any definition of the term. Some efforts have,
nevertheless, been made to treat the issue of ICTs and sustainability
more systemically. The ITUs (2012) toolkit on environmental
sustainability has, for example, highlighted some of the issues
particularly well, noting that although the ICT sectors carbon
emissions are rising, it can have a wider effect on increased energy
efficiencies in other sectors. As it observes, A significant challenge for
ICT companies is that in enabling better environmental performance
elsewhere, the ICT sector is itself taking on significant burdens (ITU,
2012: 1). Much of the cause of this is the very substantial demand of
ICTs for electricity, both for their own direct functioning, and also for
the air conditioning that is required to prevent them overheating.
Creating ICTs with lower energy requirements, and using renewable
sources of energy, such as solar, wind and water are all important ways
through which such demand can be alleviated. It is also important that
the indirect impact of ICTs on the environment, through their
contribution to economic growth more widely, be taken into
consideration in any comprehensive evaluation.
The Global e-Sustainability Initiative (GeSI) has also produced reports
(GeSIi, 2008) that have sought to address some specific aspects of
sustainability, and most recently it has developed a Sustainability
Assessment Framework (SASF) that companies and organisations can
46
use to evaluate their overall sustainability. This is built on four main

elements, the environment, human rights, utility and benefits (Figure 2),
and comprises approximately 100 indicators upon which organisations
can assess their sustainability. Nevertheless, even this fails to take a
sufficiently holistic perspective on the environmental sustainability of
specific sector-wide impacts, such as total carbon emissions, on the
environment, let alone the wider impact of the entire ICT and
telecommunication sector on natural ecosystems (Bekaroo et al., 2016).
To give but one example, no current ICT environmental impact
assessment sufficiently considers the environmental impact of satellites
and their debris in space, which is becoming an increasingly serious
challenge for the sector (Kessler and Cour-Palais, 1978; David, 2009;
Liou, 2011; ESA 2017). It is estimated that there are more than 100
million pieces of debris circulating the earth, many of which derive
from telecommunication satellites. Despite recent initiatives by the
Japan Aerospace Exploration Agency, which launched a space rubbish
collector in 2016, this problem is only likely to get worse in the
immediate future as more Low Earth Orbit and Geostationary satellites
are launched for communication purposes (Williams, 2017). Even
though increasing areas of the world are being connected by land-based
technologies, satellites still have an important role to play in
broadcasting and providing connectivity to those living in the least
connected areas of the earth. The SASF goes some way to monitoring
the environmental impact of the sector, but it is at present too limited,
and a third far-reaching recommendation of this chapter is thus:
Recommendation 3: A comprehensive and holistic independent
analysis of the direct and indirect environmental impacts of the entire
ICT sector should be undertaken as a matter of urgency to highlight
areas where improvements can be made and damaging practices
reduced. This should especially include debris mitigation measures for
telecommunication satellites. ICT companies should be required by
national governments to report annually on delivery against key
environmental indicators recommended by such a report. The potential
of ICTs to reduce environmental impacts in other sectors should also be
exploited urgently so as to limit their negative externalities on the
environment.
47
Figure 2. Global e-Sustainability Initiative's Sustainability

Assessment Framework
Source: GeSI (2016).
The second very significant, and insufficiently addressed, issue
concerns the explicit obsolescence and waste implications of the
dominant business models adopted by many companies in the ICT
sector. Its emphasis on innovation and dynamic change, which are
usually seen as being positive and lie at the very heart of the sector, is
often diametrically opposed to the inherent interests of sustainability.
This is well exemplified by the short life-spans of most modern
smartphones compared with those of old fixed-line telephones.
Likewise, all too frequently hardware changes require users to purchase
new software, and new software eventually requires people to buy new
hardware.
Opportunities for new technological solutions to enable more
sustainable practices and business models need to be explored urgently.
The importance of fashion has also become central to much digital
technology, with consumers being encouraged to buy the latest, most
modern, device with the newest technological enhancements, rather
48
than keeping their old, perfectly adequately functioning current device

(Hassan and Unwin, 2017). Not only does this mean that consumers
regularly have to pay more for the technologies that they purchase,
thereby generating enhanced corporate profits and fuelling the wealth of
the worlds richest people, but it also has a direct environmental impact
in the form of e-waste. Much e-waste contains concentrated amounts of
potentially harmful products, and in recent years a substantial trade has
developed whereby poorer countries of the world have become dumps
for such waste, with severe environmental damage resulting (Frazzoli et
al., 2010). Whilst waste-processing communities such as Guiyu in
China have developed to gain economic benefit from e-waste, and
recycling can help provide a partial solution for many materials, the
fundamental point remains that the sector as a whole is built on a model
that generates very substantial waste, rather than one that is focused
inherently on sustainability. The UNs STEP (Solving The E-waste
Problem; http://www.step-initiative.org/) initiative is one attempt to
address these issues at a global scale, but many more local initiatives
are needed, such as the UKs Restart platform
(https://therestartproject.org) which works with communities, schools,
and companies to value and use electronics longer whilst documenting
the barriers to doing so.
Recommendation 4: Stakeholders, and especially the private sector,
should draw on examples of existing good practices to develop new
business models that focus on increased durability and sustainability of
their technologies, whilst maintaining affordability. These should
include an increase in the amount of hardware that is readily
upgradable, and software that is compatible with older hardware,
especially at the lower end of the market spectrum, and a reduction in
the amount of e-waste.
2.3 Essential elements for Successful Application of ICTs

for Sustainable Development
Chapter 1 highlighted three of the important elements that must be in
place for ICTs to contribute to economic growth: infrastructure, access
and skills. This closely parallels The World Economic Forums (2016)
49
analysis of the four barriers that need to be overcome if everyone is to

be able to benefit from effective use of the Internet: Infrastructure;
affordability; skills, awareness and cultural acceptance; and local
adoption and use (see also The Earth Institute Columbia University and
Ericsson, 2016).
Recommendation 5: Stakeholders should work collaboratively and in
multi-stakeholder partnerships, drawing on existing good practices, to
enhance usage of appropriate ICTs, especially the Internet by the
poorest and most marginalised, through addressing, in the order of
priority: provision of appropriate infrastructure; the affordability of
appropriate ICTs; the skills, awareness and cultural acceptance for all
people to use ICTs; and the enhancement of local adoption and use.
Infrastructure includes not only connectivity, such as mobile broadband,
but also the electricity that is essential to power all ICTs. In 2016,
approximately 95% of the worlds population lived in an area covered
by a mobile network, with mobile-broadband networks reaching 84% of
the worlds population (ITU, 2016a). However, this by no means
implies that everyone within these areas of connectivity is connected,
and levels of connectivity vary considerably not only between, but also
within, countries. Only some 67% of the worlds rural people are thus
currently reached by mobile-broadband networks. Furthermore,
considering the presence of infrastructure alone is insufficient, because
reliability, speeds and costs of connectivity also vary significantly,
usually to the disadvantage of the poor and marginalised. Nevertheless,
it is crucial that sufficient infrastructure is in place so that most people
most of the time can have the possibility of connectivity.
Even where connectivity exists, though, many people do not use digital
technologies, either because they cannot afford them or because they do
not see a use for them. In practice, 3.9 billion people, representing 53%
of the worlds population, are still not using the Internet (ITU, 2016a),
and are therefore unable to gain the benefits that it can provide. Usage
rates vary considerably. Only 22% of Europeans do not use the Internet,
and yet three-quarters of African people do not use it. Affordability is
critical, but difficult to define, and both governments and the private
sector can do much to influence the costs of connectivity in different
50
contexts as discussed below. Prices of both handsets and connectivity

have fallen considerably in recent years in most countries, but there
remain marked differences between the affordability of these
technologies for poor consumers in different parts of the world
(Table 2). For example, the ITUs mobile cellular sub-basket shows that
costs vary from 0.09% of gross national income per capita (GNI pc) to
53.55% GNI pc in Malawi (ITU, 2016b). Likewise, costs of the fixed
broadband sub-basket vary from 0.26% GNI pc in Kuwait to 1832.36%
GNI pc in the Central African Republic, and of mobile broadband (500
MB) from 0.07% GNI pc in Norway to 127.27% GNI pc in Guinea-
Bissau (ITU, 2016b). Lessons need to be shared between countries so
that the high costs of access prevalent in many countries can be reduced
to those where it is more affordable.
Table 2: Top five countries with the cheapest mobile-cellular
services in different regions (PPP$, 2015)
Source: Table 4.3 in ITU (2016b)

Note: PPP = Purchasing Power Parity, which is a means of comparison based on the
relative costs of living and inflation rates in different countries.
People also need to have the knowledge and skills to be able to take
advantage of connectivity. This is not simply the knowledge of how to
use the Internet to gain useful information, but also the knowledge
51
about how it can help them improve their lives. Hence, education more
broadly is a crucial requirement for more widespread use of the
Internet. Such education goes far beyond merely digital skills
acquisition. Moreover, designers need to do much more to make such
technologies user friendly and more intuitive for marginalised groups.
Education needs to inculcate an awareness that ICTs can indeed be used
to enhance health, employability, and knowledge acquisition, both
through the acquisition of information but also through enhanced
communication. Recent research by the OECD (2016b) is striking in
this context because it shows that the already advantaged use the
Internet more effectively for enhancing their careers, whereas poorer,
less privileged people, tend to use it mainly for games and interacting
with friends. Interestingly, disadvantaged students in all OECD
countries spent at least as much time online as did advantaged students,
but in half of the countries they actually spent more time than the
advantaged students. However, disadvantaged students did not use it for
productive purposes, preferring to chat or play videogames, whereas the
advantaged students used it for information gathering or reading news.
Yet again, ICTs seem to enhance inequality rather than reduce it.
Furthermore, education needs to help people better understand the risks
of using ICTs, and the privacy and security issues that need to be
considered.
The fourth element identified by the World Economic Forum (2016) is
local adoption and use, which they suggest depends much on the
existence of relevant local services that people value, as well as the
provision of relevant content in local languages. The interface between
the digital economy and retail business is crucial here, with e-
commerce, for example, only being viable where logistics permit goods
ordered online actually to be supplied on the ground. This is why some
companies are seeking to use drones to deliver goods or provide
services to places that might otherwise be inaccessible within the time
frame expected by consumers. Likewise, content in local languages
that is relevant to the needs of poor people is essential if the elite
language users of the Internet are not to be yet further advantaged. It
has been estimated, for example, that almost 80% of online content was
available in one of only 10 languages in 2016
52
(http://www.internetworldstats.com/stats7.htm). To enable such local

content to be used effectively, though, it is also important that the
capacity of ICT professionals to support and deploy such solutions is
enhanced.
In order to overcome these barriers, and ensure that SDG 10 on
inclusion has a chance of being delivered alongside the SDGs more
concerned with economic growth, such as SDG 8 (decent work and
economic growth), SDG 9 (industry, innovation and infrastructure), and
SDG 11 (sustainable cities and communities), it is essential that
governments, the private sector and civil society work together
effectively to deliver on the needs of all citizen-consumers, rather than
just enhancing the economic, social and political benefits of the already-
connected and privileged segments of society. Whilst this book focuses
primarily on ways through which ICTs can contribute to the economic
growth agenda, it is crucial to realise that the very basis upon which
economic growth can be achieved will be under threat unless inequality
is also addressed. As the OECD (2015) has shown, rising inequality
creates social and political tensions that are not only a drain on the
economy, but also reduce GDP growth, and prevent lower income
people from realising their economic potential.
Recommendation 6: Governments should engage pro-actively in open,
transparent and honest conversations with the private sector, civil
society and citizens about how best to respond to the needs of the
poorest and most marginalised, and the policies that should be in place
to reduce inequalities through the use of ICTs.
There have been many recipes for what needs to be done to help ensure
that the barriers of infrastructure, affordability, skills, and local use, are
indeed overcome so that ICTs can deliver on their potential contribution
to the attainment of the SDGs. Typical of these is an ICT4SDG agenda
proposed by the Earth Institute at Columbia University and Ericsson
outlined in Table 3. Many of these recommendations resonate with
those that are also advocated in this book, although different authors are
inclined to prioritise different factors, and some aspects of this
approach, such as the emphasis on Public-Private Partnerships alone are
problematic.
53
Table 3. ICTSDGs Agenda Proposed by

Earth Institute (Columbia Univ.) & Ericsson
Ways through which ICT can help Actions required to create

implement SDGS an enabling framework
1. Accelerated upscaling of critical 1. Universal broadband by
services in health, education, financial 2020
services, smart agriculture, and low-
carbon energy systems.
2. Reduced deployment costs 2. Enabling policy
addressing urban and rural realities framework
3. Enhanced public awareness and 3. Rapid ICT rollout
engagement.
4. Innovation, connectivity, 4. New public-private
productivity and efficiency across many partnership
sectors
5. Faster upgrading in the quality of 5. Upgrade science,
services and jobs technology, engineering
and mathematics (STEM)
skills
6. Harness big data
Source: Earth Institute @ Columbia University and Ericsson, 2016, p.9 and p.11.
It is important to recognise two main ways through which ICTs can
contribute to the SDGs: directly through the impact that they have on
the lives of individual poor and marginalised people; and structurally
through the ways that they can enable the delivery of all of the SDGs
themselves. Table 4 draws on the World Economic Forums (2016)
proposed agenda, but illustrates that priorities for action vary depending
on whether people are connected, have access, or are already using the
Internet.
The use of ICTs is not a silver bullet that can be used simply to deliver
the SDGs, and varying technologies need to be incorporated
systemically in a holistic way if they are indeed going to be used
54
Table 4. Agenda for Facilitating Access to the Internet by

Marginalised Populations
Those without Those with Those with

access access but not access and
using using
Extending Providing Enhancing Enhancing
infrastructure infrastructure quantity and quality of
quality of existing
existing infrastructure
infrastructure
Affordability Lowering costs, Lowering costs, Lowering costs,
technical technical technical
innovation and innovation and innovation and
new business new business new business
models models models
Skills and Improving Improving Improving
critical digital literacy digital literacy digital literacy
awareness and and and
understanding understanding understanding
of appropriate of appropriate
use use
Local adoption, Ensuring Ensuring Ensuring
adaptation and context relevant production and production and
use content use of context use of context
relevant content relevant content
Source: based on Unwin (2017) and in part on World Economic Forum (2016).
Note: items in bold indicate highest priorities, with darker shading indicating the most
important priorities, and lighter shading less important.
effectively by people and their governments, the private sector and civil
society in making the world a more sustainable and fairer place in
which to live. This has, for example, been recognised in the work of the
ITUs m-Powering development initiative, which has emphasised the
importance of mobile broadband in achieving the SDGs, but above all
55
that any mobile-for-development initiative must involve as many

relevant stakeholders as possible in delivering it, and especially that
governments need to adopt a comprehensive approach involving many
different departments and sectors for such initiatives to be successful
and sustainable (ITU, 2015b).
Five main enabling mechanisms need to be put in place if everyone is to
use ICTs effectively to enhance their lives, and especially if
organisations involved in delivering the SDGs are to be successful
(Unwin, 2017). First, there must be a clear emphasis not just on
economic growth but also on empowerment, whereby not only poor
people but also those working in organisations and companies
committed to delivering the SDGs, can become stronger and more
confident through the use of ICTs to have greater control over their
lives. Such empowerment comes in part from a better understanding of
the complexities of the interface between ICTs and development, and a
clear realisation that they have both negative and positive outcomes.
The challenge is to reduce the negative and enhance the positive, but
unless people are made more aware of the negative they will be unable
to find innovative ways to address it. This is in part why this chapter
has emphasised the challenges associated with the tendency of ICTs to
enhance both inequality and unsustainability. Unless we recognise and
acknowledge this, we will not be able to address it effectively.
Moreover, for poor people to be empowered they must have more of a
voice in initiatives that are designed to help them. We need to work
with poor people rather than for them, and ensure that not only our
language but our practice delivers on this commitment.
Second, new ways must be found for resolving the contradictions
implicit within the SDGs, and especially in balancing the potential for
ICTs to contribute to increasing inequality and growth. If SDG 10 is to
be delivered, it is essential that much more emphasis than has
heretofore been the case is given to creating solutions that focus on the
interests of the poorest and most marginalised, and not simply
assuming that the contributions of ICTs to economic growth will deliver
significant benefits to them.
56
Third, innovative new technological solutions need to be found through

which some of the outcomes in Table 4 can be achieved. Chapter 3, in
particular, examines ways through which the old business-as-usual
approach can be revitalised through a focus on digital entrepreneurship
and innovation. Rather than emphasising connectivity to the next
billion, technical solutions that will deliver connectivity for the poorest
and most marginalised should be prioritised, and to reflect the assertion
that they are indeed of most importance, they should be called the first
billion rather than the bottom billion. Connectivity alone, though, is
insufficient, and as the remaining chapters of this book emphasise we
need to enhance affordability, ease of use, and relevance of content and
services if the SDGs are to be achieved. Education in its widest sense is
crucial if ICTs are to be used effectively for sustainable development.
ICTs can indeed support education in innovative ways, but this needs to
be balanced by wider learning within those companies and
organisations about how best to implement effective initiatives that
contribute to the SDGs.
Fourth, there is no doubt that the private sector will find innovative
ways through which ICTs can contribute to economic growth, but
governments and international organisations have a crucial role in both
enabling this to happen and ensuring that the poor and marginalised can
benefit. It is here that regulation has a key role to play, and where re-
conceptualising it as facilitation has much to offer. It is important
therefore that governments use regulation effectively to facilitate the
private sector in delivering appropriate ICT solutions to as many people
as possible, but governments also have a responsibility for ensuring that
all of their citizens can receive the benefits of ICTs for sustainable
development. This will require governments to be innovative and open
to new approaches and ideas, especially with reference to such devices
as Universal Service Funds (USF), which have not proven to be as
successful in redistributing the benefits of ICTs as many had anticipated
(GSMA, 2013). Governments will also need to use their own resources
to help subsidise or fund many aspects of the empowerment of the
poorest of their citizens through the use of ICTs.
Fifth, this book does not focus particularly strongly on issues
surrounding digital security and resilience. Nevertheless, as the world
57
becomes more reliant on interconnected technologies, and especially as

the Internet of Things and 5G systems and networks begin to be rolled
out, digital security will become ever more significant. It is crucial that
these systems are made as resilient as possible so that when the
inevitable hacking or take-downs happen, services can be brought back
on-stream as soon as possible. The threat to critical infrastructures (for
example, Butts and Shenoi, 2012) is all too often ignored, especially in
poorer countries, and if ICTs are to be used effectively in delivering the
SDGs it is essential that they are made as secure and resilient as
possible, and also that individual concerns over privacy are addressed
appropriately by governments and the private sector.
All of these mechanisms are dependent on the involvement of a
diversity of stakeholders and a commitment to effective partnerships,
and it is therefore to these that the final section of this chapter now
turns.
2.4. Stakeholders and Partnerships in Delivering SDGs

The above account has emphasised the importance of many different
actors working together holistically and collaboratively if ICTs are
indeed to be used effectively in contributing to the SDGs. In much work
on the use of ICTs in development, the terms stakeholder and
partner are used interchangeably to refer to such actors, but it is very
important to distinguish their meaning. Stakeholders are those who have
an interest in an activity, usually but not necessarily a financial interest.
In contrast, partners are those who voluntarily enter an agreement to
work together to deliver an output, with profits and losses usually being
shared proportionally.
Stakeholder theory (Steurer et al., 2005) has come to prominence
largely in a neo-liberal context explicitly to provide a framework for
considering the relationships between the private sector and civil
society, at a time when government intervention in the economy has
been declining. It has thus increasingly been used in an ICT context to
refer to multi-stakeholder models of Internet governance, whereby
governments, the private sector and civil society work together to reach
mainly policy level agreements. However, it is extremely difficult to
58
group all the different actors together in this threefold classification, and
international organisations have often therefore treated researchers,
foundations and donors as additional separate categories. The ITU, for
example, now has a specific category of Academia Membership.
Moreover, most uses of the term in the ICT context fail sufficiently to
consider the most important stakeholder, namely the user, be it as a
consumer for the private sector, or a citizen for governments. A key
theme of this book is that if ICTs are going to be used effectively to
deliver on the SDGs it is important that people who use, or are intended
to use, the technologies are considered both conceptually and
practically as one of the major stakeholders. Indeed, the distributed and
widespread reach of ICTs itself provides an important vehicle through
which new methods of interaction between on the one hand people, and
on the other governments and companies can take place. It is also
important that citizen-consumers have a greater voice in the
development of policies that will have such a significant influence in
their future lives, especially when critical issues such as privacy and
security are being debated. Recent work by Nesta, for example, has
highlighted the potential of collective intelligence to develop new kinds
of government decision making at a range of scales (Saunders and
Mulgan, 2017).
The notion of multi-stakeholderism, however, is problematic both as an
idea and as a practice (e.g., see Laprise and Musiani, 2015; Hoffman,
2016). For example, the Tunis Agenda did not adequately explicate the
roles of the different sectors in Internet governance (WSIS, 2005, Para.
35): states were seen as having a sovereign right over policy authority;
the private sector as having an important technical and economic role in
the development of the Internet; and civil society as being important,
especially at the community level. The role of international
organisations was considered to be in facilitating public policy
discussions, and in developing technical standards and policies. These
various stakeholders have different interests, and each has sought to
shape the multi-stakeholder dialogue in their own interests, leading to
considerable overlap, competition, and duplication of effort. If ICTs are
indeed going to be used more effectively to deliver the SDGs, ways
need to be found to reduce such overlap and ensure a more integrated
59
approach to global and national policy making. This will require the
organisations participating in the dialog to relinquish some of their own
interests for the greater good, to accept enhanced collaboration between
different organisations, and a reduction in the expansionist agendas of
some organisations.
The notion of partnerships is also frequently applied to the delivery by
many stakeholders of practical development-related programmes and
projects on the ground (Geldof et al., 2011). Such partnerships are
important because many different skills, experiences and resources are
required if ICT initiatives are to be successfully implemented in
delivering the SDGs. Initially these were conceptualised as Public-
Private Partnerships (PPPs), reflecting the neo-liberal shift towards
increasing private sector delivery of what had previously been
considered public sector activity (Unwin, 2015). However, the failure of
many PPPs in delivering sustainable ICTs for development initiatives,
which was often attributed to PPPs not sufficiently involving civil
society or indeed other stakeholders, notably the end users, has led to
the increasing use of the terms multi-sector, or multi-stakeholder
partnerships (MSPs), to emphasise that in most instances private sector
companies and governments cannot successfully deliver such initiatives
alone. A key learning from many such partnerships has also been that it
is much better to involve the business-end of companies than their
Corporate Social Responsibility (CSR) departments in implementing
projects, because the business-end has more experience in ensuring
delivery and profitability, and thus sustainability, whereas projects that
rely on external CSR funding frequently collapse when that funding
runs out. A further challenge with multi-stakeholder partnerships is that
all too often well-intentioned stakeholders come together to deliver an
intervention but fail to sufficiently draw on existing good practices in
implementing partnerships. It is not easy to deliver partnerships, and
often it is more cost effective to use traditional contracts to ensure
effective implementation, but there are good partnerships models that
can be used so that new initiatives do not reinvent the wheel and repeat
the mistakes made in previous projects (see Appendix A).
60
Recommendation 7: A flexible and effective multi-sector partnership

(governments, private sector, civil society, and citizens) approach
(MSPs), which goes beyond just the combined interests of the public
and private sectors in public-private partnerships (PPPs), is important
for implementing ICT initiatives that contribute to sustainability.
However, delivering effective partnerships is difficult, and all engaged
in so doing should ensure that they draw on existing models of good
practice.
2.5 Concluding Remarks: ICTs in Sustainable

Development
This chapter has provided an overview of the critical elements that need
to be in place for ICTs to be able to contribute effectively to delivering
the SDGs. It has highlighted some of the conceptual challenges around
the notion of sustainability, both in the context of development and in
the sustainability of ICTs themselves. These need to be overcome if
ICTs are to contribute effectively to the delivery of sustainable
development. It has also identified the most important (critical)
elements that need to be in place to ensure that ICTs are indeed used
appropriately, especially for the economic growth, employment, and
innovation dimensions of the SDGs that are explored in this book:
appropriate universal infrastructure, including electricity, must be
present; the technologies must be affordable, especially for the poorest
and most marginalised; people need to have the appropriate skills and
awareness of how to use ICTs to enhance their lives and deliver the
SDGs; and there needs to be locally relevant content.
The chapter has emphasised that to achieve these goals, those who
develop policies and implement programmes and projects need to
address issues of empowerment, focus on the needs of the poorest,
develop innovative technological solutions and new business models,
legislate new kinds of regulation through which governments facilitate
the ICT and telecommunication sector, and ensure that there is effective
security and resilience within the systems being developed.
Finally, multi-stakeholder partnerships can be an effective mechanism
for implementing ICT initiatives that will contribute to the SDGs, but
61
these need to draw on appropriate good practices so that the past

failures of many such partnerships can be avoided (Unwin, 2015).
Above all, it is important that system-wide and comprehensive
initiatives are implemented to bring together the full diversity of
relevant stakeholders, and especially the intended users, if ICT
initiatives are indeed to deliver effectively on the SDGs.
Acknowledgements
This chapter is the product of some amazing discussions and
correspondence between the contributing authors to our overall book
project. It is very much a joint effort, and is vastly different from what I
would have written if left to my own devices. It very much reflects the
journey that we shared together; I certainly learnt a great deal from the
experience, not least about economics and economists! Thanks are
especially due to Prof. Ahmad R. Sharafat for overseeing the project,
and to Dr. Eun-Ju Kim and her team at the ITU for gently keeping us on
track. I very much hope that the ideas contained in the chapter will
encourage others to pursue similar adventures, so that together we may
indeed use ICT effectively and appropriately to support the poorest and
most marginalised as they struggle to sustain their lives.
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Freistein, K. and Mahlert, B. (2016). The potential for tackling inequality in the
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Geldof, M., Grimshaw, D., Kleine, D. and Unwin, T. (2011). What are the key lessons
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GeSI (2008). The Contribution the ICT Industry can Make to Sustainable
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65
Appendix A
The World Economic Forums

Global Education Initiative
Alex Wong (World Economic Forum)
and
Tim Unwin (UNESCO Chair in ICT4D)39
Many people talk about partnerships in the use of ICTs for

development, but few deliver them effectively in the interests of the
poorest and most marginalised. In part, this is because they do not draw
on existing good practices, and in part because so many people in the
sector want to reinvent the wheel. However, some partnerships have
indeed been effective, not only for the partners themselves, but also for
the intended beneficiaries. One such initiative was the World Economic
Forums Global Education Initiative (GEI) that ran between 2003 and
2011, culminating in its Partnerships for Education initiatives with
UNESCO that sought to draw together lessons learnt about delivering
educational partnerships, especially through the use of ICTs. This
Appendix draws especially on the findings of this initiative, to provide
recommendations about good practices that can be followed by all those
interested in delivering effective ICT4D partnerships in response to the
SDGs.
39
This Appendix draws in part on Global Education Initiative: Retrospective on
Partnerships for Education Development 2003-2011, Geneva: World Economic
Forum, and on MultiStakeholder Partnerships in Information and Communication
for Development Interventions, T. Unwin in Mansell, R. and Ang, P.H. (eds.)
International Encyclopaedia of Digital Communication and Society, Chichester:
Wiley, 634-644, 2015.
66
There exist many models of effective partnership delivery. One of the

best known is that developed over many years by The Partnering
Initiative (Tennyson, 2011). This is circular in design, involving four
broad stages: scoping and building; managing and maintaining;
reviewing and revising; and sustaining outcomes (Figure A1); once the
circle has been completed, the partnership can reinvent itself, or cease
functioning. Alternative models, though, can often be more appropriate
for delivering effective development interventions, since such circular
partnerships tend to place more emphasis on maintaining the
partnership than on what it actually achieves in terms of development
outcomes (Unwin, 2005).
Figure A1. The Partnering Initiatives Partnering Cycle

Source: http://thepartneringinitiative.org/what_is_partnering.jsp
Cassidys linear model derived from his work with the World Economic
Forums GEI provides a useful alternative framework that very much
places the emphasis on the final results that are clearly articulated and
agreed by partners at the beginning of the process (Figure A2). There
are five core elements to Cassidys model drawn from the empirical
experience of the GEIs ICT for education partnerships:
67
1. The leadership, governance and decision making processes, as well

as a clear monitoring and evaluation strategy need to be in place
throughout the entire process.
2. Three elements are essential at the beginning: core values and
objectives; the vision, goals and objectives; and organisational
readiness. Without any of these, the partnership will flounder.
3. A project management office of some kind needs to be put into
place, to deliver the management, planning, communications and
resource mobilisation elements of the partnership.
4. This then enables the interactions between the various partners and
the intended beneficiaries, in Cassidys case the schools and
communities, to be implemented effectively.
5. Ultimately, this will then lead to effective and relevant results in
terms of educational outcomes.
Figure A2. Cassidys Model of GEIs Partnerships

Source: Cassidy (2007)
The GEI was launched in 2003 and focused initially on improving the
development and delivery of education to Jordans citizens through the
use of ICTs, in what became known as the Jordan Education Initiative
(JEI). Bringing together government agencies, global ICT companies
such as Cisco, Microsoft and Intel, as well as local companies, it
68
developed content in the core subject areas of mathematics, science,

Arabic, English and ICTs, and implemented its roll out through 100
Discovery Schools that were provided with ICTs by the partners.
Following the perceived success of the JEI, the Governments of
Rajasthan in India and the Government of the Palestinian Territories
both expressed interest in launching similar initiatives in 2005, and the
government of Egypt likewise followed suit in 2006. Each initiative had
different objectives, and a varying set of partners, although the core
companies mentioned above played a leading role in shaping all of the
initiatives.
As the GEI developed, four emergent principles became evident in
catalysing effective ICT-enabled, action-oriented, and issue-based
multi-stakeholder partnerships:
1. Senior-level political ownership is critical in providing the long-
term stability and vision that stakeholders require in any multi-
stakeholder partnership initiative;
2. Alignment with national education sector plans ensures that an
initiative aligns with the day-to-day activities and bureaucracy of
the government, and the activities of the bilateral and multilateral
donor community;
3. Maintaining overall programme management and keeping
stakeholders aligned and informed are crucial tasks that cannot be
underestimated, both in terms of resources and technical skills
required; and
4. A neutral partnership broker that creates a platform of transparency
and trust allows stakeholders to meet on a consistent basis at the
senior levels to discuss progress, remove barriers and reaffirm
commitments (World Economic Forum, 2012, p.22).
The World Economic Forums (2012) final review of the GEIs
achievements, based upon interviews with many of those involved,
highlighted three key lessons learned about crafting ICT partnerships
for education:
1. Careful project management is essential for the success of an
educational partnership;
2. Individuals play a critical role; and
69
3. Visibility through external and internal communication strategies is

important.
It also noted six critical challenges that needed to be overcome in future
initiatives:
1. Ensuring long-term sustainability, including maintaining the
excitement and interest;
2. The underestimated difficulty of reaching common agreement on
the goals and activities to be undertaken in an initiative;
3. The importance of balancing the different interests of the
stakeholders, and determining what levels of contribution are
expected from particular partners;
4. Identifying resources and focus;
5. Cooperation between private sector partners and relevant national
bodies; and
6. Timely monitoring and evaluation (not leaving them until the end,
when there is often little money left).
These are all important pointers to what can help make ICT partnership
interventions successful. It is, though, highly pertinent for this book on
delivering the SDGs that the most important challenge identified in the
GEI was the first of these, ensuring long-term sustainability. Following
previous examples of good practices in partnership implementation can
indeed help to ensure success, but partnerships are difficult to
implement successfully, and they must above all focus on ensuring that
their interventions are indeed sustainable (see also Geldof et al., 2011).
References
Cassidy, T. (2007). The Global Education Initiative (GEI) Model of Effective
Partnership Initiatives for Education. Geneva: World Economic Forum.
Geldof, M., Grimshaw, D., Kleine, D. and Unwin, T. (2011). What are the key lessons
for ICT4D partnerships for poverty reduction? Systematic review report, London:
Department for International Development.
Tennyson, R. (2011). The Partnering Toolkit. Oxford: The Partnering Initiative in
Association with the International Business Leaders Forum. 3 rd edition.
70
Unwin, T. (2005). Partnerships in Development Practice: Evidence from Multi-

Stakeholder ICT4D Partnership Practice in Africa, Paris: UNESCO for the World
Summit on the Information Society.
World Economic Forum. (2012). Global Education Initiative: Retrospective on
Partnerships for Education Development 2003-2011, Geneva: World Economic
Forum.
Biography
Tim Unwin is UNESCO Chair in ICT for Development (ICT4D) and
Emeritus Professor of Geography at Royal Holloway, University of
London. He was Secretary General of the Commonwealth
Telecommunications Organisation (CTO) from 2011-2015, and Chair
of the Commonwealth Scholarship Commission from 2009-2014. He
serves on the ITU's m-Powering Development Advisory Board, the UK
Department for International Developments Digital Advisory Panel,
the UN University Computing and Society International Advisory
Board, the Steering Committee of the World Economic Forums
Internet for All initiative, and is Honorary Professor at Lanzhou
University in China. He has written or edited 15 books and more than
200 academic papers and chapters, many of which focus on the use of
technology for development. His edited book Information and
Communication Technologies for Development, is published by
Cambridge University Press, and his book Reclaiming ICT4D is
published by Oxford University Press. He was appointed a Companion
of the Distinguished Order of St. Michael and St George (CMG) in the
Queens 90 birthday Honours list in 2016 for his services to the
Commonwealth.
71
Chapter 3
Digital Divide and Digital
Multiplier: A Paradigm Shift
through Innovation
Emanuele Giovannetti*
This chapter discusses the key factors that facilitate and support the
creation of an environment in which innovations are more likely to
succeed, and highlights recommendations to make Information and
Communication Technologies (ICTs) key enablers in realizing the
Sustainable Development Goals (SDGs). These recommendations arise
from adopting a multi-stakeholder approach to support innovations. The
stakeholders roles are analyzed by focusing on how they interact
through ICT-enabled platforms that allow establishing new and
previously unachievable interconnections in the development of
innovations. Examples of such ICT-enabled platforms are discussed by
focusing on their potential benefits and associated risks, which
ultimately depend on the existence of proper technologies as well as an
enabling policy, regulatory and economic environment to support
different pillars in the innovation ecosystem, including the role of
gender in innovation, and the potential for positive spillovers to create
digital multipliers that foster useful innovations and enhance
productivity.
3.1 Introduction
This chapter identifies the key elements that facilitate and support the
creation of an environment in which innovations are more likely to
*
Anglia Ruskin University and Hughes Hall College, University of Cambridge,
Cambridge, United Kingdom
72
succeed, and highlights the policies that need to be set and implemented
so that Information and Communication Technologies (ICTs) may
become vital enablers in realizing the Sustainable Development Goals
(SDGs). When properly applied, ICT-centric innovations can act as
digital multipliers, providing digital dividends for the billions of
disconnected or poorly connected people in many regions of the world
(World Bank, 2016). By facilitating ICT-centric innovations, the digital
revolution plays a key role in reaching many of the SDGs discussed in
Chapter 1.
We broadly define innovation as a previously non-adopted modality to
satisfy a specific need in a given context.40 This high-level
characterization encompasses the traditional distinctions between
process, product and organisational innovations, between radical and
incremental innovations, and includes the diffusion and adoption of
innovations in new contexts. For example, product innovations may
satisfy the need for an intermediate product or service within a
production chain in a B2B framework, or increase service variety for
the end user in a B2C setting. Our definition also encompasses
processes and organizational innovations associated with structuring
and managing resources and outputs within enterprises and markets.
Our definition of innovation also includes the adoption of techniques
that may be well-established in other contexts but may find new
applications in new contexts. Thus, technological adoptions and
adaptations, often through recombination, are also regarded as
innovations.
This chapter focuses on the entire innovation ecosystem (Adner, 2006),
which includes interactions between different stakeholders participating
in the innovation process and the forces and feedbacks that drive such
interactions. In this ecosystem, ICTs play a key role in clarifying how
the linkages operate, and facilitate interactions to expand and enhance
opportunities as discussed in detail below. ICTs enable stakeholders to
develop and share new knowledge, impacting all aspects of innovation
40
The literature is rife with multiple characterizations of what constitute innovations.
For example, the pioneering work by Pavitt (1984) and Archibugi (2001) provide
useful frameworks for understanding innovation processes.
73
processes from the original discovery through their implementation in

the operation of markets and enterprises. This chapter also addresses the
conditions required for the innovation ecosystem to transform digital
divides into digital multipliers. The focus is on the building blocks
forming the innovation ecosystem that benefits from the full set of
implicit and explicit interactions between different stakeholders. In this
framework, ICT-centric platforms are simultaneously organizational
innovations in their own right as well as innovation enablers. As such,
they play a pivotal role in generating digital multipliers.
3.2 Innovation Ecosystems

The study of the drivers of innovation was radically transformed in the
late 20th century by the emergence of evolutionary economics (Nelson
and Winter, 1982; Dosi, 1982) whose focus was on understanding
innovations as organisational learning processes leading to creative
and disruptive effects on markets and industries (Schumpeter, 1934). In
this paradigm, the focus shifted to modeling the processes governing a
firms production decisions and considering innovations as the process
by which the production processes mutated. This led to the concept of
national innovation systems (Lundvall, 1992) based on the notion that
understanding the linkages among key supply chain actors leads to
understanding how innovations contribute to the enhancement of the
overall economic performance. This is due to the fact that innovation
and technical progress emanate from a complex set of interactions
among multiple actors engaged in producing, distributing and applying
different kinds of knowledge, and the innovative performance of a
country depends to a large extent on how these actors relate to each
other as elements of a collective system of knowledge creation and use,
as well as the technologies they use. (OECD, 1997, page 9).
The functioning of innovation ecosystems depends on how their
multiple stakeholders are linked through a set of cooperative
interactions that form an open innovation network (Chesbrough, 2003).
Open innovation networks enhance digital multipliers, and generate
additional indirect benefits by expanding the effects of innovations to
an even wider set of stakeholders through positive spillovers and
network externalities. By including these indirect spillovers and
74
unintentional benefits, an innovation ecosystem (our focus here)

represents a more encompassing concept than the set of explicit
cooperative interactions forming the open innovation network.
The following sections build on this conceptual framework, and
consider innovations as part of a dynamic process of collective learning,
leading to changes in the way products and services are made, refined
and delivered.
3.2.1 Collaborations as Building Blocks of Innovation
Ecosystems
In order to understand how the innovation ecosystem works, one needs
to focus on the interactions between different stakeholders (Figure 3.1).
These interactions represent collaborations that enable the innovation
ecosystem to develop, share, and implement innovations. Our focus on
the modalities of collaboration among stakeholders is based on the large
body of theoretical and empirical research developed to measure
innovative activities and outputs, as discussed in the Oslo Manual
(OECD/Eurostat, 2005) which is a key reference on the design of the
Community Innovation Surveys (CISs), conducted by Eurostat.41
The CISs provide valuable data for assessing the degree of
innovativeness in European countries, regions and sectors and identify
the data needed to assess the economys capacity for innovation. The
CISs focus on the process, product and organisational innovations and
the interdependencies among the many stakeholders that jointly
contribute to the development of innovations. These innovation surveys
allow a detailed decomposition of a firms innovation expenditures into
different intangible assets (Corrado et al., 2006) that contribute to
building its capacity for absorbing knowledge (Cohen and Levinthal,
1990). The CISs also provide evidence about the many intentional
cooperation activities, set up by firms as part of their innovation
processes. These activities are categorized according to the types of
interactions among stakeholders. The CISs list the set of stakeholders
41
Eurostat (2017). http://ec.europa.eu/eurostat/web/microdata/community-
innovation-survey.
75
Figure 1. Stakeholders in Innovation Ecosystem

Source: ITU (2017)
with whom an innovating firm can set up cooperative interactions in
one of the following categories: 1) other businesses within the same
enterprise group, 2) suppliers of equipment, materials, services or
software, 3) clients, customers or end users, 4) competitors or other
businesses in the same industry, 5) consultants, commercial
laboratories, or private R&D institutes, 6) universities or other
institutions of higher education, and 7) Government or public research
institutes.42
The role of intentional cooperation for innovation has been the focus of
Management, Innovation and Regional Studies using survey data. In
separate studies, De Propris (2002), Freel and Harrison (2006),
Tomlinson and Jackson (2013) and Giovannetti and Piga (2017) have
all identified the facilitating role of stakeholders cooperation for the
realization of successful innovations. The positive role of explicit
cooperation on innovation is also one of the key insights that has
emerged from the literature on open innovation processes (Chesbrough,
2003; Gassmann et al., 2010). This leads to Recommendation 1 below
to develop a roadmap for supporting innovations:
42
See Mazzucato (2013) for a fascinating analysis of the role of governments in the
innovation process.
76
Recommendation 1: Facilitate cooperation in innovative activities

among different stakeholders by providing face-to-face and virtual
meetings, and trust-enforcing mechanisms to increase the chances of
success.
3.2.2 Collaboration Among Competitors Can Hamper
Innovation
While the previous section stressed the importance of facilitating
cooperative interactions between different stakeholders, a policy
roadmap also needs to focus on the potential for conflicting economic
objectives among different stakeholders in the innovation ecosystem.
For example, innovations in goods and services when introduced by
competitors intensify both price and quality competition, exerting a
negative effect on profitability. Anticipation of this adverse impact can
reduce the incentives to innovate (Giovannetti, 2013; Katz et al., 1990).
Insiti and Levien (2004) coined the term dominator strategy to
capture how this might adversely affect an open innovation ecosystem
and reduce its innovation output. Furthermore, building on the
Schumpeterian notion of creative destruction, Aghion and Howitt
(1992) incorporated these ideas into an endogenous growth model, and
pioneered the Neo-Schumpeterian approach to the relationship between
innovations and economic growth (See Aghion et al., 2014 for a recent
survey). A problem may arise when innovation policies support
industrial consortia for developing systems such as online booking
systems or e-commerce platforms. While cooperation in such consortia
can help with cost sharing and the dissemination of best practices, there
is also a risk that such consortia can be used to reduce competition that
might otherwise be a strong incentive. Such negative aspects of
cooperation among competitors within an innovation ecosystem should,
therefore, be taken into account when assessing potential obstacles in
introducing innovations.
Recommendation 2: Monitor cooperation between stakeholders that
are also product competitors as this may reduce rivalry and reduce
innovation.
77
3.2.3 ICTs, Spillovers and Soft Boundaries in Innovation

Ecosystem
CISs capture explicit collaborations among stakeholders, but are less
successful in capturing implicit or unintentional interactions that can
also facilitate knowledge spillovers. Marshall (1890) was the first to
note the role of knowledge spillovers by way of face-to-face interaction
and informal contacts (Polanyi, 1958) that can take place when parties
are in physical proximity (Jaffe, 1989; Acs et al., 2002; Audretsch and
Feldman, 1996). Due to the de-localising effect of ICTs, such spillovers
can now take place without requiring physical proximity43. This
unintentional form of cooperation is what characterizes the holistic
nature of innovation ecosystem, where intentional collaborations as well
as unintentional knowledge spillovers facilitate innovations.
To deliver tangible benefits, these spillovers require potential
beneficiaries to appreciate and take advantage of the shared knowledge.
Cohen and Levinthal (1990) noted that knowledge produced elsewhere
is a key component of a companys intangible capital (Corrado et al.,
2006) and is considered as an enabler of innovation. Such knowledge
spillovers that can occur because ICTs reduce the need for physical
proximity are beneficial simply because trade between firms can be
increased because of such spillovers.44 Hence, the increasing
importance of e-commerce platforms for Business to Business (B2B)
interactions makes ICTs a key enabler for facilitating and absorption of
unintentional cooperation.
43
ICTs make it feasible to distribute the organization of decision-making and
production in multiple dimensions: geographically (e.g., software running on a
remote server can implement functionality that previously had to be hosted on
hardware in a specific location); time (e.g., store-and-forward service); and context
(e.g., software-controlled machines can customize production on a per-unit basis).
44
A research paper on these themes, published by the UK Department for Business,
Innovation and Skills (BIS, 2014), for example, measured the unintentional
cooperation effects arising from proximity in production space by using metrics
based on weights derived from inter and intra-sector trade exchange flows.
78
3.2.4 ICT-Centric Innovation Ecosystems

Having considered the importance of intentional and unintentional
collaborations in the innovation ecosystem, we now focus on the role of
ICTs in facilitating open collaboration and introducing innovations. By
allowing virtual communications that do not require physical co-
location of collaborators, ICTs play a key role in forming virtual R&D
teams, promoting creativity, exchanging technical information, and
coordinating decentralized activities, as shown by Boutellier et al.
(1998) in their study of IBM's transnational R&D activities. The
literature also attests to the importance of investing on ICTs as a key
enabler in firms innovative activities leading to better productivity
(Hall et al., 2012). ICTs may simultaneously be the cause and the effect
of innovations, which complicates the analysis of their impact.
Different authors have addressed this problem by proposing different
estimation or modeling schemes (Brynjolfsson and Hitt, 1995; Hempell,
2005; Rller and Waverman, 2001; Czernich et al., 2011).
The concept of innovation ecosystem has also been used in framing
policies in developing countries (ITU, 2016a). When assessing the
impact of ICTs in fostering innovation in developing countries, the key
problem is that the innovation ecosystem often suffers from the absence
of reliable ICT infrastructure needed by advanced ICT-based platforms.
Recommendation 3: As the innovation ecosystem benefits also from
unintentional collaboration, arising from spillovers in intangible
innovative activities, innovation policy should encourage the use and
diffusion of all platforms that facilitate the process of knowledge
absorption for the formation of human capital and ICT access
infrastructure required by these platforms.
Another major impediment often experienced in flourishing innovations
is the lack of sufficient funds to transform innovative ideas into
successful products and services. In some economies, venture capital
comes to the rescue, where risk-taking investors are prepared to invest
in activities that in their own judgment are worthy of investment.
However, when venture capital is unavailable, a new concept called
crowdfunding, as described further in Section 3.3.3, can be used where
many investors provide small amounts and the risk is distributed to
79
many funders. Crowdfunding uses web-based interfaces to match

lenders and borrowers to finance micro-entrepreneurship and innovation
projects, and is an example of ICT-enabled platforms that can play an
important role in strengthening the innovation ecosystem (Kromidha
and Robson, 2016; Davies and Giovannetti 2016).
There are many other examples of ICT-enabled concepts, such as
Innovation Hubs (World Bank, 2016, Box 4.29 page 229; Firestone and
Kelly, 2015) that match innovators with entrepreneurs and financiers;
Internet exchange points (World Bank, 2016, page 220) that facilitate
exchanging Internet traffic in a cost effective manner, E-commerce
platforms (ITC, 2016) that match sellers and buyers, and national
research and education networks that connect researchers and
universities in different locations to achieve WSIS Target 3 Connect
all scientific and research centers with ICTs (ITU, 2011; World Bank
2010; Foley, 2016), all of which can facilitate innovation by linking key
stakeholders. Each of these ICT-enabled platforms is both an ICT-
innovation in its own right, as well as a facilitator of additional
innovations. When extant, such platforms can serve as digital
multipliers, amplifying the effects of innovations by expanding their
accessibility, while stimulating more innovations. However, the success
of such platforms is not assured and depends on the existence of proper
technologies as well as the enabling policy, regulatory and economic
environment to support the pillars of innovation ecosystem.
An important element for ensuring that such platforms can serve as
digital multipliers is the need to provide access to disconnected
populations. This is in line with Target c of SDG 9: Significantly
increase access to information and communications technology (ICT)
and strive to provide universal and affordable access to the Internet in
least developed countries by 2020. At present, this is mainly achieved
via wireless networks as the preferred way to reach the unreached in an
affordable manner and provide them with digital content and
connectivity (ITU, 2016). Hence, affordability, quality and availability
of mobile services are vital for these platforms to reach critical masses
of users. For innovation to be economically viable, there needs to be an
addressable market that exceeds a critical mass, which once achieved
can set off a self-reinforcing adoption cycle (Katz and Shapiro, 1985).
80
Public policy can help jumpstart such adoption bandwagons by helping

to form the critical mass through demand aggregation, education, and/or
subsidy programs. Such policy stimulus is especially important when
social returns greatly exceed private returns.
Bricks and mortar shops and physical market places are examples of
market platforms that enable buyers and sellers to engage in the trade of
goods and services. The formation of micro-shops addresses gender
equality (SDG 5) as their absence forces consumers, predominantly
women and girls, to walk for kilometers to purchase and exchange
essential livelihood items, preventing them from engaging in
educational tasks. Establishing micro-shops to meet these needs often
requires micro-entrepreneurship that, in turn, needs the availability of
more advanced digital platforms, such as mobile banking. In many rural
areas, it can be difficult for financial institutions to find economic
incentives to provide physical banking services to the population
(UNCTAD, 2015; ITU, 2016; McKinsey, 2016).
In each of such platforms, the key elements are partnership and
cooperation that also require conscious decisions based on human and
business interactions, for which ICT infrastructure is a prerequisite.
Recommendation 4: As an ICT-centric innovation ecosystem is
formed by developing and utilizing multiple ICT-enabled platforms by
different stakeholders, there is a need for holistic and gender aware
policies to ensure that such platforms are developed and used for
attaining a vibrant and successful innovation ecosystem.
3.3 Examples of ICT-Centric Innovation Ecosystem and

Their Relevance to SDGs
3.3.1 Incubators, Digital Hubs and Mobile Application
Development45
The development of Mobile Applications is typically associated with
the emergence of digital hubs and incubators, of which some 314 were
45
Parts of this section draw on Unwin (2017).
81
active in Africa in 2016 (Du Boucher, 2016). The iHub in Nairobi was
hailed as a successful example of African innovation, after launching
Ushahidi, a crowd sourcing mapping software and the BRCK, a rugged,
self-powered, mobile Wi-Fi device that connects people and things to
the Internet with inadequate infrastructure. Incubator initiatives have
been promoted by international organizations to support
entrepreneurship in developing countries (Firestone and Kelly, 2015). A
potential problem arising from such initiatives is that large (and often
foreign-based) companies that can play an important role in promoting
the success of such hubs and incubators may also take advantage of
their superior resources to hire or acquire the assets of some of the best
emerging talents and resources available in such hubs, starving smaller
firms of talent and potentially reducing future competitive threats by
preventing smaller firms from growing to critical mass (Unwin, 2017).
This is a clear example whereby rivalry among competitors may stifle
innovation.
Similarly, the failure to successfully cooperate with other stakeholders
who embody entrepreneurial competencies and resources in the
innovation ecosystem may cause the incubator to fail in providing the
necessary business skills needed by such potential entrepreneurs to
succeed, as indicated in Recommendation 1.
Recommendation 5: Governments should protect smaller firms by
discouraging larger companies from hiring talents of smaller firms.
3.3.2 Gig Economy
Gig economies are systems where temporary employment positions are
dominant and organizations tend to use short-term or zero hour labour
contracts. The gig economies are enabled by ICT platforms generating
new demand and supply for material and digital goods and services
through ICT-based matching mechanisms. However, the typical
innovation ecosystem surrounding the gig economy presents both
opportunities and threats. Some of the problems posed by these digital
platforms are due to the fact that gig economy workers often miss out
on the social protection systems such as unemployment benefits, sick
pay and pensions. The World Bank and the International Labour
Organization (ILO) recommend that countries should adopt the same
82
Figure 2. The relationship between availability of online work and

wealth
http://ilabour.oii.ox.ac.uk/mapping-the-demand-for-online-labour
digital technologies to extend social and labour legislation to protect gig

economy workers (Kuddo et al., 2015).
The importance of ICT-centric innovation ecosystems sustaining the gig
economy is becoming increasingly evident for developing countries.
India, the Philippines and Bangladesh, for example, all have large
shares of online labour, as shown in Figure 3.2. However, the data also
show that many countries in Sub-Saharan Africa such as Cameroon,
Kenya, and in South America such as Guyana and Panama, are
experiencing significant rates of employment linked to the gig
economy.
In October 2016, digital platforms such as Uber, Lyft, TaskRabbit,
Upwork, Freelancer, Thumbtack, and Airbnb, were used by about 4
percent of the working-age population to earn income (McKinsey
Global Institute, 2016). The report also found that most independent
sellers of goods do so by joining e-commerce market platforms, such as
eBay and Etsy, while 25 and 40 percent of those who earn
independently by leasing assets use digital platforms such as
83
HomeAway, Airbnb, or VRBO (McKinsey Global Institute, 2016,

page 12). The ICT-platforms underlying the gig economy present
unmatched opportunities for introducing innovations by providing
services and goods in new areas. But their development also poses key
policy and regulatory questions that need to be addressed if ICT-centric
innovation ecosystems, based on these platforms, are to achieve the
relevant SDGs.
Recommendation 6: ICT-centric innovation ecosystems in the gig
economy present unmatched job opportunities, but may disregard
employees rights. Hence, while labour policies and laws should
support innovations, they should also protect such rights.
3.3.3 ICT-Centric Crowdfunding
ICT-centric crowdfunding can alleviate the shortage of funds for
transforming innovations into successful and marketable products and
services. It can also be used to address a number of other challenges,
such as provision of low-cost microfinance, helping in particular the
participation of women whose gendered perspectives and contributions
are important in developing new products and services or meeting
users needs.46 However, an ICT-centric crowdfunding platform can
only be useful if all its users are provided with affordable and
ubiquitous ICT connectivity.
One famous example of pre-ICTs crowdfunding is the call by a New
York newspaper to its readers for funds to build the pedestal of the
Statue of Liberty (BBC News, 2013). ICTs have transformed this old
idea into crowdfunding platforms capable of raising a substantial
amount of money from a large number of entrepreneurs as an
alternative form of funding.
Crowdfunding has been classified into different types depending on the
participation rights of those funding the projects. Giudici et al. (2013)
46
See, for example the WISET and Portia report edited by Lee and Pollitzer (2015)
The Role of Gender-based Innovations for the UN Sustainable Development
Goals Toward 2030: Better Science and Technology for All. http://gender-
summit.com/images/GS6Docs/SDG_Report_FINAL.Jan13.pdf
84
identified the following four categories:

Equity-based crowdfunding, where a backer is entitled to own a
portion of the company shares or the product they are backing.
Lending-based crowdfunding, where backers are given an interest
payment for their backing.
Donation-based crowdfunding, where no physical return is given to
the backer.
Reward-based crowdfunding, in which the backer is given a reward,
based on the size of his donation which can be a product, artwork, or
other rewards.
Crowdfunding platforms are complex ICT-enabled applications and
their success in delivering innovations depends on the interplay of many
stakeholders, not only the lenders and borrowers. One key group of
stakeholders is represented by the social network built around a given
innovation project (Colombo et al., 2015). In some developing
countries, the geographical location of a project is an important factor
that affects its probability of success, and plays a key role towards
financial inclusion and driving micro-entrepreneurship. However, ICTs
enable the crowdfunding platforms to bypass the physical distance
between funders and proposers, and facilitate achieving SDG 8,
Target 10 Strengthen the capacity of domestic financial institutions to
encourage and to expand access to banking, insurance and financial
services for all.
Recommendation 7: ICT-centric innovation ecosystem thrives
through reciprocity. Innovation policy should support the formation of
social capital by facilitating meeting and interaction and enforcing
rights and guarantees. These are key elements in the ecosystems'
finances comprising its crowd-funders and stakeholders.
In general, and for crowdfunding in particular, timing is another key
dimension in determining the success of innovative projects. Such path-
dependency (Arthur, 1994) reflects the aspects of categorizations
inspired by Rogers (2003) in the more general context of the theory of
diffusion of innovations. The timing of innovation processes, as
depicted in Figure 3, includes a portion that is commonly called the
85
Valley of Death, defined as a period after an innovative concept is

proved to be functional when innovators require significant investment
and support, and there is a high risk of failure as a business. This is
possibly the most critical period to provide the necessary and critical
support, though support throughout the lifecycle is also critically
important. Similar to the need for support from all pillars of the
ecosystem, if any part of the entrepreneurial lifecycle fails, it will vastly
reduce the chances of success for similar ventures (ITU, 2016a, p. 59).
Recommendation 8: The initial phase is very important in an
innovative activity, and providing early financial support is critical to
surviving the Valley of Death. Early access to finance can be achieved
by disseminating information, creating accountability, and increasing
trust in ICT- enabled crowdfunding platforms.
Figure 3. The Valley of Death and phases of Stakeholders

involvement
86
3.4 Roadmap to Enhance Digital Multipliers

ITU estimates that over 4.5 billion people were connected worldwide
in 2016. However, many are still unable to enjoy new products or
services to satisfy their actual or potential needs, mainly due to lack of
proper platforms for matching those needs with either existing or
innovative products or services. Even more worrisome, the cost to
connect the next 1.5 billion people by 2020 is estimated to be $450
billion (Broadband Commission for Sustainable Development, 2016)
and this would not include those at the bottom of this list. Clearly,
policies aimed at attaining SDGs should move far beyond this threshold
and focus on innovations that could reach the bottom billion.
Using appropriate ICT metrics is a prerequisite for the success of any
agenda that aims at fostering innovations for the benefit of the society.
Metrics are necessary to monitor and evaluate capabilities and progress
toward specific goals and outcomes. Policies targeting Innovation
Divides should use appropriate ICT metrics, such as Network
Readiness Index provided by World Economic Forum, Akamai's speed
of connectivity indexes (Figure 4) and ITUs ICT Development Index
(IDI),47 each capturing, benchmarking and comparing different aspects
of ICT development and readiness, at country and regional levels.
In the ITU report on Measuring the Information Society (ITU, 2016),
regional comparisons of the IDI index show significant disparities
across the globe. However, while essential in concisely capturing and
allowing the visualisation of digital divides across countries, the IDI
index also shows the relevance of policies for removing the obstacles
faced by ICT-based innovations. The IDI index has three separate sub-
indices, namely, Access, Use and Skills. The disaggregate analysis of
these sub-indices is of particular interest, especially when these vary
greatly among countries and regions, as they provide a clear picture of
47
For additional metrics based on crowd-sourced Internet Periphery methods see, for
example, Giovannetti and Sigloch (2015), Gupta et al. (2014) and the series of
Active Internet Measurement Systems (AIMS) workshops hosted by the Center for
Applied Internet Data Analysis (CAIDA).
https://www.caida.org/workshops/aims/1703/
87
the multi-dimensionality of the digital divides. Of particular interest are

the countries that perform very differently in the world ranking in
different sub-indices, allowing for the disentanglement of the different
country-specific bottlenecks and barriers. These sub-indices can be used
to identify specific deficiencies in the physical and human capital
resources needed by appropriate ICT infrastructure underlying the
innovation ecosystem system.
Figure 4. State of the Internet: a heat map displaying worldwide rate

of access to 4 Mbps broadband
Source: Akamai (2016)
The Access index can be used in developing a policy roadmap for the
ICT-centric innovation ecosystem for addressing the digital gap that
prevents the less connected and totally disconnected from enjoying the
potential transformative benefits of digital platforms (ITU, 2016a).
However, while ICT policies that focus on physical ICT infrastructure,
as captured by the Access index are essential, it is equally important
(especially for developing countries) to also focus on the other key
elements in the ICT-centric innovation ecosystem. The Use and Skills
indices may provide a better indication of the innovation capacity
associated with social and intangible capital, both essential components
of the overall growth and productivity that are needed for inclusive and
sustainable development through innovations.
Moving from the digital divide to the innovation divide also implies
shifting from lack of connectivity to lack of services, platforms and
88
products that hold back consumers and producers needs. Digital

platforms are the backbone of different types of impactful but low-cost,
or frugal (Radjou and Prabhu, 2015) innovations, which can be
developed by recombining and adapting existing tools and applications
to specific needs and contents that have local and gender relevance.
These are considered as innovations, as they satisfy given needs in a
new context. The main obstacles associated with these innovations are
largely due to the coordination required for sustaining ecosystems to
work smoothly through the full innovation cycle, including the
possibility of crowdfunding to overcome the Valley of Death.
Different Recommendations developed in this chapter add further
elements and suggestions to improve some critical aspects of the
internal workings of the ICT-centric innovation ecosystem. These
insights were derived by focusing on building blocks of the ecosystem:
the set and timing of the intentional and unintentional interactions
among different stakeholders. As an exemplar case of successful
innovation ecosystem, the Research Park (IITMRP) and its Incubation
Cell (IITMIC) at Indian Institute of Technology Madras in Chennai is
presented in Appendix 1, where we discuss practical implications, and
lessons learned. This case-study focuses on the nature of interactions
between key stakeholders, and on the IITMRPs actions to coordinate
and leverage the synergies in driving innovation and entrepreneurship
through cooperation between academia, industry and other stakeholders.
3.5 Concluding Remarks

The presence of significant barriers for developing and enhancing ICT-
centric innovation leads to missed opportunities in satisfying the
unfulfilled needs for services and products, and to obstacles in
enhancing productivity and efficiency. These pose major impediments
for achieving SDGs.48 A set of policies and guidelines needs to be put
in place to establish an ICT-centric innovation ecosystem for achieving
SDGs in an efficient and cost effective manner. The ICT-centric
48
Achieve higher levels of economic productivity through diversification,
technological upgrading and innovation, including through a focus on high-value
added and labour-intensive sectors.
89
innovation ecosystem has a number of separate, yet interlinked

elements. It is essential for all stakeholders to have a common
understanding of the objectives and agree on efficient methods to
achieve those objectives. There is also a need to have political support
and determination in removing the obstacles and bottlenecks. In some
instances, the stakeholders and players in the ICT-centric ecosystem are
unaware of the adopted policies and expectations.49 This lack of
awareness impedes innovation and stifles growth and productivity. In
this respect, the human and social capital, ICT infrastructure, platforms
and institutions are all key elements of the ICT-centric innovation
ecosystem that need to be coordinated and harmonized.
Acknowledgement
I would like to sincerely thank Mr. Brahima Sanou, Director of
Telecommunication Development Bureau of the International
Telecommunication Union for the invitation to contribute to the ITU
study on ICTSDGs, Dr. Eun-Ju Kim, Prof. Tim Unwin and Mr.
Mohamed Ba for numerous suggestions and discussions on this chapter.
Also, sincere thanks to Prof. Ahmad R. Sharafat, Dr. William H. Lehr
and Mr. Stuart Sharrock for their many insightful comments that helped
in transforming the initial draft into this final version. I am also thankful
to Prof Ashok Jhunjhunwala for hosting me at IIT Madras, with the
support of the UK India Education Research Initiative (UKIERI). Last
but not least, I thank Anglia Ruskin University for supporting me, and
Mr. William Davies and Mr. Sebastian Sigloch for their precious
assistance. Any mistake remains of course my own responsibility.
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https://openknowledge.worldbank.org/handle/10986/12367.
World Bank (2016), World Development Report 2016, Washington, DC.
94
Appendix A
Fostering Innovation in Indian

Institute of Technology Madras
Research Park
Emanuele Giovannetti (Anglia Ruskin University)

and
Shailaja Fennell (University of Cambridge)
1 Introduction
The Indian Institute of Technology Madras (IITM) has established a
Research Park (IITMRP) where an ICT-centric innovation ecosystem is
at work by creating and enhancing successful collaboration between
industry, research community, academia and public bodies. IITMRPs
focus on facilitating partnerships between IITM and industry has not
only fostered collaboration towards research and development, but also
resulted in spinning-off innovative business ventures that have further
generated innovations for fostering economic development in Chennai.
IITMRP was first conceptualized to create a bridge between the
academia and the industry for transforming innovations into products,
applications and services. The key notion was that the rewards of R&D
will be significantly higher if the academia and industry work together
on new ideas. The central identifying feature of IITMRPs innovation
ecosystem is the sharing of physical space (the research park), where
research-oriented companies interact formally and informally with
faculty members and other scientists and technicians at IITM.
IITMRP rewards collaborative interaction through its knowledge and
innovation ecosystem, and has produced solid and tangible results: By
2015, over 60 patents were filed for the work done at IITMRP. This
shows a successful way to overcome the traditional obstacles faced by
95
individual innovators in transforming their new ideas and concepts into

successful new products and services by way of creating, recombining,
integrating, and applying new knowledge and insights into successful
technological innovations.
2 Fostering Innovation in IITMRP Innovation Ecosystem
IITMRP was opened in March 2010, and is directly linked to the main
campus of IITM. It covers an area of 11.42-acre, and is in the proximity
of one of the largest IT parks in Asia, the Tidel Park50. The Tidel Park
was set up in 2000, and employs more than 12,000 software
professionals. High speed data/voice services are provided by multiple
service providers to customers in Tidel Park.
IITMRPs basic approach to fostering innovation includes:
1. Creating a collaborative environment between the industry and
academia through joint R&D projects and consulting assignments
2. Developing a self-sustaining and technologically fertile environment
3. Aligning R&D activities in the academia to the potential needs of
the industry
4. Providing world class infrastructure for R&D activities
5. Educating and training high-quality technical staff and motivating
them to grow professionally through part-time Masters and PhD
Programs
6. Sharing technology and business skills between academia and
industry tenants
IITMRPs objective is to create a space that reproduces the
characteristics of the best innovating research parks, for example, that
of Stanford Research Park: a community of and for people who
seek to invent the future. We support innovative companies in their
R&D pursuits by providing modern facilities in a beautiful natural
landscape, offering sustainable transportation programs, forging
connections with Stanford Universitys talent and resources, and
fostering collaboration 51. Clearly, given the different national context,
50
http://www.tidelpark.com/index.asp
51
http://stanfordresearchpark.com/about
96
a key success of IITMRP has been in showing that some of these ideas,
initially developed in the US, could be adapted to the local contexts of
Tamil Nadu and India.
IITMRPs focus is not only on business incubation but also on
supporting innovation in already established R&D intensive companies.
This is done by connecting the industry to the innovation inputs of
knowledge and being the catalyst for high-tech development.
Collaboration amongst industry R&D staff, faculty members and
students is the key element for increasing the probability of success via
introducing thriving and sustainable innovations. These three key pillars
are brought together by being co-located at IITMRP, and have been
identified as the following Golden Triad forming the ecosystem:
R&D staff: bringing the rich insights of the industry and market
Faculty: repositories of a wealth of knowledge from multiple
domains and departments
Students: different but key stakeholders, able to work relentlessly
and oblivious to risk.
The benefits of becoming a tenant company in IITMRP include high-
quality ICT and research infrastructure, and a collaborative relationship
with IITM, so that tenant companies will have the opportunity to tap
into its research resources. In other words, by moving into IITMRP, a
company will have the potential to leverage the expertise of the faculty,
utilise their research facilities, while providing part-time jobs and work
experience to IITM students. IITMRP now has 29 corporate clients52
and 16 smaller incubates53, and has developed and deployed effective
mechanisms to foster cooperation between different stakeholders.
2.1 CREDIT: Fostering Cooperation in Innovation
Ecosystem
Collaboration between the industry and academia has been formalised
so that companies residing in IITMRP are expected to seek active
collaboration with the university, for which they receive points.
52
http://respark.iitm.ac.in/our_clients/corporate_clients.php
53
http://respark.iitm.ac.in/our_clients/incubatees.php
97
Every company is required to earn a minimum number of points each

year, depending on its area of activity. IITMRPs Credit Points System,
called Collaboration in Research and Engagement with Departments
in IIT Madras (CREDIT54) measures collaboration between a company
and IITM. The key motivation lies in the fact that a successful
innovation ecosystem has a high level of collaboration in R&D and
innovation activities among different stakeholders, which in this case
are the resident companies and IITM. The CREDIT system rewards
collaboration and discourages opportunistic behaviour.
2.2 Incubation in IITMRP: A Pillar of Entrepreneurship in
the Innovation Ecosystem
IITMRP promotes entrepreneurship and innovation by way of
incubation, which include provision of work space, seed funding,
branding through IITMs worldwide reputation, academic mentoring,
collaboration based networking, and other support services such as
patent application. IITMRP has developed a system of topic-specific
incubators that include Rural Technology Business Incubator and Bio
Incubator. The incubators are coordinated by the Incubation Cell, and
have incubated more than 100 companies. In the sequel, we briefly
review the main features and roles of the Incubation Cell, the Rural
Technology Business Incubator, and the Bio Incubator.
IITM Incubation Cell (IITMIC)55 coordinates and supports the two
Incubators to ensure innovation and entrepreneurship at IITM. It
supports cutting-edge research and facilitates collaboration between
academia and industry. IITMIC was the first university-driven research-
park-based incubator in India and has a strong record of incubation in
rural, social and industrial technologies. Its success is based on
establishing collaboration between different stakeholders: the State, the
private sector (local companies and outside firms), and IITMs students,
faculty members, staff & alumni. It supports tech start-ups that can
disrupt markets and industries via innovative solutions while providing
benefits to the wider society.
54
http://respark.iitm.ac.in/collaborate_with_us/credits.php
55
http://www.incubation.iitm.ac.in/
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IITM Bio Incubator56 was established by the Biotechnology Industry

Research Assistance Council 57(BIRAC), a public sector enterprise in
the Department of Biotechnology (DBT). BIRAC was set up as a
platform to empower emerging biotech enterprises to undertake
strategic research and innovation, while addressing the nations needs
for new products. Through the Bio Incubator Support Scheme (BISS) 58,
BIRAC has established several bio incubators around the country,
including one at IITM. The objective of IITMs Bio Incubator is to
promote Indian biotech innovation and entrepreneurship by enhancing
R&D capabilities in start-ups and SMEs.
Rural Technology and Business Incubator (RTBI)59 is the IITMs
incubator for rural-inclusive technology and business innovation. Its
mission is to design, pilot and incubate scalable business ventures with
a rural focus. It provides leadership, funding, and an incubation
ecosystem for entrepreneurs at any phase in their venture including the
early conceptual stage. RTBIs incubation areas include education,
health, agriculture, financial inclusion, vocational training, and micro-
enterprise development and technologies for rural needs.
The faculty members at IITM are shareholders in 19 start-ups. Besides,
collaboration between faculty members and their current and former
students for translating research into commercial ventures/companies is
on the rise.
2.3 Patents and Intellectual Property Rights in IITMRP
Intellectual Property Rights (IPRs) for joint activities performed in
IITMRP are negotiated between the companies and the university. IITM
normally assigns all IPRs to the respective company, and in return
receives a portion of revenue generated from the work. In the legal
framework governing IPRs, the involvement of other governmental
departments and institutions is also essential. For example, the National
56
http://www.bioincubator-iitm.in/
57
http://www.birac.nic.in/description_new.php?id=89
58
http://www.birac.nic.in/desc_new.php?id=84
59
http://www.rtbi.in/
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Science & Technology Entrepreneurship Development Board

(NSTEDB), which is part of the Indian Department of Science &
Technology played an important role in establishing IITMIC and
certifying the IIPMRPs Technology Business Incubator. This is of
vital importance in securing additional resources.
2.4 IITM Research Centres in Innovation Ecosystem
In what follows, we provide a brief overview of some of the more
active IITM research centres together with their respective focus.
Centre of Excellence in Wireless Technology (CEWiT)60 is a Public
Private Partnership (PPP) focussing on research, development and
deployment of wireless technology. CEWiT supports public institutions
in policy making, spectrum management, and regulation with research
on 5G technologies; and participates in global standardisation of
wireless networks and systems. CEWiT also provides simulators and
test beds needed in R&D projects.
Healthcare Technology Innovation Centre61 (HTIC) was established
with the support of Indian Department of Biotechnology (DBT). It is a
multi-disciplinary centre for facilitating collaboration among
technologists, engineers, doctors and healthcare professionals in
industry and government with a view to developing healthcare
technologies. HTIC collaborates with the leading medical institutions
and many industry players in different areas, such as ophthalmology,
ultrasonography, orthopaedics, neonatal care, and patient monitoring.
As an example, a project developed at HTIC in collaboration with
Sasken is the Remote Intensive Care Units (ICU), which provides
continuous monitoring of clinical data from patients by utilizing
multiple pieces of equipment connected to a network of strategically
located phone-based cameras. The technology was piloted in Mehta
Children Hospital, Chennai
60
http://cewit.org.in/#
61
https://htic.iitm.ac.in/newsite/
100
Centre for Technology and Policy62 (CTaP) addresses key questions on

innovation policy. Examples of such questions are how IITMs R&D
work can be leveraged to address public policy challenges, and how
science and technology can be made an integral part of policy-making
processes? CTaP focuses on energy, water, healthcare, telecom, and
education, and advocates an inter-disciplinary approach by working
with other incubation centres.
2.5 IITMRP Corporate Clients
Figure A1 shows a breakdown of the areas of activity for tenant
companies in IITMRP, and in Annex 1, we briefly describe areas of
activity and focus of 29 corporate clients in IITMRP.
2.6 Success Stories
As a direct impact of IITMRP on creating new jobs, circa 15% of
students graduating from IITM venture into entrepreneurship, and more
than 40% of faculty members are involved in entrepreneurship
activities. However, this has some negative consequences, such as
increasing the students stress levels and reducing academic
performance when their ventures pick steam. To deal with such
problems, students are allowed to take a semester off to cope better. In
what follows, we briefly mention 5 success stories that have emanated
from the IITMRPs innovation ecosystem.
2.6.1 Public Transport

RAFT is an App developed by the start-up Geotagg, which helps
commuters in mastering public transports timing in Chennai by
suggesting the best route to take between any two points in the city,
with up-to-date timing of buses and trains. It experienced more than
30,000 downloads in a very short time63.
62
https://ctap.iitm.ac.in/
63
Geotagg, incubated at IITM, (Deccan Chronicle, May 2, 2015)
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Figure A1. Areas of activity of tenant companies in IITMRP

Source: http://respark.iitm.ac.in/our_clients.php
2.6.2 Brain Games

Edsix Brain Lab was incubated in the Rural Technology and Business
Incubator, which was instrumental in seeking collateral-free loans
through the governments Technology Incubation and Development of
Entrepreneurs programme. Edsix was provided with working space, and
received mentorship, loans and grants in exchange for some equity in
the company. The work resulted in Skills Angels64, which is a gaming
platform to assess and enhance brain skills that include logic and
memory, featuring animation and images to different versions of
modifiable games. During the development phase, it was recognized
that there is a need to consult with developmental paediatricians and
clinical psychologists as well. Skills Angels was featured in Startup
India 2016, was the finalist at the CavinKare-MMA Chinnikrishnan
Innovation Awards in 2015, and has received numerous other awards,
including the Best Start-up Award in 2014 by the Department of
64
http://skillangels.com/
102
Electronics & IT, Ministry of Commerce & IT, the Hot100 Technology
Award and Peoples Choice Best Startup Award. Applications for local
and international patents have been filed for Skills Angeles.
2.6.3 Solar ATM
Vortex Engineering, one of the top 10 startups that could change your
life according to Time Magazine in 201065,66, worked on financial
inclusion by developing disruptive innovations to extend the reach of
Automated Teller Machines (ATMs) to rural areas. Among them, was
the first commercially viable solar ATM. As reported by CNBC67 A
small startup, a frugal mindset and a disruptive technology are shaking
up the rural banking scene in India, giving 300 million dwellers a
chance to get a bank account. These ATMs use solar power that works
even at extremely high temperatures without requiring air-conditioning,
and are designed to minimise breakdowns. Vortex ATM is customized
to the Indias case where electricity is scarce, accessibility is poor, crisp
bank notes are hard to get and the language and dialects vary. The
research has resulted in nine patents related to Vortex ATM.
2.6.4 Micro-Spinning
Microspin has developed another impactful innovation68 that involves a
new method of spinning for small scale production, which is the
dominant reality of cotton farmers in the Vidarbha region in the Indian
State of Maharashtra. This was achieved by integrating separate
activities of weaving and dyeing, thereby allowing cotton farmers to by-
pass intermediate stages and eliminating unnecessary costs.
65
http://www.thehindubusinessline.com/economy/spinning-success-from-diverse-
opportunities/article4541988.ece
66
http://content.time.com/time/specials/packages/article/0,28804,2017050_
2017049_2017042,00.html
67
CNBC Solar ATMs changing the face of banking in India, by Neerja Jetley
Tuesday, 1 Apr 2014 http://www.cnbc.com/2014/03/28/solar-atms-changing-the-
face-of-banking-in-india.html
68
Chennai tech firm spins a solution for farmers in Vidarbha, by SHILPA
ELIZABETH. http://economictimes.indiatimes.com/news/economy/agriculture/
chennai-tech-firm-spins-a-solution-for-farmers-in-
vidarbha/articleshow/46185407.cms?intenttarget=no
103
2.6.5 Stellapps Technologies - IoT Wearables for Cows

Stellapps Technologies was incubated at IITMRP and was ranked
second in the in 2016 Deloitte Technology Fast 50 in the Indias fastest
growing tech companies after having reached a growth rate of 1278%.
Stellaps innovations are based on a combination of the Internet of
Things (IoT), cloud computing, data analytics and wearables applied to
the dairy sector. The work is of critical relevance to the Indias 75
million dairy farms that suffer from some of the worst productivity
levels. The SmartMoo IoT router and in-premise IoT controller obtain
data via sensors that are embedded in the milking system, animal
wearables, milk chilling equipment and peripherals, and transmit the
same to the Stellapps SmartMoo Big Data Cloud Service Delivery
Platform (SDP) where data are analyzed before disseminating the
analytics to various stakeholders69. This work has differentiated
Stellapps from others and led to its enormous growth in the past few
years. The startup was bootstrapped with the founders corpus
contributions in April 2011. Subsequently, in 2012 it was angel
funded/incubated by IIT-Madras Rural Technology Business Incubator.
2.7 Conclusion
IITMRP is a case of successful innovation ecosystem and provides clear
lessons to be learned. It validates that the prescribed recommendations
in Chapter 3 form a basis for creating and establishing a successful
ecosystem for fostering innovations that create new jobs and lead to
sustainable economic development. One can clearly observe the
relevance and applicability of the recommendations in Chapter 3 to
successful cases that have emerged from IITMRPs innovation
ecosystem. However, we wish to emphasize that solutions to some
problems may not be universal, and implementation of
Recommendations needs to be carefully adapted to the conditions that
are specific to each case.
69
The Economic Times: Wearables for cows: How Stellapps Technologies is
'Milking' its way to success by MAMTA SHARMA, Nov. 16, 2016. Read more at:
http://economictimes.indiatimes.com/articleshow/55350970.cms?utm_source=cont
entofinterest&utm_medium=text&utm_campaign=cppst
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Annex 1: Corporate Clients at IITMRP70
1. Altiscale: Offers cloud service to develop a fast, reliable, easy to

use, and affordable infrastructure.
2. AMADA Soft India: Provides engineering solutions to customers in
the CAD/ CAM domain.
3. ARCI: Is a R&D entity in advanced materials and the associated
processing technologies.
4. BHEL R&D Gateway: Is engaged in the design, engineering,
manufacture, construction, testing & commissioning of a wide range
of products, systems and services.
5. BigCat Wireless: Focuses on developing innovative wireless
solutions that encompass algorithm development and
Implementation.
6. Cognizant Technology: Works in virtualization, machine learning,
bots, semantic web and text mining.
7. The Confederation of Indian Industry (CII): Works to create and
sustain an environment conducive to the growth of industry in India,
partnering industry and government through advisory and
consulting.
8. DesiCrew: Utilizes information technology to build a new
outsourcing model and provide employment opportunities in rural
India, ideally suited to digitization of high volume data such as data
base compilation, mailing list compilation, keying from images,
data mining from web, electronic publication and file translation.
9. D Espat: Is engaged in the design and development of Lithium-Ion
& Lithium Polymer battery products for niche industrial and
defence applications in India
10. Dhvani R&D solution: Works on technologies related to non-
destructive testing, manufacturing diagnostics, materials
characterization, structure monitoring, simulation and visualization
tools.
70
http://respark.iitm.ac.in/our_clients/corporate_clients.php.
105
11. FEV: Works on the design and development of internal combustion

engines, conventional, electric, and alternative vehicle drive
systems, energy technology
12. Forbes Marshall: Is the Indias largest steam engineering and
process energy company. Its products include steam boilers, steam
distribution accessories, process heat utilization systems, controls,
condensate and flash steam recovery systems, plant diagnostics,
process automation systems, solar heating systems and renewable
energy systems, DCS systems, field sensors for critical process
parameters, flow and level measurement and a whole range of
process plant solutions.
13. Guidanz Systems: Provides products, services, and solutions
focused on databases, analytics, and big data.
14. Helyxon Healthcare Solutions: Is in the business of connected
healthcare, building platforms, devices and services for an
affordable effective healthcare. It specialises in integrating smart
medical sensors/devices, data science and automation.
15. Invention Labs: Was incubated by IIT Madras Rural Technology
and Business Incubator (RTBI) and funded by RTBI. Their product,
Avaz, provides solutions for assisted speech in children with
disabilities.
16. MaxVal: Provides comprehensive intellectual property services
covering the entire patent lifecycle. With experience in innovation,
IP management and monetization, as well as legal expertise, they
offer invention analysis (including patentability), patent filing and
prosecution in India, US and other countries.
17. Myeasydocs.com: Provides services of online storage, verification
& sharing of paper based documents, linking document owners,
document issuers and document seeking entities into a single portal.
18. Net Access (India): Is a provider of IT infrastructure solutions and
services, focussing on reducing complexity and barriers across their
IT infrastructure.
19. NMS Works Software: Focuses on network management
framework, vertical-specific applications and mediation adapters to
integrate many third party EMS and network elements.
106
20. ROPE: Manufactures environment friendly home decor and life

style products, focusing on sustainability and environmental
responsibility.
21. Saggezza: Provides consulting, systems integration, and outsourcing
solutions, focussing on being a trusted technology services partner
in key industry verticals.
22. Sconce Solutions: Is a provider of engineering solutions and
services and has launched a web based search environment,
Bingo!, which uses shape indexing technology to effectively
search 3D component models (assemblies/parts/drawings) based on
3D geometry or 2D input sketches.
23. Stratus Environmental: Specializes in the assessment and clean-up
of soil and groundwater that has been impacted by petroleum
products, pesticides, solvents and heavy metals.
24. Tata Consultancy Services: Has its own research and development
wing known as the innovation labs. The broad area of interests
include sensor networks, semantic web, web 2.0, software tools, etc.
25. TATA Elxsi: Is a design company whose services include
embedded product design, industrial design, animation & visual
effects and systems integration.
26. Uniphore Software Systems: Is engaged in-depth research to
understand the dynamics of information needs, linguistic modelling,
impact creation, demand of information, etc. for rural India and is
creating value by developing innovative applications on its patent
pending VoiceNet system. Uniphore supports increased scope in
bridging the rural information divide and add value by providing
automated services in various verticals such as healthcare,
agriculture, education, livelihood, banking, etc.
27. Villgro: Focuses on rural development by actively identifying and
incubating innovative models and ideas to promote rural based
social enterprises. Villgro works with different stakeholders to
create and support an eco-system that incubates and empowers
social entrepreneurship.
28. Vortex Engineering: Is the pioneer of rural ATM in India. With its
patented and innovative, low power consuming ATMs, Vortex now
107
has the worlds largest number of solar ATM installations.

29. Yalamanchili: Focuses on technologies in the authentication and
transactional security systems to provide self-sufficiency and self-
help to organizations, and remove dependency on complex
technologies.
Biography
Emanuele Giovannetti is Professor of Economics at Anglia Ruskin
University, and Fellow at Hughes Hall, University of Cambridge. He
has also taught at the University of Cape Town and the University of
Verona. His research focuses on the diffusion of mobile social
networking, market power in the Internet, mobile Internet access and
adoption of new technologies. Prof. Giovannetti has advised
governments, competition authorities and businesses in Europe, Africa
and Asia on Internet access and competition policy, and has led
multidisciplinary and multinational projects focusing on network
competition, Internet infrastructure and mobile access in developing
countries. He has published numerous academic articles in leading
academic journals, edited a special issue of Telecommunications Policy
on Peering and Roaming in the Internet and co-edited "The Internet
Revolution: A Global Perspective" published by Cambridge University
Press. He holds a PhD and MPhil in Economics from Trinity College,
University of Cambridge.
108
Chapter 4
The Role of Governments in ICT-

Based Sustainable Development
George R. Barker*,
Prasit Prapinmongkolkarn** and Supavadee Aramvith**
This chapter explores how governments can harness ICTs to promote

sustainable development. To do so, we will identify two important focal
points for governments in charting the way forward. First, within the
ICT sector itself, governments should focus upon removing policies that
prevent competition and limit innovation. Instead they need to
encourage and facilitate the introduction of innovative ICT-based
products and solutions. Second, in non-ICT sectors of the economy
(agriculture, health, energy, transportation, commerce, etc.),
governments need to actively identify barriers to the development of
ICT-based products and services. Policies that constrain competition
and innovation in non-ICT sectors can be particularly detrimental,
indirectly limiting and distorting demand for ICT solutions: thus
preventing the most efficient use of ICTs. In many countries, and across
most non-ICT sectors, existing regulatory regimes are frozen in time.
General reforms of non-ICT markets will thus be complementary or
synergistic with reforms that are directly ICT-related, and vice versa.
Hence governments need to adapt their vision and objectives of their
regulatory regimes. In doing so, they can avoid and remove all barriers
to the introduction of innovative ICT-based products and solutions
across a wide range of sectors.
*
London School of Economics, London, United Kingdom, and Australian National
University, Canberra, Australia
**
Chulalongkorn University, Bangkok, Thailand
109
4.1 Introduction
This chapter discusses the role (and limits) of governments in
establishing a legal, budgetary, policy and regulatory frameworks for
information and communication technologies (ICTs) to ensure they can
make an optimal contribution to the UNs objective of sustainable
development. We will identify and briefly assess key policy choices
affecting ICTs and how best to ensure that government policy optimizes
the role of ICTs in sustainable development.
Government policy takes various forms, such as acts of legislatures
(including general law, and fiscal or budgetary measure including tax
and expenditure), regulations and rules made by ministers and/or
regulators, and decisions taken by courts, fiscal and regulatory agencies,
and state-owned enterprises (SOE). Government influence also extends
to co-regulation, social marketing/advertising, and collective action for
non-market production by private individuals. 71 The aim of these
policies is fundamentally the same: influencing the behaviour of
individuals and organizations to promote sustainable development.
Our focus will be on government decisions on policies pertaining to
budget (tax and expenditure), law and regulation (including e-
government), and how this in turn affects the contribution of ICTs to
sustainable development.
4.2 Outline
The remainder of this chapter is broken into four sections. Section
4.3 focuses on defining the objectives, with a review of the UNs
seventeen sustainable development goals (SDGs). It will show how all
of these goals are related. In the remaining three sections, we turn our
attention to the means which could be used by the government to
achieve these objectives, focusing particularly on the governments role
in three areas:
1. First, in Section 4.4, we focus on the organization of government
71
We recognise, of course, that the extent and nature of public or state production
provides a major context for the regulation of other activities.
110
itself, and the importance of more open, accountable and transparent

processes as a pre-condition for sustainable development. In this
endeavour, the role of ICTs is critical. This is particularly relevant to
two fundamental UN goals: SDG 16 Peace and Justice for all
and SDG 17 calling for global partnerships. In this section we
explore how ICT-enabled systems such as e-Government offer
considerable scope for creating peaceful, just and inclusive societies
by facilitating more open, accountable and transparent governments.
2. Second, in Section 4.5, we assess how government policy on ICT
markets impacts the role of ICTs in sustainable development. This
includes government policy on two key ICT markets:
ICT infrastructure markets, including state ownership of legacy
ICT network assets, spectrum licensing, competition law and
access-price regulation, as well as the governments role in
universal service obligations.
ICT applications and content markets, focusing upon the
governments role in intellectual property and privacy law.
3. Finally, in Section 4.6, we consider how government policy on non-
ICT markets is shaping the role of ICTs in sustainable development.
Government policy on non-ICT markets (including food, water,
energy, urban and human-settlement services, education services,
health, etc.) can indirectly affect the demand for ICTs, either
enabling or limiting opportunities for ICTs to contribute to
sustainable development. In particular, we focus on the unforeseen
effects of government policy on non-ICT markets. Designed for the
pre-Internet era, these policies remain largely frozen in time and
may now be limiting the beneficial effects of ICTs. Indirectly, they
are preventing the rise of the internet of things (IoT), 72 or smart
72
Internet of Things (IoT) is when the Internet and networks expand to places such as
manufacturing floors, energy grids, healthcare facilities, and transportation by
networking relevant physical devices, vehicles, buildings and other items -
embedded with electronics, software, sensors, actuators, and network connectivity,
enabling these objects to collect and exchange data.
111
markets. 73
4.3 Objectives and Goals
In this section, we first review and define sustainable development;
review how the UNs seventeen SDGs relate to each other; and seek to
isolate the role of ICTs and government policy in their achievement for
further analysis.
4.3.1 Sustainable Development
The overarching objective of sustainable development has been defined
by the UN as: development that meets the needs of the present without
compromising the ability of future generations to meet their own
needs. 74 The two key elements of this definition are
a focus on the needs of the people, or more broadly their well-being;
a concern with the factor of time that is, with the needs, or well-
being of people over time.
Sustainable development is a question of striking the right balance
between the well-being and needs of people in the present, and the well-
being and needs of people in the future, including future generations.
The above definition implies that the test for any new sustainable
development policy is whether it will enhance the well-being of those in
the present, without harming those in the future.
For the vast majority of todays world population, it appears possible to
both enhance the well-being of people today, and people in the future,
striking a win-win balance over time. This is presumably what
governments should focus on to achieve sustainable development. As
we shall see, to optimize the well-being of the population over time,
73
A type of auction in which transactions are made to and from a pool of participants
rather than bilaterally between one buyer and one seller. It is cleared using
operations research techniques and mathematical optimization, such as linear
programming, operated by a market manager. A smart market can assist market
operation when trades would otherwise have significant transaction
costs or externalities.
74
See What is sustainable development
www.un.org/sustainabledevelopment/development-agenda.
112
sustainable development involving such win/win outcomes over time

requires three things:
1. Resources need to be allocated to their best uses or activities in
terms of peoples needs or wellbeing over time.
2. The most productive use of allocated resources is required over
time.
3. Dynamic innovation, adaptation and adoption of new and better
ways to allocate and productively use resources over time so as to
continuously enhance what is achievable in terms of peoples needs
or well-being.
As we shall see, policies directly and indirectly affecting ICTs offer
such possibilities. At the same time, we may face inter-temporal trade-
offs, in the well-being of people over time. In such cases, it is important
to strike the right balance. Climate change is a much cited case of a
potential win-lose outcome over time, and therefore unsustainable
development. It is also, however, possible to go too far in the opposite
direction, adopting policies that hurt those in the present more than they
benefit those in the future. These kinds of trade-offs lead to lose-win
outcomes over time, making them equally unsustainable policies.
This might arise, for example, where current carbon emissions are
restricted too much to improve future environmental outcomes.
Occasionally, one might allow a policy with adverse future
consequences (a win-lose outcome), so long as it has offsetting present-
day benefits. These gains can be drawn upon to make active
investments in the future and compensate for future losses. The
contentious question is whether such win-lose policies should be
allowed in the absence of actual inter-temporal compensation or
compensatory action. Where there is a risk of catastrophic
consequences in the future/present that cant be mitigated or
compensated for adequately, it makes sense to adopt a more
precautionary approach.
To ensure sustainable development, decision-makers should prioritize
policy alternatives where, compared to the status quo, benefits outweigh
costs over time. Furthermore, they need to be certain that the chosen
alternative is the one that has the greatest net benefits over time
113
compared to every other feasible alternative. Costbenefit analysis

(CBA) offers a helpful methodology for collective decision making that
promotes sustainable development by enabling decision makers:
To determine if a decisions benefits outweigh the costs, and by how
much;
To compare alternatives by weighing the total expected cost of each
option against its total expected benefits.
Environmental impacts can also be factored into CBA.75 Recently, one
has seen the development of an ecosystem approach which focuses
consideration on ecosystem services as a generalization of the idea of
environmental goods. Ecosystem services can be defined as the
benefits that humans obtain from ecosystems. 76 The UN identifies
three key ecosystems for sustainable development: the terrestrial
ecosystem (SDG 15), the marine ecosystem (SDG 14) and the
atmospheric ecosystem (SDG 13). All three provide ecosystem services.
Environmental impacts can thus be factored into CBA using ecosystem
service valuation (ESV), which values the benefits we derive from
ecosystems, and the costs and benefits of alternative uses for scarce
ecosystem services or environment resources, including future costs
arising from climate change, habitat degradation, pollution, ocean
acidification, de-oxygenation, etc.
75
See Borger et al (2014) p. 163. In the UK, cost-benefit analysis that factored in
environmental impacts gained moment as early as 1984 with HM Treasury's
Green Book which noted that non-market impacts may not be directly measured
in money terms, but might sometimes still sensibly be given money values
(Pearce et al 1989 p. 124). In its 2003 edition, Green Book specifically referred
to the need to capture social and environmental costs and benefits for which there
is no market price (Treasury HM 2003 p. 19) and included a separate annex
dealing with non-market assessment. In the EU environmental assessment came
into focus in the EU Water Framework Directive (EC Directive 2000/60/EC), and
recently in the EU Marine Strategy Framework Directive (EC Directive
2018/56/EC).
76
See Borger et al (2014) p. 162.
114
4.3.2 Sustainable Development Goals

The General Assembly 2030 Agenda for Sustainable Development
adopted seventeen detailed sustainable development goals (SDGs) for
the post-2015 era (RIO+20, 2012). 77 Figure 1 summarizes these goals,
depicting the ways in which they relate to each other as well as the
ultimate objective of sustainable development. The central dial in the
figure identifies key outcome-related SDGs that help address trade-offs
between individuals well-being over time or equity problems
including: poverty reduction (SDG 1), gender balance (SDG 5),
inequality reduction (SDG 10) and economic growth (SDG 8). The
SDGs on poverty, gender and inequality indicate the focus of the UNs
equity concerns, indicating that greater weight is to be given to the
well-being of some of the most disadvantaged portions of the
population. SDG 8 (economic growth), on the other hand, helps address
equity concerns in a different way: by ensuring government policies
seek to grow the size of the pie. Reducing financial hardship helps to
potentially avoid other trade-offs and, over time, offers greater capacity
to finance compensatory transfers to those most in need.
Later in the chapter, we shall not discuss in detail how to measure,
reconcile or balance these key outcome-related SDGs (1,5,8 and 10)
identified in the central dial. We take these as given criteria for
evaluating the outcome of government policy and choosing between
alternatives. Instead, we will focus our attention on the SDGs
highlighted in the remainder of the diagram. These are best thought of
as the means to achieve the outcomes sought by the SDGs in the central
dial. Further, our focus will be on the role of governments and ICTs
affecting these remaining thirteen 13 SDGs over time.
We start in the next section with the core role of governments
encapsulated in the pyramid at the bottom of Figure 1, as to ensure
peace, and justice for all (SDG 16), and global partnerships (SDG 17).
As we shall see, these form key preconditions for sustainable
development, and ICTs have a critical role to play here.
77
See Chapter 1: ICT Engines for Sustainable Development. The 2030 Agenda also
announced a total of 169 specific targets to accompany the seventeen SDGs.
115
Figure 1. UN Sustainable Development Goals
We then move up the diagram to discuss the role of government policy

in the two SDGs shown in large ovals. In particular, we shall examine
the role of government policy in sustainable infrastructure,
industrialization and innovation (SDG 9), and in sustainable production
and consumption (SDG 12). Our focus in this section will be on the role
of government policy directly affecting ICT markets, given that ICTs
116
are a key platform for infrastructure, industrialization and innovation

(SDG 9), and key inputs and outputs in sustainable production and
consumption (SDG 12).
Finally, we shall move to the top of the diagram, to consider how
government policy is directed at the nine remaining SDGs. Shown in
smaller circles surrounding the central dial, these SDGs relate to needs
shared by people of all generations and fall into three categories:
1. Basic needs, or goods and services, including: food (SDG 2), water
(SDG 6), energy (SDG 7) and cities and settlements (SDG 11),
shown in the bottom portion of the outer ring of circles;
2. Fundamental human capital, or human needs or services: including
health (SDG 3) and education (SDG 4), identified in small circles at
middle level;
3. Fundamental environmental needs, or goods and services: including
climate (SDG13), oceans and seas (SDG 14) and terrestrial
ecosystems (SDG 15), identified at the top of the outer ring of
circles.
These nine UN SDGs thus specifically relate to key non-ICTs markets,
including markets for basic goods and services (food, water, energy,
cities and settlements); markets for human services (health and
education); and (often missing) markets for environmental goods and
services. We shall thus examine how government policy directly
regulating these non-ICT markets can indirectly affect the demand for
ICTs, enabling or limiting the opportunities for ICTs to contribute to
sustainable development. In this final section, we shall particularly
focus on how government policy on these non-ICT markets may have
unforeseen effects, limiting the beneficial effects of ICTs. As we shall
see, in market after market, policy designed for the pre-Internet era
appears to be preventing the development of smart agriculture and food
markets, smart water markets, smart energy markets, smart cities, smart
transport, smart health, smart education and smart manufacturing. For
this reason, governments urgently need to review and adapt their
existing policies on non-ICT markets to ensure that they better suit the
Internet era, thereby enabling cutting-edge ICTs to play their role in
sustainable development.
117
In what follows, we begin by focusing on the organization of

government itself. Next we explore the impact of government policy on
sustainable development through the two main transmission
mechanisms shown in Figure 2, namely, ICT markets and non-ICT
markets that directly relate to key SDGs, such as food (SDG2), water
(SDG6), and energy (SDG 7).
Figure 2. Transmission of Government Policy to Sustainable

Development
Government policy on ICT markets (on the left) can directly impact
upon sustainable development, since ICT markets are a source of
employment and income for many people. Also ICT market outputs are
directly measured in GDP and therefore affect key outcomes like
economic growth, poverty, gender balance and inequality. A key
additional point for this chapter, however, is the two-way interaction
(shown in the horizontal link) between both ICT and non-ICT markets.
This captures the fact that policy on non-ICT markets (right) can affect
ICT markets (left) particularly in terms of demand and vice versa:
policy on ICT markets can affect non-ICT markets particularly in
terms of the supply of ICTs. These cross-effects are a key overlooked
strategic issue facing governments in the twenty-first century which we
shall address in this chapter. But we begin with the organization of
government itself, and the role of ICTs therein.
118
4.4 The Organization of Governments and ICTs

4.4.1 Peace and Justice for All
UN SDG 16 seeks to promote peaceful and inclusive societies for
sustainable development, provide access to justice for all and build
effective, accountable and inclusive institutions at all levels (UN,
2016). Establishing peace and justice is a key foundation for sustainable
development and requires the establishment of an open, accountable
and transparent state, and government institutions.
Nobel Prize-winning economist, Douglas North, highlighted the state
and the organization of governments as a key determinant not only of
peace, but also of the performance of economies through time. 78 North
defined the state as the contestable monopolist 79 of violence, or of
coercive powers within a jurisdiction, the geographic boundaries of
which are set by the limits of the states ability to tax. North argued that
the centralization, and limitation of the use of violence or coercion
within a state not only lays the foundation for peace, but also for
economic growth, largely because it enables the definition and
allocation of property rights. This in turn supports both the development
of markets, and investment in production of goods and services required
to meet the needs of people over time.
The centralisation of the use of violence in the state, however, only lays
the foundation for better economic and social outcomes. There needs to
be more than centralisation of coercive power. There also needs to be
appropriate institutions that sustain and guide a state to better progress
the well-being of its citizens.80 Otherwise, as North notes, the states
coercive powers can be diverted to promote only the narrow interests of
a power elite and encourage unproductive rent seeking.
78
See North (1983, 1990 and 1995).
79
North (1983) points out the reason a state holds only a contestable monopoly of
violence is because it faces both the threat of internal overthrow by revolution, and
the threat of external overthrow by other states.
80
Acemoglu D. and. Robinson J.A. (2012) document the need not only for
centralisation of power but inclusive institutions governing its use.
119
As noted by the UN, achieving sustainable development is extremely

difficult in the absence of effective, accountable and inclusive
institutions, and ICTs offer considerable scope for creating peaceful,
just and inclusive societies by facilitating more open, accountable and
transparent governments (UN, 2016). The role of ICTs in achieving
SDG 16 can extend from making information more accessible to
enabling citizens to hold governments to account and to express their
preferences or demand for government services (e.g., through voting)
ensuring more efficient and responsive supply, access and delivery of
government services, including legal and social welfare systems
designed to offer justice for all.
E-government is the term given to the use of ICTs in facilitating online
registration, online service delivery, e-public services, e-revenue and
one-stop service, or integration of all government services to citizens
and businesses. The 2016 United Nations E-Government Survey
highlights a positive global trend towards higher levels of e-government
development commenting:
Countries in all regions are increasingly embracing innovation and
utilizing ICTs to deliver services and engage people in decision-making
processes. One of the most important new trends is the advancement of
people-driven services. It addresses the growing demand for more
personalized services that react to individual needs, as well as peoples
aspiration to be more closely engaged in the design and delivery of
services. These new demands are transforming the way the public sector
operates. (UN, 2016, p. 3)
The survey provided insight into global indicators and comprehensive
data showing the status of 193 countries in e-government development.
Its aim was to deepen understanding of the extent of interoperability
and implementation of WoG (Whole of Government). These indicators
relate to the following:
One-stop service platform;
Advanced search features (indexing contents and government
websites);
Digital features that enable different systems to seamlessly
exchange information; and
120
Online tracking systems that permit citizens and representatives of

civil society to check on the status of on-line transactions. (UN,
2012)
E-government and e-participation, including access to social media,
have enabled people to get involved and this has led to increased
transparency and participatory decision-making at countrywide and
local level relating to implementing government and public policy.
Since e-government can also enable delivery of services though ICT-
enabled platforms, transacting with the government can become easier
and more straightforward (from filing taxes and expenditure program
applications, to applications for licenses and other regulatory
approvals). This can include consent-based platforms for residents to
manage their personal data for electronic government transactions.
4.4.2 Global Partnership
UN SDG 17 seeks to strengthen the means of implementation and
revitalize global partnership for sustainable development. This is
another key foundation for sustainable development, for the simple
reason that, (as Norths definition of state highlights), states tend to be
delineated by boundaries, or be limited in geography, and in scale. One
does not have just one global super state, but many states of differing
sizes. Whilst this can be a good thing, it also necessitates state
cooperation.
While it may be both common and helpful for a state to
monopolize/centralize control of violence in a geographic area to
safeguard peace and economic growth, it has also historically been
uncommon, and generally unhelpful, for just one state to try and control
all populations on the planet. Multiple competing states have been both
a fact and a beneficial feature of history. In the famous Tiebout model
(Charles M. Tiebout, 1956), multiple competing jurisdictions enable
households to vote with their feet and choose a jurisdiction that
provides the fiscal package best suited to their requirements. Besides
enabling such assortative matching of citizens to states, competition
121
between states can also facilitate policy and legal experimentation by

states, and shared learning from success and failure.81
Despite these benefits from competing small states, there are also
potential costs to be considered. Three key cost issues are likely. First,
there may be loss of economies of scale in the production, and/or
consumption of collective goods produced by the state. This can occur
where there is declining marginal cost of production and/or non-rivalry
in consumption of collective goods produced by the state. Second, there
may be increased scope for inter-jurisdictional externalities (e.g.,
climate change), or situations where (a) decisions made in one
jurisdiction impact another (an external effect); and (b) these external
effects are not factored into the original decision making (i.e., an
externality). Third, there is the serious threat of war between states. As
North notes, two thirds of all changes in government since World War
II did not occur peacefully, but rather as the result of external invasion
by another state, or internal revolution, with the latter often fermented
by another state.
Global partnerships and cooperation (SDG 17) can thus help to address
or minimise these costs of competing states. Such global partnerships
and cooperation can, in turn, be supported through ICT-based solutions.
ICTs, for example, can be used to facilitate communication, monitoring
and enforcement of inter-state cooperation agreements, to exploit
economies of scale and address inter-jurisdictional externalities at a
transnational level, fostering positive cross-border transactions (e.g.
trade) and better regulating negative ones (e.g. climate change).
A key challenge, however, is global cooperation between states to
address cybersecurity. This stands out as an increasingly pertinent issue
with many countries now including cybersecurity in their national
policy priorities. (CCDCOE, 2017). Priority has been given to
cybersecurity for two reasons: first, the Internet and ICTs are
considered as vital infrastructure for driving economic and social
development; and second, the increasing severity and pace of cyber
81
See Oates (1999) pp. 1130ff for a discussion of potential gains from
experimentation with greater decentralization within a federal system.
122
threats. While policy makers might seek to promote the Internet as an

open platform for innovation and growth (OECD, 2012) at the same
time they need to provide efficient protection against cyber threats. The
International Telecommunication Union (ITU) launched Global
Cybersecurity Agenda (GCA) in 2007 to develop a framework and
strategies to respond to global challenges in cybersecurity (ITU, 2011
p19). Analysis of ITU Global Cybersecurity Index (GCI) in the ITU
Cybersecurity Index and Cyberwellness Profiles Report (ITU, 2015)
shown in Table 1a below reveals that Europe is the region with the
highest index. Africa rates lowest.
Table 1a: Global cybersecurity index and cyberwellness profiles
Global Africa Americas Arab Asia Pacific CIS Europe

0.28 0.16 0.26 0.27 0.29 0.27 0.45
Table 1b shows additional ITU cybersecurity index analysis by five

work areas: (1) legal measures; (2) technical and procedural measures;
(3) organizational structures; (4) capacity building; and (5) international
cooperation. The five work areas are seen to be important to battling
cybercrime (ITU, 2014). The highest sub-index is Europe for legal
aspects and the lowest is Africa for capacity building. Besides enacting
and enforcing cybersecurity legislation and setting up a national
cybersecurity framework, government priorities include setting up
national cybersecurity entities, including a computer incident response
team (CIRT), organizing publicprivate partnerships, strengthening
countries cybersecurity skills through training, and fostering
international cooperation.
4.5 ICT Market Policy

We now focus on the direct impact of government policy upon two key
ICT markets:
1. ICT infrastructure markets; and
2. ICT applications and content markets.
In Section 4.4.1 below on ICT infrastructure markets, we focus on the
impact of state ownership of legacy ICT network assets, spectrum
123
licensing, competition law, access regulation and universal service

obligations (USO). In Section 4.4.2, we focus on the governments role
in intellectual-property rights (IPR) and privacy law.
Table 1b: Global cybersecurity index and cyberwellness profiles

work areas
Area Legal Technology Organizational Capacity Cooperation

Building
Africa 0.31 0.13 0.17 0.11 0.16
Americas 0.44 0.24 0.24 0.25 0.20
Arab 0.42 0.24 0.27 0.26 0.23
Asia pacific 0.41 0.30 0.30 0.27 0.25
CIS 0.73 0.31 0.19 0.13 0.26
Europe 0.79 0.42 0.45 0.37 0.34
Source: ABI research report (ITU, 2015, p. 17).
Before proceeding to the above mentioned sections, we will first briefly

identify the significant contribution made by ICT markets to two key
SDGs:
SDG 9 which aims to build resilient infrastructure, promote
inclusive and sustainable industrialization and foster innovation;
and
SDG 12 which aims to ensure sustainable consumption and
production patterns;
and briefly discuss the role of governments at a high level in ICT
markets to provide context.
ICT infrastructure is a key direct contributor to SDG 9. ICT
infrastructure investment involves decisions on investment in, and use
of the underlying communications technology used to intelligent
devices such as computers, smart phones, tablets, etc. It includes the
backbone of the telecommunication infrastructure (wired, wireless,
fixed and mobile). A considerable amount of capital investment is
required to create and maintain this ICT infrastructure. Indeed,
investment in ICT infrastructure is typically among the largest of the
124
key infrastructures in some developed economies. For example, Table 2

presents data on investment in private non-residential assets in the
US.82 As shown in the second to last column in Table 2, from 1995
2015, investment in total ICT infrastructure83 was on average higher
than investment in all utilities combined over the same period 84 and
also higher than investment in all transport combined.
Indeed, as shown in the last column of Table 2 by 2015, despite falls in
ICT prices over the prior twenty years, total ICT infrastructure
investment in the US was 63% higher than the total investment in
utilities and 53% higher than investment in transportation.85 ICT
infrastructure in this case thus directly and significantly affects SDG 9
more than any other infrastructure, and for that reason alone, it is
important that ICT investment is sustainable. As we explore later,
however, ICT infrastructure also indirectly affects the achievement of
SDG 9 by impacting on the sustainability of other infrastructure
platforms, i.e., by supporting more efficient smart energy, water,
sanitation, and transport infrastructures.
Applications and contents delivered over ICT infrastructure are also
significant components of both the firms production processes and
consumers consumption bundles. Applications are software programs
that run on devices, smartphones and tablets, which are typically
82
The data in the table is taken from Bureau of Economic Activity analysis of
Investment in Private Non-Residential Fixed Assets
https://bea.gov/national/FA2004/Details/Index.htm. For further data see Table 4a
US Annual Capital expenditure survey. For detailed 2015 data
www.census.gov/data/tables/2015/econ/aces/2015-aces-summary.html.
83
Including broadcasting and telecommunications (codes 515, and 517 in the North
American Industry Classification System (NAICS)) and information and data
processing services (NAICS 518,519).
84
All utilities combined (NAICS 22) includes electric power generation,
transmission, and distribution, natural gas distribution water, sewage, and other
systems.
85
All forms of transportation and warehousing (NAICS 48-49) include air, rail,
water, truck, transit and ground passenger, pipeline of crude oil, refined petroleum,
and miscellaneous products, natural gas, scenic and sightseeing, support activities
for transportation couriers and messengers, warehousing and storage.
125
Table 2: US investment in private non-residential fixed assets
Structures, equipment and intellectual property (millions of USD)

NAICS86 Average
Codes 1995-2015 2015
Total ICT infrastructure 139,855 201,717
Broadcasting and
telecommunications
515, 517 114,271 132,576
Information and data

processing services 518, 519 25,584 69,141
Utilities 22 81,650 123,536

Transportation and warehousing 48-49 74,493 131,587
ICT applications and content

Publishing industries
(including software) 511 27,871 40,227
Motion picture and

sound recording industries 512 33,427 36,725
ICT grand total 201,152 278,669
connected to mobile or fixed phone networks. The rapid growth of

mobile devices has been accompanied by an equally rapid growth in
app development, in substantial part because platform providers (Apple,
Google, etc.) have lowered the costs of development and distribution of
mobile applications. 87 Contents refer to digitized audio and visual
material such as music, film and television, books, video games, etc.
86
North American Industry Classification System (NAICS).
87
Bresnahan, T., Davis, J.P., Yin. P., (2015) p. 233.
126
Recent studies indicate that real-time entertainment (comprised of

streaming video and audio) continues to be the largest traffic category
on virtually every network (mobile and fixed) and the key driver of
network growth.88 The last four rows of Table 2 further show
investment related to ICT applications and content, relevant to the
Internet, namely publishing (including software), motion picture and
sound recording. As shown, investment in this form of applications and
contents adds around another 40% to total ICT infrastructure
investment, making the grand total of investment in ICTs shown in the
last row of Table 2 higher than investment in both utilities and transport
combined. ICT applications and contents thus form a direct component
of SDG 12 sustainable consumption and production. As we shall see,
ICT applications and contents also indirectly affect consumption and
production of other goods and services related to other key SDGs,
including food (SDG 2), water (SDG 6), energy (SDG 7), cities and
settlements (SDG 11), health (SDG 3), education (SDG 4), climate
(SDG 13), oceans and seas (SDG 14) and terrestrial ecosystems
(SDG 15).
As summarised in Chapter 1, the research literature on the higher-level
socio-economic impacts of ICTs is extensive and provides ample
evidence that ICTs can contribute significantly to sustainable
development. For example, the World Bank (2016) concluded that the
accumulation of ICT capital accounted for almost 20% of global growth
between 1995 and 2014. 89 Although the empirical evidence is less
extensive, ICTs have been generally found to produce similarly positive
economic impacts in studies that focus on less developed countries.90
The great part of this contribution is through the effect of ICTs on non-
ICT markets to which we turn in the next section.
To realize the full benefits of ICTs, however, requires properly
functioning markets and competition, in particular ICT infrastructure
88
Sandvine 2016.
89
World Bank (2016), p. 55.
90
For references see Chapter 1 of this book: ICT Engines for Sustainable
Development
127
markets and ICT applications and contents markets. In any economy,

the supply and exchange of services from businesses to businesses
(B2B), businesses to households as consumers (B2C) and businesses to
government (B2G) involve markets - where markets are merely
institutions for consummating such exchanges. For markets to work
well, however, requires a legal framework that ensures a sustainable
open, pro-competitive trading environment. Otherwise, ICT markets
can fail in classic ways; if, for example, they become dominated by
monopolies, or exhibit externalities that remain uncorrected. ICTs can
further contribute to positive externalities for example, through better
access to knowledge although this potential benefit may remain
underexploited if this access to knowledge involves free riding on the
investment in knowledge creation, which reduces the reward and
therefore the incentive for knowledge creation.
The government clearly plays a pivotal role in market exchange
relationships between households and the businesses that provide
services to meet their needs, including ICT whether the businesses are
for profit, non-profit, private or state owned. The broad rationale behind
any kind of government intervention should be to correct market
failures or situations where markets fail to deliver sustainable
development. An equally important consideration, however, is the risk
of government or regulatory failures that do not deliver sustainable
development. This highlights the importance of detailed comparative
institutional analysis, and avoiding the assumption that heavy reliance
on either markets or government is better. One inevitably needs an
optimal blend of both to achieve sustainable development, and this
requires comparing feasible alternative policy options.
In what follows, we address key policy issues and challenges in greater
detail, and try to identify practical guidance on key government roles,
highlighting several key practical areas of advice for development
professionals in relation to ICT markets focusing in more details.
4.5.1 ICT Infrastructure Markets
As shown above, the underlying ICT infrastructure (mobile and fixed
line telephony) can be the most capital-intensive infrastructure in any
economy. For a country to benefit from ICT-supported sustainable
128
development, therefore, it requires major ICT infrastructure investment.

A central policy problem to be solved by governments interested in
ICT-supported sustainable development then is that they must convince
potential domestic or foreign ICT-market entrants as new investors that
neither government policy nor the regulatory environment will expose
them to excessive regulatory risk or uncertainty.
This poses a so-called credible commitment problem for
governments.91 There will always be temptation for governments to
intervene in politically expedient ways after large ICT capital
investments have been made by firms. 92 This will typically involve a
transfer of wealth from investors who have become locked into an
investment in stranded assets, to a consumer group, or a particular
local competitor who may be important to short-term political
objectives. This will lead to unsustainable developments, with the well-
being of future citizens being compromised by the political
opportunism of governments in the present. Hence, investors
particularly foreign ones will have outside options before investing
(ex ante) and will foresee the sovereign government risk to stranded
assets posed after they invest (ex post). They will therefore demand
compensation for this risk, or not invest at all. Thus, a simple way to
attract foreign investment at a lower cost of capital is for governments
to make credible commitments ex ante, to safeguard investors
legitimate investment expectations ex post.
The design of institutional arrangements then becomes critical to
ensuring sustainable development, ensuring that the well-being of
future generations is not compromised by the opportunism of present-
day governments. Next, we will explore this problem and its
implications for ownership of legacy ICT network assets, spectrum
licensing, competition law, access regulation and universal service
obligations (USO).
91
See North D.C and Weingast B. R. (1989) for a seminal article on the credible
commitment problem for governments.
92
See Levy, Brian; Spiller, Pablo T. (1994) for seminal application of credible
commitment problem to telecommunications.
129
State Ownership of Legacy ICT Assets

The worlds first telecommunication network, supporting telephone
services, began in the US under largely private ownership in 1877.93 By
mid-1880s, the company had built telephone exchanges in every major
city in the country along with inter-city lines to connect them.
Elsewhere in the world, however, the state assumed ownership of
telecommunications service, often locating them in a state-owned
agency along with post and telegraph. There remains a significant
element of state ownership of telecommunication assets today, despite
the global trend for privatization from the 1980s when steps were
slowly taken to privatize fixed-line incumbent telecommunication
operators around the world. By 2011, 60% of OECD countries had at
least partly privatized their fixed-line operators: leaving a significant
portion under state ownership.94 This was, however, twice the level of
privatization as the average recorded in non-OECD countries. Latin
America and the Caribbean, African resource-rich and African
resource-scarce coastal countries have only privatized between 30 and
40% of their fixed-line operators and this number falls to 10% in
African resource-scarce landlocked countries. 95
93
Principally owned by the Bell Telephone Company, a common law joint stock
company formed in Boston, Massachusetts on July 9, 1877, by Alexander Graham
Bell and his father-in-law Gardiner Greene Hubbard, which later evolved
into American Telephone & Telegraph (AT&T).
94
Gasmi et al 2013.
95
ibid. The fixed telecommunication infrastructure has no doubt faced increasing
competition from the mobile-cellular worldwide. Data on the extent of state
ownership of the mobile networks globally is not readily available, however it
seems likely that state owned fixed line incumbent operators have been involved in
the roll out of mobile networks particularly the early 2G networks. It is worth
noting however that the proportionof the worlds population covered by at least
2G mobile network is about 95%, with mobile-broadband 3G network reaching 84
per cent in 2016, but only 67 per cent in the case of the rural population (see ITU
2016 p88). The ITU notes however that it is impossible to draw conclusions on
mobile- phone usage in the worlds poorest nations due to lack of data (See ITU
2016 p162). The World Economic Forum notes however the gap between coverage
and penetration is 30-50% in many developed countries, and this difference jumps
to 55-75% in emerging markets World Economic Forum (2015) p. 19.
130
A key policy issue for many countries then remains state ownership of
legacy telecommunication infrastructure. Telecommunication
infrastructure is a critical driver of ICT-based sustainable development,
as it remains a key input into all downstream ICT market activities.
State ownership of the telecommunication network, however, poses
serious credible commitment problems for governments. Unfettered
state ownership of key ICT assets like the telecommunication network
poses the risk of political opportunism by future governments which
may opt to raise prices or limit investment thus compromising service
quality for short-term fiscal or political gains. This would be to the
detriment of both domestic and foreign private investors in ICTs reliant
on such state-owned assets. The problem is how to credibly commit
future governments, and encourage domestic and foreign direct
investment in ICT infrastructures today, when state ownership of
critical ICT assets means that governments will control price and
quality of key ICT services available to downstream users and
investors, after private sector investments are made. Once an ICT
investment becomes a sunk cost, it is also at risk of becoming a
stranded asset, open to misappropriation by government for short-
term political gain.
Besides credible commitment, or the need for the government not to
abuse its control of assets, there is also the problem of the effect of
state-owned firms incentives on efficiency. So far as sustainable
development is concerned, the effect of state ownership on three
conditions for economic efficiency are primarily relevant.96 These are:
1. Allocative efficiency: if economic growth in a country is to be
sustainable, resources within that economy need to be allocated to
their highest return uses at the margin.
96
Empirical evidence suggests a positive fiscal impact of privatization. This is
mainly due to the cessation of state capital injections to public sector enterprises, as
well as due to the collection of privatization proceeds and taxes derived from the
profits of privatised firms. See Gupta, Schiller and Ma (1999, pp. 1011). Davis et
al. (2000) and Kikeri and Nellis (2002, pp. 1314). Other secondary effects may
include the promotion of capital markets and the enhancement of public ownership
of shares.
131
2. Technical efficiency: this requires the use of least-cost production

methods to produce outputs using the lowest amount of labour,
capital and other possible resources.
3. Dynamic efficiency: both allocative and technical efficiency need to
be maintained on a dynamic basis, or continuously through time, by
way of constant innovation.
These three conditions require that enterprises do not absorb resources
that might earn a higher return elsewhere, and at the same time that any
resources absorbed by an enterprise are also allocated internally to their
most highly valued uses and used efficiently on a dynamic basis. This
requires systems of management that eliminate relatively low-return
investment activities, build ones with higher returns at the margin, and
foster innovation subject to the constraint of available funds. Ideally
this would be done to equalize returns to investment at the margin, and
thereby maximise total value added over time.
A key problem undermining efficiency in any state or private-owned
organization, however, is commonly known as the principal agent
problem. This problem arises when agents within a firm pursue goals
that are not aligned to the wider interests of other parties, such as
contributors of capital and consumers. Individual members of an
organization have a tendency to pursue their own goals. Owners
typically aim at maximizing their profits (dividends and capital growth),
while managers and workers remain primarily focused on the fulfilment
of their personal goals (e.g., increased income and higher social
status).97 Internal firm decision making about the allocation and use of
resources which are owned by the organisation may lead to
insufficient investment, innovation, or care, and so called shirking, or
featherbedding, having a negative influence on corporate performance.
Theoretically, with clearly defined property (or decision) rights and
zero costs of contracting to structure agents incentives, these incentive
problems could be overcome through contracting. In the presence of
97
Williamson (1963), Jensen and Meckling (1976) and Fama (1980).W Galal (1991,
pp. 26), Shleifer and Vishny (1994), Boycko, Shleifer and Vishny (1996), King
and Pitchford (1998), Nestor and Mahboobi (1999, pp. 310), Shirley and Walsh
(2000, pp. 2224, 2836), Corneo and Rob (2002) and Cragg and Dyck (2003).
132
information costs, however, transaction costs of negotiating, monitoring

and enforcing contracts emerge, and lead to scope for inefficiency, or
wasted resources within firms.
The agency problem is common in both private and public sectors,
yet, it is exacerbated in the case of state-owned firms for a number of
reasons, including, inter alia:
Manipulation of state-owned enterprises (SOEs) by the government
for political objectives (e.g., appointment of political friends in
managerial positions, use of SOEs to employ redundant workers), as
opposed to clear and stable profit objectives;
The existence of a complex structure of delegation by voters to
ministers and by ministers to managers who are monitored by
ministers; this, in turn, displays agency problems at multiple
levels and is tainted by political, or distributional criteria, as
opposed to wealth maximization criteria;
Increased monitoring difficulties by citizens-voters-owners in the
case of state-owned firms, due to the fact that ownership is highly
diffused and there is the possibility of free riding on the monitoring
efforts of others;
The lack of market for management teams, analogous to market for
corporate control (takeover threat) in the private sector; that is, in
the case of state-owned enterprises, managers are appointed and
removed by the government.
The absence of the threat of bankruptcy and market discipline, since
state-owned enterprises are frequently bailed-out by the government
when things go wrong.98
A key reason for privatizing large trading entities in particular (e.g.
telecommunication firms) is that in the absence of doing so, the
beneficial effects of the threat of competition including product
market entry by other firms, takeover and bankruptcy are diluted, and
incentives for superior performance weakened. In the context of
residual government ownership, or special legislative and/or fiscal
98
Staikouras P. K. (2004) p. 375.
133
interventions, there is always the potential for the company to focus its
energies on maintaining or deepening regulatory or fiscal advantages
(creating barriers to entry), or to feel that it can always fall back on
implicit government guarantees against financial failure, which are hard
for governments to avoid given their power to raise taxes. The
consequence of resisting privatization then is weaker economic
performance. Having said that, how privatization is implemented is also
important.
One of the key events that helped kick-start the growth of ICTs and the
spread of the Internet worldwide in the 1990s were steps to increase
competitive conditions in telecommunications. These focused on reform
of ownership arrangements from the early 1980s. This began in the US,
with the break-up of Ma Bell into AT&T providing long-distance
service, and the so called Baby Bells or Regional Bell Operating
companies providing local services, which was finally mandated in
1982. These moves to enhance competitive conditions through
ownership reforms were mirrored elsewhere in the world into the 1990s
and beyond, with the retreat of state ownership of telecommunications.
The superiority of private firms over their state-owned counterparts can
be confirmed by looking at productive efficiency that is the relationship
between quantity of goods produced/service provided and resources
employed.99 Historically, there was a debate between researchers who
asserted that private firms do better than SOEs given the same market
structure 100 and others who argued liberalization and competition
policies affecting market structure are more important to increased
efficiency. 101 It appears safe to conclude, however, that privatization
99
Kay and Thompson (1986, p. 20).
100
Boardman and Vinning (1989), Megginson, Nash and Van Randenborgh (1994),
Haskel and Sanchis (1995), Jones and . & Mygind, N. (2000) Estache and
Gonzalez (2002), all conclude that privatization increases firms efficiency, with
Jones and Mygind (2001), estimating that private ownership is 1322% more
efficient than public ownership.
101
Kay and Thompson (1986), Parker and Hartley (1991), De Fraja (1993), Martin
and Parker (1995), Durant, Legge and Moussios (1998), Estrin and Rosevear
(1999), Liu and Garino (2001).
134
and liberalization, or promotion of market competition are

complementary rather than competing policies. 102 While private firms
tend to perform better than SOEs given the same market structure,
privatization realizes its full potential when market competition is also
promoted. 103 Privatization of telecommunications from the 1980s has
thus also tended to include the liberalization of the telecommunication
sector, in particular, the opening to competition of the fixed and cellular
segments of the industry typically accompanied by the creation of
regulatory agencies independent from the political administration in a
sector where regulation and competition policy have been playing an
increasingly important role in the functioning of markets.
Spectrum Licensing
Spectrum is a critical input to a networked and digital economy and
society. It supports a wide range of services that promote economic
growth and enhance social well-being. Its role, as an economic driver
and the value it returns to society, is increasing. Wireless services can
support more efficient processes and delivery of existing services,
enabling improvements in productivity. Yet, according to data compiled
by the ITU at the end of 2013, many emerging markets had only
released one-third or less of the spectrum that will be required to meet
mobile demands alone in 2020. 104 Some countries will need up to ten
times more spectrum than what is now available. 105
A critical constraint on efficient outcomes will be the nature of
government decisions on spectrum policy. Spectrum licensing reform
on a global scale is necessary to unleash the potential sustainable
development dividend offered by ICTs. In this way, it would be
possible to satisfy the growing demand for access rights associated with
the growth of all types of wireless service, which are critical to the
102
Fershtman (1990), Boubakri, Cosset and Guedhami (2001), Debande (2001), Smith
and Trebilcock(2001), Ng and Seabright (2001) and Angelucci et al. (2002).
103
Shirley and Walsh (2000), pp. 5052, Kikeri and Nellis (2002), pp. 2125,
Nicoletti and Scarpetta (2003), pp. 711.
104
ITU (2013a).
105
World Economic Forum (2015).
135
continued growth of the ICT value chain and the overall economy.
Besides, reform is needed to ensure that available spectrum is used
efficiently.
One can characterize spectrum policy globally along two dimensions:
1. The first is the nature of the access model, and the resulting use of
the spectrum: exclusive use (the traditional model), shared use and
the commons.
2. The second is a more conventional breakdown of spectrum
management models into command and control, and market-based
methods.
The combinations of these access and management models are not
mutually exclusive; regulators can combine them often in the same
band and even for the same services and market outcomes differ
depending upon the conditions of demand and supply.
Historically, around the world, the typical approach to managing the
radio spectrum has been highly prescriptive, or based on command and
control. More recently a number of spectrum agencies have modernized
spectrum management policy to accommodate the use of increasingly
market-based methods and promote flexibility in use. This contrasts
with the approach thirty years ago when command and control were the
universal management practice. Most of the innovations unveiled in
recent years revolve around flexibility and the use of market-based
methods. Many countries have introduced some degree of market-based
methods, usually via competitive assignments of some kind, or auctions
for certain classes of licenses (chiefly cellular telephony spectrum
licenses).
Only a handful of countries, however, have gone beyond auctions and
introduced serious measures to address flexibility and accommodate
spectrum trading. These are the United States (US), Australia, New
Zealand (NZ) and the United Kingdom (UK). Ambitious reforms in
these countries have been associated with different degrees of
technology and service neutrality and the (re)definition of spectrum-
property rights. Only the US has adopted elements of the commons
access model. Otherwise, current arrangements elsewhere in the world
are generally biased in favour of a command and control approach in
136
relation to decisions about spectrum use and regulatory models. While

this approach works in so much as it licenses spectrum to particular
users and ensures that excessive interference is avoided, it is unlikely
that it achieves the full objective of maximising the economic value
derived from the spectrum.
Thus it is currently the case in most countries that a large amount of
spectrum remains directly under government control, or within the
public sector, and has not even been released into private hands. This is
unlikely to lead to maximizing the economic value derived from
spectrum. A market-based process can be extended, however, to public
sector spectrum where government-funded agencies compete for
spectrum with private users, and therefore pay the opportunity cost of
spectrum in private use. One way to move towards more market-based
systems for government-held spectrum would be to allow and
encourage government agencies to participate in market activity such as
spectrum trading. Government agencies would also be required to meet
their new spectrum needs through the market in all but exceptional
circumstances. 106 Emergency services such as the police, however, are
extremely reluctant to share their spectrum with other users, as their
radio networks need to have sufficient headroom above traffic
patterns in normal times to be able to cope with the rapid increase in
traffic levels whenever an emergency arises. For such users, the
development of robust sharing protocols would be useful. Re-farming
of spectrum in land-mobile bands to enable the dedication of a
significant spectrum block for a national government radio network
would also be a major step forward in emergency services
communications. In addition, it should be possible to explore ways of
providing greater incentives for spectrum sharing, with license fee relief
and other measures. Public sector spectrum use is, often for good
reason, swathed in secrecy. Whenever possible, however, information
needed by potential users to make decisions on purchasing, leasing or
sharing of such spectrum should be made available.
106
Cave M. (2005) UK Independent Audit of Spectrum Holdings.
http://www.spectrumaudit.org.uk
137
Where spectrum has been allocated to private hands under command

and control systems, much of it is under protected or restricted use, for
example, a significant amount of spectrum is often restricted to only
broadcasting uses. Technology has, however, made it increasingly
feasible to unbundle services from specific technologies and frequency
bands, enabling new business models and service architectures that hold
the promise of new services, expanded markets, and more robust
competition.
Much of the debate in relation to spectrum placed in private use has
been around a move from command and control exclusive access to
market-based exclusive access. It is widely accepted that appropriately
supervised markets can yield superior outcomes to the command and
control methods. Market-based mechanisms have to date been used to
grant licenses (principally through auctions) and to accommodate
secondary trading of licenses. Spectrum trading is arguably the most
potent market-based mechanism available, yet, in practice its impact has
been minimal to date. To increase spectrum trading activity, regulators
and governments can help satisfy key efficiency criteria including to
ensure that there are well-defined property rights, thick markets with
limits on abuse of market power, better information and limitations on
unforeseen externalities.
Perhaps the key factor limiting outcomes in global spectrum
management has been the widespread failure to adopt well-defined
property rights. In general, market-based mechanisms work effectively
when property rights are well defined and clearly assigned. The idea
that the right to use a radio spectrum should be a private property right
an approach that has its origins in ground-breaking economic work
by Nobel Prize-winning economist, Ronald Coase 107, regards
frequencies as a resource that should be exclusive to individual owners.
Even in economies with better designed systems like US, Australia and
NZ, however, spectrum licenses lack key features that are important to
incentives for investors and traders. Spectrum license terms, for
example, are often severely limited by governments. In general, longer
107
Coase, R.H. (1959).
138
tenure for spectrum licenses would lead to an improvement in their

utility and help to make network development a much more enticing
proposition to investors: thus removing a significant impediment to the
trade and development of efficient secondary spectrum markets. By
comparison, property rights in land are in perpetuity which serves to
support both significant long-term investment and trade in real estate.
The property rights model which lies at the heart of market-based
mechanisms contrasts with the commons approach. Several influential
authors, such as Noam108 and Benkler109, have promoted the idea of
substituting the traditional regime of exclusive access to spectrum,
under either market or command and control methods, with an
alternative commons approach based on non-exclusive access. The
commons is a part of the spectrum where anyone can transmit without a
license. For that reason it is sometimes called license-exempt, or
unlicensed spectrum. In the past and today, a small portion of spectrum
sat alongside licensed spectrum to provide unlicensed access to users of
certified equipment; but their approach has attracted little interest. Since
the late 1990s, some authors, however, have proposed an alternative
radical regime change in which command and control methods are
replaced not by markets and property rights but by a universal
commons. As Noam envisions, sharing of spectrum would be policed
by the market. In advocating deregulation of spectrum, Werbach
contends that courts can ensure that individuals and firms use commons
access spectrum without unduly interfering with one another.110
The ideas of these pioneers of the commons were initially embraced by
an increasing number of commentators, who pointed to successful
innovations such as WiFi communications 111 (in the 2.4 GHz band)
which rely on utilizing resources controlled by no one to strengthen
their support in favor of the commons, and against exclusive use of the
108
Noam, E. M., 1998,
109
Benkler, Y. (1998); and Benkler, Y., (2002,)
110
Werbach, K.
111
Weiser, P.J. and Hatfield, D.N. (2005). The authors claim that the success of the
802.11 standard, popularly known as WiFi, has demonstrated that unlicensed
spectrum can be big business (p. 1). See also Lessig, L. (2001),.
139
radio frequency spectrum. For instance, the US Federal

Communications Commission (FCC) has shown some interest in these
arguments and has made more license-exempt spectrum available as a
sort of commons, leading many to question whether further unlicensed
allocations would result in more innovation and deployments.
However, after a stage that has been dubbed ideology112, in the current
stage of implementation and problem solving, the case for the commons
seems generally tougher to defend at least as a one-size-fits-all
model for spectrum management. It is difficult to regard spectrum that
is in high demand as one where open access may be justified on
economic grounds. A commons regime may work more effectively if
there is an owner (possibly a collective) who can determine the amount
of spectrum to be assigned to the commons. Indeed, spectrum commons
might be allocated by market forces; the owner(s) both private and
public could buy, sell, trade, aggregate, disaggregate, and share their
spectrum.
More recently spectrum policy debate has shifted away from the
polarization seen in academic papers and considered the possibility of
combining the commons with market-based methods. 113 Designating a
band as suitable for unlicensed use relaxes some constraints on entry
and use, but almost invariably introduces new ones, e.g., restrictions on
power and requirements for interference mitigation. Hence, the costs
and benefits of decisions concerning the allocation of spectrum to
licensed versus unlicensed need to be assessed on a case-by-case basis.
In general, however, worldwide, an approach based on risk analysis
involving a more aggressive expansion of property rights together with
112
Faulhaber, G.R. (2005), WiFi is an example of an application that is known to
many consumers. However, there are many other applications that use licensed
spectrum and that consumers do not use directly. Hazlett (2006) observes that
success of unlicensed applications does not mean that more unlicensed spectrum is
needed.
113
The two approaches are not mutually exclusive. In practice the commons approach
will require some element of property rights (usually held by either a private band
manager or public spectrum manager), see Brito J (2007) .
140
a modest expansion of the commons would seem to be an appropriate

model to pursue.
There is an ongoing need for examination of government spectrum and
other protected spectrum, and of the appropriate balance between this
and other spectrum. Full-scale, across-the-board liberalization with a
wholesale redefinition of property rights has not been achieved in any
country. This raises continuing questions about the feasibility of major
reforms in spectrum management. A concerted push is needed to get the
reform process moving again, and to capitalize on the early gains that
have been made. To pursue a more rapid introduction of market-based
and flexible spectrum regulation, governments need to devise and adopt
transformational reform strategies. The precise nature of these reform
programs, and importantly what spectrum would be implicated in the
early stages, would require further detailed study. The use of an
incremental adjustment strategy could avoid, or minimize, the need for
significant disruption and compensation for displaced users when
compared to a big bang approach to reform. Under an incremental or
transformational reform model, existing users (in most cases) could be
given notice before they are required to relinquish their existing
licenses. Two-sided auctions could also be another way of reducing
compensation demands, by placing the responsibility for deciding
whether to move out of a band on the incumbent rather than the
government imposing such a move.
Recommendation 1: Wherever possible, a wholesale transition to a

property rights regime for spectrum is recommended.
Recommendation 2: There is also scope for a modest expansion of the

spectrum commons. Governments should consider whether existing
licensing arrangements are adequate for the development of a private
commons and other shared use of spectrum. New licensing
arrangements should be implemented if necessary. Goals could be set
for the reservation of public park commons (perhaps paid for from
auction proceeds from the transition to a property rights regime).
Governments should also explore ways of providing greater incentives
for sharing of spectrum though licence-fee relief or other measures.
141
Recommendation 3: Reforms to spectrum management should also

include the removal of all designated or protected commercial services
band (e.g., remove the designated, protected or dedicated uses afforded
to such categories as broadcasting where no longer required).
Recommendation 4: Additional incentives are needed for government

agencies to use spectrum more efficiently and to acquire and dispose of
spectrum in the market. Even where spectrum use is deemed to be in the
public interest, an agency could still enter into the market to acquire
additional spectrum. This spectrum could be leased out (if not required
in the immediate future), or sold on (in case where it is surplus to
requirements). Government agencies could thus be allowed and
encouraged (though not forced) to participate in market activity such as
spectrum trading. Government agencies should be expected to meet
their new spectrum needs through the market in all but exceptional
circumstances.114 Market approaches and provision of spectrum for
public use need not be mutually exclusive.
Recommendation 5: On balance we would not support the introduction

of use-it-or-lose-it provisions as a means of addressing the problem of
under-used spectrum. This would only increase uncertainty and
insecurity of title; instead rather greater reliance should be placed on
developing a market in tradable rights.
Competition Laws and ICT Access Regulation

It is generally accepted that, while ICT markets can perform well in
delivering economic growth, government action to foster competition is
critical to ensure this growth delivers sustainable development. The
promotion of an open and pro-competitive market environment within a
legal framework that ensures sustainability is essential. For many
countries hoping to foster competition, this would be achievable
through structural reform in the major areas of policy affecting ICTs,
including:
Trade and foreign investment policy;
114
Cave (2005) UK Independent Audit of Spectrum Holdings.
142
Government procurement policy;

State-ownership policy; and
State licensing policy.
Fostering an open, competitive economy through reform in the areas
outlined above to lower barriers to trade and investment, increase
economic integration, and enlarge the size of markets would facilitate
exploitation of available economic efficiencies in ICT markets and
foster sustainable development. However, literature suggests that, in
addition to structural reforms, there is a need to both adopt and then
effectively implement competition and consumer regulation. Effective
competition and consumer protection laws are appropriate to
complement structural reform measures in ICTs owing particularly to:
The existence of a large and non-tradable ICT sector in any
economy (e.g., telecommunication infrastructure in local exchanges)
The inevitably significant, albeit residual, legal barriers to market
entry which will exist in any economy (e.g., due to ICT
infrastructure licensing); and
Information problems undermining efficient consumer markets in
any economy.
For these reasons, one needs a two-pronged approach to sustainable
development, involving structural reform and laws to directly foster
competition and consumer protection; otherwise, structural economic
policies may operate at cross-purposes to competition and consumer
protection laws by overly protecting domestic markets from beneficial
import competition, promoting concentration in certain markets,
distorting competitive conditions or creating market power.
Two key elements of any competition laws are: rules against cartel or
anticompetitive collusive behaviour, and rules against unilateral abuse
of market power. This may extend further to direct regulation of access
to any residual monopoly elements in ICT infrastructure. The four key
decision variables in the regulation of any ICT infrastructure market in
terms of their economic consequences are:
1. Entry;
2. Price, including retail and wholesale prices;
143
3. Access obligations, to sets the terms of access to infrastructure; and

4. Quality or conditions of service. 115
In order to ensure sustainable development and to avoid, or at least
minimize, the risk of law enforcement being distorted to meet the
political demands of the day effective economic regulation calls for
not only effective substantive rules written into the legislation on the
above concerns, but also effective procedural and institutional rules
governing administration and enforcement. The critical question then is:
can governments solve their credible commitment problems by putting
institutional arrangements in place that prevent harmful government
interference in regulatory decisions and promote sustainable
development? This question is critical: both for prospective investors in
newly liberalized industries, and policy makers concerned with
encouraging new investment and stimulating sustainable development.
As noted earlier, theoretical and empirical work in economic history
and development literature concur that a governments ability to
credibly commit not to interfere with investors legitimate private
property rights is vital for countries to attract long-term capital
investment and experience sustained economic growth. Much of this
literature emphasizes the importance of independent institutions
ensuring regulatory commitment. 116 To maintain credible commitment
to the promotion of economic welfare, the agency charged with
enforcing the rules governing ICTs will need to be independent of
government. Two main options then offer themselves:
Independent court-based administration: This requires, at root, an
independent judiciary. The enforcement of competition and
consumer regulation may then be vested in an ordinary court system
through civil actions to ensure the independence of the
administration of justice. Court oversight of the operation of any
economic regulation will be inevitable and necessary, at least on
115
Quality of service regulation can be driven by competition concerns, information
asymmetry concerns, or externality concerns, including safety, and environment
impact.
116
See Henisz (2000 and 2002) for good reviews of this literature.
144
appeal, but they could also be made the place of hearing in the first
instance.
Independent commission: The common alternative approach is the
creation of an independent National Regulatory Authority (NRA)
subject to court supervision.
In addition, it is important to distinguish between nuanced scenarios.
One option is to separate the decision on whether to regulate a
component of ICT infrastructure into a separate agency from that tasked
with the decision on how to regulate in a particular case. This may place
a check on the tendency for regulatory creep, where regulatory agencies
may have incentives, and even a psychological bias to see the need for
regulation, when unregulated markets might operate better.
Universal Service Obligations

The imposition of universal service obligations (USO) is a specific
example of regulation of quality, or conditions of service that needs to
be carefully designed to achieve sustainable development. USO seek to
ensure that basic ICT services are available at an affordable price to all
citizens and customers. USO, therefore, are likely to impose additional
costs on infrastructure service providers requiring them to provide ICT
access to high-cost users at below cost, for example, to poor people
living in rural and arid areas. USO may be imposed by a
telecommunication/ICT regulator, or a ministry responsible for ICT
development. USO began with basic telephone services and have since
moved on to cover Internet and broadband WiFi and advanced mobile
technology (4G and 5G) access as an alternative for broadband optical
fibre.
Around the world, USO policies have faced political challenges and
problems. So far, there have been more failures than successes (GSMA,
2013). The two critical problems have been confusion over the
objectives of USO, and second poorly designed means to achieve them.
The basic underlying objective of USO applied to any ICT service is
typically to provide access to the ICT service at below cost for high cost
users who might not be serviced at all through pure market-based
delivery. This suggests three key questions: (i) what services?
145
(including what volume, and quality); (ii) For whom?; and iii) how are
the services to be funded? 117
Clearly the funding problem will increase with the range, volume and
quality of the services, and the number of people targeted in USO.
Given the limited resources of most developing countries, there will be
a need to prioritize through careful social costbenefit analysis, and
some candidate services may need to be excluded. Decisions will thus
need to be made as to whether, for example, USO be extended from
traditional phone calls to Internet video streaming and even Internet
protocol television (IPTV)?
Limited USO funds should be focused on uses and users where there
are the greatest net social benefits. A key threshold question in any case
is whether any service under consideration would have been provided
by the market anyway, in which case USO would only crowd out
private enterprise and innovation. A policy of encouraging competition
in fixed and mobile markets appears more likely to lead to a high degree
of availability, quality and affordability for the basic connection and
services thus making separate USO unnecessary. This may then imply
a narrow emphasis on ICTs for education only, both traditional
classroom type (formal), education and distance learning or online
classroom; or ICTs for healthcare services only, such as access to
specialists for remote patients and applying broadband imaging of
patients for diagnostic purposes. Thus, although broadband
communications empowered by computer and animation technology
can provide opportunities for new ICT start-ups in urban areas, it is not
clear whether this would have a high enough net social benefit to justify
relocating USO funding from, for example, education or health, to poor
people in remote regions.
117
See papers in Symposium on Universal Service Obligation and Competition in
Information Economics and Policy 12 pp. 205-300 especially Panzar (2000) who
explains the underlying logical exercise one must go through when attempting to
measure the cost of fulfilling any specified USO; and Gasmia F., Laffont, J. J.,
Sharkey W. W. (2000) who discuss the relevance of USO to developing countries.
More recently see Chone, Flochel, and Perrot 2002; Mirabel, Poudou, and Roland
2009 and Hoernig 2006.
146
Once the objective is clear, in terms of the service and target population
involved, the best means to fulfil the objective needs to be used. This
implies the need to find a service provider who is willing to deliver the
designated services to a satisfactory standard, to the targeted customers
at least cost. A potentially efficient way to secure such a provider would
be to auction the USO to the lowest bidder.118 Such an auction would
seek to establish who is the least cost provider of any USO service at
the required standard to a target population, in terms of the cost of
service delivery, including related administrative, and enforcement
costs.
Having determined how best to establish the price of USO service
provision, the question that remains is how best to fund it. It would
seem reasonable for funding to be approached in the same way as for
any other public good, particularly given its largely redistributive
purpose, and fund the USO out of general taxation, preferably drawing
on a broad base and low-rate tax system that minimizes distortions and
the costs of financing. The funds raised could then be paid either to the
service provider directly, or to the target populations to enable them to
buy services from the provider or a mixture of both. There may also
be some user co-payments to ensure efficient use.
In reality, the problem, however, has been the way the USO funded
which is a budget and regulation issue. In early regulated
telecommunication business between 1990 and 2010, the common
approach was for government or regulatory bodies to collect a
percentage of the gross revenues of telecommunication operators to
cover the expense of USO implementation. It is not clear why this is the
best tax base. A second major problem with most of these early funding
approaches has been the funds, which, although collected, have not
been disbursed in many countries.
118
Paul Milgrom delivered the Nobel Lecture in Stockholm, in December, 1996, in
which he provided an overview of the application of auctions to universal service.
See Milgrom (1996) and Weller (1999).
147
Recommendation 6: Funding for USO should ideally be provided from

general taxation; where industry levies are applied, it should be spread
across a wide range of contributors benefitting from the availability of
networks.
Recommendation 7: Auction mechanisms should be used for the

allocation of available funding for USO subsidies aimed at stimulating
competition among several subsidized carriers, with due care being
given to minimizing the extent such auctions are vulnerable to
collusion.
4.5.2 Application and Content Markets
In total, applications and contents streamed as audio visual in
downstream retail consumer markets including software, databases,
computer games, books, press, music, radio; video, motion picture,
television; visual photography, and graphic arts already now make up
between 7 and 8% of GDP in developed countries, and provide
equivalent numbers of employment. The latest Internet trends in Asia-
Pacific, Africa, and the Middle East also indicate the growing
importance of ICT applications and contents.
The latest data on Internet trends in North America and Latin America
suggest that in future, most countries will see a growing importance of
consumer retail markets for applications and contents. In North
America, real-time entertainment (comprised of streaming video and
audio) is now responsible for over 71% of downstream bytes during
peak period a modest increase over the 70% in 2015.119 As streaming
audio and video adoption continues to expand, and emerging video
technologies such as 4K resolution, high-dynamic-range (HDR) video,
and virtual reality increase in adoption, it is expected that North
America will be the first region to surpass the 80% of downstream
traffic streaming threshold by the end of 2020. 120
On the source of this traffic, the data suggests:
119
Sandvine (2006) p. 1.
120
ibid, p. 1.
148
Even with these improvements in video streaming efficiency,

Netflix represented 35.2% of traffic on North American fixed
networks, a modest decline from the 37.1% of traffic it represented
six months ago. Netflixs traffic share on fixed networks in Latin
America by comparison increased from 6.6% to 8.3%. Amazon
Video is now the third ranked downstream application (up from
eighth a year ago) in North America, accounting for 4.3% of fixed
traffic. Sling TV now appears among the top twenty applications on
most US networks, but still accounts for less than 1% of traffic.
Cloud storage (Dropbox, iCloud, Google Drive, etc.) has surpassed
filesharing as the largest source of upstream traffic during peak
period on North American fixed access networks. BitTorrent now
accounts for less than 5% of total daily traffic in the region.
The addition of video and voice calling is driving growth in
communication apps on mobile networks in both Latin America and
North America. In Latin America, WhatsApp traffic share is now
7.4% more than triple what it was two years ago.
In Latin America, Facebook and Google account for over 70% of
total mobile traffic in the region up from 60% reported last year.
Over 60% of mobile traffic in both Latin America and North
America is now encrypted and Sandvine predicts some networks
will surpass 80% this year.
The latest Internet trends in Asia-Pacific, Africa, and the Middle East
also indicate the growing importance of ICT applications and contents.
Thus, in 2016:
Video on mobile networks in Africa has more than doubled in one
year, increasing from 8.6% to 18.1%.
YouTube continues to top the mobile application in both Asia-
Pacific and the Middle East, with Sandvine predicting the rapid
growth of video in Africa will make it the top application in Africa
within the next eighteen months.
Filesharing still accounted for almost 30% of total traffic on fixed
networks in Asia- Pacific, although it did experience a small decline
from the figures observed last year. Last year, Sandvine predicted
that filesharing traffic share had peaked in the region.
149
Facebook properties (Facebook, Instagram, and WhatsApp)

continue to account for almost a quarter of all traffic on mobile
networks in the Middle East.
WAP browsing, typically associated with feature phone use, has
seen its traffic share cut in half in Africa over the past two years.
This is indicative of increasing smartphone adoption in the region
Intellectual Property Rights

Application and content markets depend critically on government
policy and regulation, in particular intellectual property law and policy.
The main value created by application and content businesses discussed
above derives from investment in intangible capital, or intellectual
property that is generated by innovation, creativity and inventiveness.
The main way in which such investment in intangible capital is
protected is through the intellectual property law, including copyright,
design, patent and trademark law, that create different types of
intellectual property rights (IPR).
IPR act as the key enabler of innovation, creativity and inventiveness.
This is because of two key underlying economic characteristics of
innovation, creativity and inventiveness:
First, innovation, creativity and inventiveness require creation costs.
These are the costs to creating any new work. As Demsetz notes,
standard economic theory does not contemplate creative activity:
standard economic theory does not allow for two classes of goods,
newly created and already existing. All goods are presumed to
already exist in these models.121
Second, the outcomes of innovation, creativity and inventiveness are
easy to copy and appropriate, yet, difficult and costly to protect. As
Demsetz observed, economic theory deals only with production of
an existing, known good . . . [t]his denies opportunities to engage in
the sort of free-riding . . . which is based on the ability of a copier to
avoid the cost of creating the new work.122
121
Harold Demsetz, 2009, p. 9.
122
Harold Demsetz, 2009, p. 8.
150
This creates the problem of free-riding. The free-rider lets others incur
the risks and costs of innovation, creativity and inventiveness, and
simply imitates and appropriates their successful practices. Free-riders
can then undercut the innovators, creators or inventors price to
market, and thereby prevent them from earning a return on their
investment in innovation. This will lead to suboptimal levels of
innovation, creativity and inventiveness, as innovators, creators or
inventors are not rewarded for their contributions.
IPR serve to reduce free-riding. IPR are thus critical to ensuring
sustainable development or ensuring the well-being of those in the
future is not compromised by free-riding on innovation, creativity and
inventiveness in the present. The value of investment in intangible
capital associated with innovation, creativity and inventiveness
protected by IPR is ever increasing, accounting for the largest portion of
business investment and a key contributor to growth in advanced
economies.123 Copyright law is, in turn, the most important IPR in
terms of the value of creative and inventive investment, and output it
protects including applications and contents. The World Intellectual
Property Office (WIPO) has developed a methodology that identifies
eight groups of core creative industries protected by copyright,
according to product or service including 1) software, databases, and
computer games; 2) press and literature; 3) music, theatrical
productions, operas; 4) motion picture and video; 5) radio and
television; 6) photography; 7) visual and graphic arts; 8) advertising
services.124 In total, these industries make up between 7 and 8% of GDP
and provide an equivalent percentage of total employment. This role
only seems likely to increase for two main reasons: First, if as seems
likely, more economies of the world progress from lower to middle
income, and poverty worldwide continues to decline, demand for
creative and innovative output will increase. In addition, to the extent
ICTs displace the demand for unskilled work, creative industries will be
offering more jobs, and becoming more important to ensuring
sustainable development that benefits all.
123
OECD (2013a), p. 12.
124
WIPO Guide, para 123, pp. 4950.
151
There tends to be an assumption that developments in digital

technologies and the spread of the Internet over the past twenty to
twenty-five years have facilitated a dramatic increase in fortunes for the
innovative and creative sector. This hypothesis is based on the
assumption that digitization and the spread of the Internet have reduced
the costs of creating and distributing creative works that are protected
by copyright. A key problem, however, is that ICTs are also having
negative, as well as positive effects on creative industries. Greater
access to ICTs, digitization of creative works and the spread of the
Internet have enabled greater unauthorized appropriation or piracy of
copyright works. The question, then, is whether the predicted positive
effects of ICTs have been offset by the negative effects of greater
unauthorized appropriation of copyrighted works that are also enabled
by digitization and the spread of the Internet.
Recent empirical research125 suggests that, even if digitization and the
spread of the Internet have reduced the costs of creating and distributing
creative works protected by copyright, these positive effects have been
offset by the negative effects of greater unauthorized appropriation of
copyright works that is enabled by digitization and the spread of the
internet. This supports the need to move to stronger copyright to restore
copyright protection and deter unauthorized appropriation, and limit
market bypass. This would enhance the extent of market transactions in
copyright-protected works along with the total reward and incentive for
creativity, stem the loss of economic value, employment and investment
to the benefit of the wider community in the future.
Privacy Law and Policy

Privacy concerns are increasingly important in the online world. Users
of online services clearly place value on their information being kept
private and safe126, and view use of their personal data without explicit
consent, adequate safeguards and compensation as a form of coerced
exchange. Consumer access to applications and contents online,
however, is often subsidized in so-called two-sided markets, where
125
Barker G. R. (2017a) and (2017b).
126
Horrigan, J. (2008).
152
third-party advertisers pay for consumers access, in return for use of

consumer data, and placement of advertising. This poses significant
issues relating to privacy, or control and ownership of personal data and
potential abuse of market power in information markets. Internet
intermediary firms are using information about firms and individuals:
sell online services to users, such as search, and simultaneously;
sell advertising services to third parties based on individual users
revealed behaviour.
This is a form of bundling. Users may want to use services to search for
information - but not simultaneously advertise their interest.
The widespread and increasing use of cloud computing also raises a
number of privacy and security questions. At the beginning of the
millennium people stored data on private fixed hard drives located in
offices and homes, and used portable private discs and then memory
sticks when mobile. Now companies, individuals and governments are
all increasingly turning to cloud computing. Cloud computing refers to
the ability to access and manipulate information stored on remote
servers, using any Internet-enabled platform, including smartphones.
Originally used for applications like emails, computing facilities and
applications are increasingly being delivered as a service, over the
Internet. The three cloud service delivery models are:
application/software as a service (SaaS), platform as a service (PaaS)
and infrastructure as a service (IaaS).127
As early as September 2008, a Pew survey128 showed that 69% of
Americans had stored data online or using a web-based software
application involving six forms of common cloud computing, at least
once.129 Users of the six cloud computing services further reported high
127
ITU-T Technology Watch Report (2009).
128
Horrigan, J. (2008) based on a survey of 2,251 adults between April 8, 2008 and
May 11, 2008. Some 1,553 respondents in the survey were internet users and the
margin of error is plus or minus 3 percentage points for results based on internet
users.
129
The six activities and percentage usage included 1) use of webmail services, 56%
e.g., Hotmail, Gmail or Yahoo!; (2) storing personal photos online, 34% e.g.,
153
levels of concern when presented with scenarios in which companies

may put their data to uses of which they may not be aware.
90% of cloud application users said they would be very concerned if
the company at which their data were stored sold it to another party.
80% said they would be very concerned if companies used their
photos or other data in marketing campaigns.
68% of users of at least one of the six cloud applications said they
would be very concerned if companies who provided these services
analyzed their information and then displayed ads to them based on
their actions.
Data in the cloud is easier to manipulate, but also easier to lose control
of. Without knowledge of the physical location of the server or how the
processing of personal data is configured, end-users consume cloud
services without any information about the processes involved. Can
cloud providers be trusted? Are cloud servers reliable enough? What
happens if data gets lost? What about privacy and lock-in? Will
switching to another cloud be difficult?
It is generally accepted that due consideration of privacy issues
promotes user confidence in the online world and can contribute to
sustainable economic development. Indeed, privacy is enshrined in
Article 12 of the Universal Declaration of Human Rights which states
that: No one shall be subjected to arbitrary interference with his
privacy, family, home or correspondence, nor to attacks upon his
honour and reputation. Everyone has the right to the protection of the
law against such interference or attacks.130 A number of basic privacy
principles are further common in various countries legislation on the
matter and enjoy wide consensus. The Madrid Resolution131, for
example, was approved by data protection authorities from fifty
Flickr; (3) using online applications, 29% e.g., Google Documents and Adobe
Photoshop express; (4) Storing personal videos online, 7% e.g., YouTube; (5)
Paying for store computer files on line, 5%; (6) Backing up hard drive to an online
site, 5%.
130
http://www.un.org/en/universal-declaration-human-rights/index.html.
131
Madrid Resolution (2009).
154
countries, gathered in Madrid in 2009 within the framework of the 31st

International Conference of Data Protection and Privacy. Its purpose
was to define a set of principles132 and rights guaranteeing the effective
and internationally uniform protection of privacy with regard to the
processing of personal data, and to facilitate the international flows of
personal data inherent in a globalized world. Privacy principles are also
to be found in other organizations and countries.133 In Europe, the
Charter of Fundamental Rights of the European Union (2000) became
legally binding in European Union as part of the Lisbon Treaty (in force
since December 2009). The main legal instruments in Europe covering
privacy and the processing of personal data are the EU Directive
95/46/EC, and e-privacy and electronic communications Directive
2002/58/EC covering also data retention.134 The US does not have an
overarching governmental regulation but follows a sectoral approach,
while countries in the developing world (e.g. on the African continent,
India and China) have introduced, or are currently planning, privacy
and data protection laws.
In general, promoting sustainable development requires not only access
but also confidence in the online world. This requires users consent to
use of their personal data online, and that adequate mechanisms exist to
ensure that their data is protected and kept safe. The global differences
in privacy legislation may, however, become a trade barrier and prevent
innovation. Adoption of privacy enhancing technologies (PETs)135 to
132
The basic principles identified in the Madrid Resolution for the use of personal
data include those of lawfulness and fairness, proportionality, purpose
specification, data quality, openness and accountability see Madrid Resolution
(2009).
133
Some examples of other privacy principles: OECD (Privacy Principles 1980),
Generally Accepted Privacy Principles (GAPP) from AICPA, FTC Fair
Information Practice Principles (FIPPs) (United States Privacy Act of 1974),
Consumer Privacy Protection Principles (CPPPS), Asia-Pacific Economic
Cooperation (APEC) Privacy Framework - Information Privacy Principles (2005)
and International Security, Trust & Privacy Alliance (ISTPA) Privacy Principles.
134
27 Member States have implemented the 1995 EU Directive
135
In general PETs are viewed as technologies that: a) Reduce the risk of
contravening privacy principles and legislation. b) Minimize the amount of data
155
support the secure processing of personal data in the cloud will

increasingly depend upon government policy, including the existence of
uniform ways of handling personal data at international level and on
technical standards which can help demonstrate compliance with legal
and regulatory frameworks.
4.6 Non-ICT Markets Policy

As noted, nine of the UNs SDGs relate to specific key needs of people,
and relevant goods and services that fall into three categories:
Basic needs, including goods and services such as food (SDG 2),
water (SDG 6), energy (SDG 7) and cities and settlements
(SDG 11);
Fundamental human capital or human services needs including
health (SDG 3) and education (SDG 4);
Fundamental environmental needs or goods and services including
climate (SDG 13), oceans and seas (SDG 14) and terrestrial
ecosystems (SDG 15).
These nine UN SDGs in turn relate to three corresponding key non-
ICTs markets, including (i) markets for basic goods and services (food,
water, energy, cities and settlements); (ii) markets for human services
(health and education); and (ii) markets for environmental goods and
services (terrestrial, marine and atmospheric).
We shall examine how government policy directly regulating these
three sets of non-ICT markets can affect the demand for ICTs, enabling
or limiting the opportunities for ICTs to contribute to sustainable
development. In particular, we shall explore the detrimental effects of
the fact that regulation of non-ICT markets has been designed for the
pre-Internet era, and remains frozen in time, thereby indirectly
preventing the development of smart non-ICT markets including
smart agriculture and food markets, smart water markets, smart energy
markets, smart cities, smart transport, smart health, smart education,
smart manufacturing and smart eco-systems.
held about individuals. c) Allow individuals to retain control of information about

themselves at all times. See ITU-T Technology Watch Report (March 2012) p. 4.
156
ICT innovation enables a variety of new services, deployed through

various ICT-enabled applications including big data analytics
(Davenport and Kudybe, 2016), the Internet of Things (IoT), ubiquitous
computing, artificial intelligence (AI), and robotics expected to occur
by 2025. As outlined below, governments urgently need to review and
adapt regulation of non-ICT markets to ensure they are not standing in
the way of these developments, but are better suited to the Internet era,
and thereby better enable the role of ICTs in sustainable development.
4.6.1 Basic Goods and Services Markets
Sustainable Food (SDG 2)
UN SDG 2 aims to End hunger, achieve food security and improved
nutrition, and promote sustainable agriculture. The challenge here is
that demand for agricultural crops is expected to double as the worlds
population reaches 9.1 billion by 2050. Increasing the quantity and
quality of food in response to growing demand will require increased
agricultural productivity. ICT-enabled applications permit more
sustainable food production and distribution by enabling better
production efficiency and product quality, through computer-controlled
production and ICT-based quality inspecting sensor systems enabling
laboratory quality inspection and testing. Regulation of food markets,
however, may currently be preventing these developments and needs
urgent review to exploit the opportunities for food productivity growth
posed by ICTs.
The potential role of ICT-enabled systems in enhancing productive and
allocative efficiency and sustainable development in food is well
documented and demonstrates only a special case of ICTs economy-
wide productivity effects. Since the 1960s, the Hazard Analysis and
Critical Control Points (HACCP) system has been recognized
internationally as a logical tool for adapting traditional inspection
methods to a modern, science-based, food safety system.136 ICT-
136
HACCP was conceived in the 1960s when the US National Aeronautics and Space
Administration (NASA) asked Pillsbury to design and manufacture the first foods
for space flights. HACCP is however believed to have originated for production
process monitoring during World War II because traditional "end of the pipe"
157
enabled HACCP systems can support safe food production practices

and enhance food quality at lower cost, thereby increasing the supply of
food to meet basic needs, while enabling businesses to better meet
demands of a growing number of consumers, including health-
conscious buyers interested, for example, in organic food and
agricultural products. Web-based ICT devices and programs can be
used to identify low cost and/or health promoting food, and provide
supply chain transparency or visibility of how food is produced and
promote confidence and trust.
ICT-enabled systems also enable accountability, and compliance with
governmental food standards, regulations and codes, that impose
requirements for foods such as additives, food safety, nutrition contents,
labelling and genetically modified (GM) foods. The United Nations
Food and Agricultural Organization (FAO) uses Good Agricultural
Practices (GAP) as a set of principles to apply for on-farm production
and post-production processes, to ensure safe and healthy food and non-
food agricultural products that are economically, socially and
environmentally sustainable. ICTs can be applied to facilitate GAP
implementation, quality assurance and supply-chain integrity. This
would create new market opportunities for farmers and exporters in
developing countries, enhance the productivity of farmers in the supply
chain, train farmers in sustainable practices and help to eradicate
poverty. Improvements in producing economic food and cocoa tree crop
varieties, for example, has enabled several hundred million people
living in rural Africa to earn a living. (Chakravorti, 2015)
Sustainable Water (SDG 6)

SDG 6 seeks to Ensure availability and sustainable management of
water and sanitation for all. Sanitation is the means of promoting
hygiene through the prevention of human contact with hazardous waste
(especially faeces), by proper treatment and disposal of such materials,
testing on artillery shell's firing mechanisms could not be performed, and a large
percentage of the artillery shells made at the time were either duds or misfiring.
The seven HACCP principles are included in the international standard ISO 22000
FSMS 2011.
158
often mixed into wastewater. Wastewater management, thus, has

implications for water scarcity. Water scarcity is the lack of sufficient
water resources to meet needs within a particular region. It affects every
continent and around 2.8 billion people around the world at least one
month out of every year. More than 1.2 billion people lack access to
clean drinking water. Water scarcity can arise from inadequate natural
water resources to supply a regions demand, but can also be
exacerbated by poor management of available resources.
ICT-enabled applications provide opportunities for more sustainable
water systems. Once again, poor regulation of water markets may
currently be preventing these developments and need urgent review to
exploit the opportunities for sustainable water posed by ICTs. ICT-
enabled systems, for example, can better ensure production efficiency
and product quality, with computer-controlled production and ICT-
based quality inspecting sensor systems enabling laboratory quality
inspection and testing.
Focusing on water quality, standards are determined by the intended
use, be it human consumption, industrial use, or in the environment.137
A number of water quality initiatives now apply HACCP principles and
steps to control the spread of infectious water-borne disease, and
HACCP provided the basis for the water safety plan (WSP) approach in
the third edition of the World Health Organization (WHO) report.138
Although water quality is usually sampled and analyzed at laboratories,
nowadays, citizens demand real-time information about the water they
are drinking. ICT-enabled systems can provide this via real-time remote
monitoring systems for measuring water-quality worldwide (including
pH, turbidity or dissolved oxygen levels).
Demand for such developments, however, is hindered by problems in
the regulatory framework surrounding water globally. In particular,
property rights in water and tradable markets in water rights have not
137
The use of HACCP for water quality management was first proposed nearly 20
years ago. See Havelaar, A.H. (1994).
138
Guideline for Drinking-Quality Water World Health Organization (WHO). 2004.
http://www.who.int/water_sanitation_health/dwq/GDWQ2004web.pdf
159
been developed. This is undermining the scope for pricing water to

reflect scarcity and quality, enabling more efficient use of water, and
providing signals and incentives for more efficient investment,
including investment in ICT-enabled water management.
Sustainable Energy (SDG 7)

SDG 7 seeks to Ensure access to affordable, reliable, sustainable and
modern energy for all. ICT-enabled applications provide opportunities
for more sustainable energy systems. ICT-enabled energy systems can
ensure better investment and use of scarce energy resources. Computer
controlled production and ICT-based monitoring systems enable
improved allocative and productive efficiency, and reliability. Beyond
the obvious supply-side engineering or systems management benefits of
an ICT-based smart grid, ICTs can also ensure more efficient
demand-side management through real-time pricing.
On the supply-side, ICT-based wholesale electricity markets have been
developed worldwide from the late 1980s to enable real-time and
nodal pricing, so that prices paid to suppliers of energy vary by time
of day and region or geographic node based on real-time auctions that
ensure prices reflected relative scarcity. Using ICT-enabled networks
these smart energy markets sent better price signals by time period,
and node to less efficient generators to reduce production and even shut
down, and to more efficient generators to expand production, and
further to investors on where and when to invest in new generation
capacity. Any externalities including environmental costs of particular
forms of energy generation and distribution have also been factored into
ICT-enabled energy market prices either through direct carbon-
emission-related taxes, or through carbon emissions prices set in related
input markets for tradable rights in carbon emissions, with total
carbon emissions limited to meet regional and/or global caps.
ICT-based real-time energy pricing also encourages better demand-side
management and conservation of energy by sending signals to energy
retailers as to peak periods and bottleneck locations, alerting them to
possible demand-shifting behaviours. More recently ICT-enabled
applications have also led to smart meters located in households and
businesses that encourage consumers to shift their usage from peak to
160
off-peak periods, and from high-cost supply to lower cost sources of

supply - expanding the total system capacity with no further investment,
just more efficient demand-side management.
A key issue with ICT infrastructure itself, and its growing ubiquity and
use, however, is the additional demand for energy use that ICTs per se
generate. This can lead to pressure on the power grid, and demand for
greater investment in energy systems. This, of course, is addressed in
part by the smart energy systems that ICTs enable outlined above,
including energy pricing that factors in all costs. There are also many
examples of innovative ways to develop ICT services that have lower
energy-intensity, and which can be combined with low cost, and
distributed or local alternative energy generation.
Sustainable Cities and Settlements (SDG 11)

SDG 11 seeks to Make cities and human settlements inclusive, safe,
resilient and sustainable. The greatest change in human settlements
over the past 200 years has been the growth of cities or urban areas. At
the turn of the 20th century, just 15% of the world population lived in
cities 139 increased to 30% by 1950, 54% by 2014, and is projected to
reach 66% by 2050.140 The urban population, thus, grew globally by
more than five times from around 700,000 in 1950 to close to 3.9
billion in 2014, and is expected to grow by a further 2.4 billion to reach
6.3 billion by 2050, with nearly 90% of the increase concentrated in
Asia and Africa.141
Table 3 presents data on urban population worldwide in total, and in
percentages by size of city, together with the changing numbers of cities
by size class. Growth in city populations occurs not just by growth of
existing cities but also through the creation of whole new cities. Thus,
as shown in the last column of Table 3, by 2030 the number of urban
agglomerations larger than 300,000 is projected to increase across all
139
Annez, P. C. and Buckley, R. M. (2009)
140
UN 2014 (c) World Urbanization Prospects, p. 1.
https://esa.un.org/unpd/wup/Publications/Files/WUP2014-Report.pdf.
141
ibid, p. 1.
161
city sizes by over 30% on average, with around 530 more cities. As
shown in the last three rows of Table 3, small urban settlements with
fewer than 500,000 inhabitants in 2014 constituted over half of the
worlds urban population (around 2.3 billion of 3.9 billion total) but the
share of the urban population living in these small cities is expected to
fall by 2030 to around 45%, with larger cities expected to grow their
share. By 2030 smaller scale cities of 500,000 to 1 million inhabitants
are expected to grow in number by approximately 20, and host almost
150 million more people than in 2014, and incorporate around 10% of
the worlds urban population. 142 Medium-sized cities of 1 to 5 million
are projected to grow by a further 34% by 2030, or 141 reaching at total
of 558 cities, hosting 1.1 billion people worldwide - or nearly a quarter
of the worlds urban population. The next size class of cities of
5 million to 10 million are projected to grow by 47% to 63 by 2030.
Finally the number of megacities with 10 million or more inhabitants
has also increased significantly: it tripled from three in 1970 to 10 in
1990, and tripled again to 28 in 2014. By 2030, this number is projected
to reach 41 and to house 730 million people, representing one in seven
(around 14 per cent) of the worlds urban population.
These global developments pose major challenges. Rapid urban growth
threatens sustainable development when the necessary infrastructure is
not developed or when policies are not implemented to ensure that the
benefits of city life are equitably shared. An estimated 863 million
people, representing nearly one third of urban residents in developing
regions, lived in slums or informal settlements in 2012, characterized by
housing that is non-durable or overcrowded, or that lacks access to
improved water and sanitation or security against eviction (United
Nations, 2014b).
Todays cities are further growing twice as fast in terms of land area as
they are in terms of population (Angel et al., 2011). Consequently,
projections indicate that future trends in urbanization could produce a
near tripling in the global urban land area between 2000 and 2030
(Angel et al., 2011; Seto et al., 2012). Owing in part to their higher
142
ibid, p. 79.
162
Table 3. Population distribution and number of urban agglomerations of the world by size class of
urban settlement, 1970, 1990, 2014 and 2030
Area of residence Number of urban

Population (millions) Percentage distribution
and size class of agglomerations
urban settlement
(number of
inhabitants) 1970 1990 2014 2030 1970 1990 2014 2030 1970 1990 2014 2030
Total 3,691 5,321 7,244 8,425 100 100 100 100

Rural area 2,341 3,036 3,364 3,367 63.4 57.1 46.4 40.0
Urban area 1,350 2,285 3,880 5,058 36.6 42.9 53.6 60.0
10 million or more 55 153 453 730 1.5 2.9 6.3 8.7 3 10 28 41
5 million to 10
106 157 301 434 2.9 3.0 4.1 5.2 15 21 43 63
million
1 million to 5
245 459 827 1,128 6.6 8.6 11.4 13.4 126 239 417 558
million
500,000 to 1
129 202 363 509 3.5 3.8 5.0 6.0 186 294 525 731
million
300,000 to 500,000 87 157 258 319 2.4 3.0 3.6 3.8 227 412 679 832
Fewer than
729 1,156 1,678 1,938 19.7 21.7 23.2 23.0
300,000
163
incomes, urban dwellers tend to consume more per capita than rural
dwellers. Todays cities consume more than two-thirds of the worlds
energy and account for more than 70% of global greenhouse gas
emissions (UN-Habitat, 2011; IEA, 2008).
In the short run, given the rapid growth of cities, a key problem with
current infrastructure is the cost of network congestion, and the lack of
investment. According to a 2016 World Bank study, if one takes roads
for example, many cities in developing countries are stuck in an
underfunding trap for urban transport.143 In these cities, the up-front
investments that are needed for new transport infrastructure are huge,
while revenue from their still small-scale and perhaps even poor-quality
systems and other sources is insufficient to cover maintenance and
operation expenses, let alone new investment projects. This problem of
increasing urban transport congestion is global. In the US for example
where we have better data, from 1982 to 2014, there has been a 233%
increase in urban area congestion, measured as increases in the total
hours of delay for each auto commuter.144 Thus according to Texas AM
Transportation Institute 2015 Urban Mobility Scorecard, in the US in
2015, travel delays due to traffic congestion kept travellers stuck in
their cars forty-two hours per rush-hour commuter up from eighteen
hours in 1982 or nearly 7 billion extra hours, at a cost of $960 per
commuter per annum, and caused drivers to waste more than 3 billion
gallons of fuel involving a significant environmental cost. The total
nationwide price tag in the US was estimated at $160 billion.145
As the UN notes, with good planning and governance, the increasing
concentration of people in urban settlements can facilitate economic and
social development, while also offering opportunities to mitigate the
adverse impact of consumption and production on the environment.
However, rapid and unplanned urban growth threatens sustainable
development when the necessary infrastructure is not developed or
143
Ardila-Gomez, A. and A. Ortegon-Sanchez (2016), p. xiv.
144
Schrank, et al. (2015), p. 1, DeGood and Madowitz (2014), p. 12.
145
Schrank, et al. (2015), p. 1.
164
when policies are not implemented to protect the environment and

ensure that the benefits of city life are equitably shared. 146
ICT-enabled applications permit more sustainable cities and settlements
that can better meet the above challenges. The big opportunity in
cities and human settlements is to exploit ICT developments across
utility or network industries, including energy, water, transport, etc. We
have already elaborated the potential role of ICTs in assisting with
smarter food, energy, water and waste management systems that are
available to any city or human settlement. ICT-enabled systems also,
however, offer cities and settlements advantages from computer
monitoring and management of other key urban services or amenities,
including transport, housing, public safety, education, health, retail
services, parks, recreation and entertainment
An essential asset of a utility, for example, typically is the right of way
it uses. Indeed, one can analytically conceive of all utilities as
essentially involving transport of goods, services or people across fixed-
cost rights of way including transport of passengers, possessions,
water, electricity, gas, signals, etc. Many utilities in fact share these
rights of way over, under and on top of roads, but this could be done
better to lower both investment and management costs. The government
plays a critical role in the creation of these rights of way through its so-
called eminent domain powers that enable the acquisition of property
for a public purpose. It is important that eminent domain powers are
used wisely, and that market compensation is paid to current owners of
any rights taken or acquired, so as to safeguard underlying property
rights. At the same time, government will inevitably need to make
judgements about the design and use of any rights of way to ensure they
make best use of the assets acquired. In this regard, the use of ICTs on
all rights of way or shared infrastructure platforms to make them
smarter offers considerable potential over the next ten years for better
outcomes in cities. Already, the necessary systems and the data they
collect are available. Some of it in private hands, with outsourcing and
privatization likely to continue. Access to, and use of private data,
146
ibid, p. 1.
165
however, are major issues to be grappled with, as discussed earlier in

the section on privacy, including use of private data in enforcement
In what follows, we shall focus on recent developments in intelligent or
smart transportation solutions across the various modes (road, rail
and air) that provide an answer to the growing problem of congestion
and underinvestment and, more generally, the basis for more efficient
and smart cities. The core ICT-based opportunities we explore for
transport systems are similarly available to other networks and are at
least twofold, namely, better coordinated investment and better
management of underlying scarce assets. Focusing on road, rail and air
transport of passengers and goods to illustrate the opportunity, however
key ICT-enabled changes include:
Increased power of the individual to capture and use information:
Social media are altering how we think about service information
asymmetries. The circumstances in which government has a useful
role in dealing with such asymmetries is changing.
Greater economies, and reduced investment requirements through
sharing of excess capacity in existing private capital invested in
transport (e.g., Uber).
The development and uptake of automated vehicles or drones, on
land, and in air and maritime applications; offering more efficient,
safer and more inclusive systems for certain groups of users, e.g.,
persons with disabilities.
Greater convergence, interconnectedness and intermodal
competition can be foreseen. Changing boundaries between
different transport modes, for example, is increasing competition
between modes. For example, drones may become intermodal, (or
be able to travel by land, air and sea), and be used to pick and
deliver goods, and perhaps move them from point to point by land,
air, and sea.
Increased unbundling of services, e.g., information from service
vehicles from infrastructure. Users can potentially access service on
demand, design their own bundles, and switch back and forth
between being users and providers. The same is happening in other
sectors, especially media.
166
The above developments have implications not just for how we regulate
the use of existing transport services but also for the regulation of
transport rights of way or infrastructure across multiple utilities. The
rise of big data and big data analytics is obviously front and centre
for utility regulation and management, and widespread digitization has
obviously made possible real-time accumulation of very finely grained
and precise micro-data. Most utilities are by their nature composed of
many individual transactions that are now amenable to direct physical
measurement and can typically be monetized as well. This is probably
the major ICT-driven innovation available to regulators. Government
investment in, and use of ICTs to enable electronic pricing based on
underlying transaction data, for example, in real time, on all utilities or
networks, would enable better signals to guide infrastructure utilization,
and investment decisions and alleviate congestion. There are large
social costs from infrastructure not being priced properly. On the one
hand, of course, if prices are too low there is the risk of over-use and
congestion, while on the other hand, if the price of use is too high you
have the risk of under-utilization. At the same time, prices that better
reflect use and relative scarcities, can provide better signals for
investment.
The problem is that current government policy is hindering innovative
ICT-based developments. Focusing, for example, on transport
infrastructure, current policy on financing arrangements designed for
the pre-Internet era poses significant barriers to better ICT-based
sustainable development. Currently the financing of transport is
predominantly based on tax-funded infrastructure (using general income
or sales tax, or petrol tax), together with state ownership and control of
key assets. By comparison, a recent World Bank review of sustainable
urban transport financing, however, concludes that instruments that
charge the direct beneficiaries of urban transport investments, such as
passengers or drivers, are most likely to efficiently achieve sustainable
transport goals.147 The current general tax, or petrol-tax based financing
arrangements will increasingly fail on a number of fronts compared to
147
Ardila-Gomez, A. and A. Ortegon-Sanchez (2016), p. xiv. See also DeGood and
Madowitz (2014).
167
infrastructure that is funded using more explicit pricing systems that

charge the direct beneficiaries of transport systems, and that are now
becoming possible with new ICTs, including location-based (GPS) time
of use pricing, paid for by using e-finance methods.
For example, while a petrol tax is related to road use, and paid by direct
beneficiaries of transport systems, and has therefore been widely
adopted as a better mechanism for funding road development than more
blunt taxes like general income or sales taxes, it is still a blunt
instrument. The petrol tax paid and collected does not vary sufficiently
according to congestion. No doubt large commercial transport
companies use the amount of petrol they can save for planning routes
and monitoring performance, but the tax on top of the petrol price is a
blunt signal even to them. Moreover, advances in fuel efficiency also
mean the tax paid may fall, even though road development and usage
costs are rising. In the US, for example, for more than five decades, gas
tax revenues paid to the Highway Trust Fund (HTF) have been used to
fund required highway and transit programs.148 However, dramatic
improvements in vehicle fuel efficiency have significantly reduced the
amount of revenue owing into the fund. By 2025 increased fuel
efficiency in the US is expected to double, cutting gas tax revenues in
half and decimating the HTF in the process.149
By comparison, pricing of transport services using new ICTs and e-
payment methods involving advanced technologies in camera tag
recognition, smart phones, automated billing and collection and a vast
informatics network to process everything allows for more creative
design of pricing methods that can better incentivize efficient use. Thus,
148
DeGood and Madowitz (2014), p. 6. The Highway Trust Fund, or HTF, is
capitalized by fuel taxes, a tire tax, a heavy vehicle use tax, and a fee on truck and
trailer sales. Approximately 68 percent of HTF revenues come from the tax on
gasoline and 25 percent from diesel. For purposes of simplicity, we refer to the
gas tax as a shorthand for all of the various taxes that capitalize the fund.
149
ibid (2014), p. 6.
168
states like Oregon150, California151 and Washington in the US are

leading the way as regards to electronic road pricing technologies.
Optimal congestion pricing in the short run would reduce the
congestion problems outlined above and internalize the external costs
that additional network users are imposing on current network users,
but also provide better price signals as to where more investment is
justified by the benefits. Broad-based pricing across networks would
also enable inter-modal competition by better revealing relative prices
to users travelling on different modes. ICT-based pricing not only
provides more efficient signals, and better incentives for investment,
but can also better enable competitive entry, providing the basis for new
investment of private capital in private infrastructure projects. It would
also increase the ability to unbundle and rebundle individual
services (e.g., pricing, vehicle, and infrastructure services) to optimize
both user outcomes, administrative economy, and fiscal efficiency.
Road pricing is further considered an equitable measure, especially in
developing countries where private car users generally belong to higher-
income populations. The measure might be progressive if the revenue
collected from the charge is earmarked for public transport investments
(as is the case in London) or non-motorized infrastructure. 152
Having said that, pricing or collecting fees for use is itself costly, so the
objective has to be to minimize the sum of congestion and transaction
costs. In the old days, in transport, for example, to collect a price for a
road service, drivers had to stop to drop money into a drop-box. This
was and remains a costly means of collection, because of the time lost
and the congestion it causes. Prior to the lower cost pricing
150
Oregon is the only state in the US with an operational road charge program. In
2013 the Oregon Legislature approved the Road Usage Charge Program OReGO,
which became operational July 1, 2015.
151
The California Road Charge Pilot Program, a multi-year pilot that commenced in
the summer of 2016, has now concluded and the California State Transportation
Agency (CalSTA) will submit a final findings report to the Legislature, the
California Transportation Commission, and the Road Charge Technical Advisory
Committee in summer of 2017. See
http://www.dot.ca.gov/road_charge/index.html.
152
Ardila-Gomez, A. and A. Ortegon-Sanchez (2016), p. 55.
169
opportunities created by ICTs, the high transaction costs of collecting

tolls using drop boxes justified limited use of tolls on largely
uncongested roads at the time. Today, road pricing makes greater sense
as the transaction costs of road pricing are lower with the new
electronic road pricing technologies and congestion costs are also
higher. Policy, however, has failed to evolve to make road pricing more
widespread. This is despite the fact that congestion or peak-period
pricing using ICT-based electronic congestion pricing could be used
to relieve congestion by encouraging users to shift to lower priced/less
congested travel times, or travel modes.
Londons Congestion Zone, a so-called Cordon Price that wraps around
the central business district (CBD), would not be possible without ICTs.
Compared to simple flat-rate tolls or charges, even more sophisticated
pricing methods are now possible153, including vehicle kilometres
travelled (VKT) and weight/distance charging. Similarly, dynamic
pricing could be used in express lanes, where prices rise as speed of
traffic falls, so as to maintain a constant speed of traffic flow by
encouraging slower traffic to switch lanes. Private network operators
who own their network, do active yield management of their capacity.
So, too, do some public operators, especially in rail.
New technology has clearly expanded the scope for better transport
pricing, enhanced competition, and increased transport privatizations,
both within and across modes, and one can readily point to early
adopters of regulatory approaches permitting better pricing, more
competition, and greater private sector involvement, including early
expansion of private providers in transit (e.g., Hong Kong), in roads
(e.g., Spain), and in airports (e.g., Australia). In each case, increased
competition and private involvement has resulted in and driven
improvements in project delivery and oversight, price setting and
collection, and identification and harvesting of new revenue streams
that benefit users, private companies and the general public alike. For
example, toll and fare collection systems have become increasingly
efficient, in the case of transit especially allowing for faster and faster
153
NZ has a road user charge system for heavy vehicles that has been operational for
over 30 years that can be readily applied to passenger and other light vehicles.
170
loading and unloading of passengers and hence speedier system flows.

The ability to sell and harvest data and put it under a brand has made
some of these services not just self-funding, but revenue centres for
government entities in some case. The simple privilege of data
collection is worth money to a private company. An analogy can be
made with Amazon.com, which uses its vast database of transactions to
present users with you may like options that cross-market other goods
and services, sometimes from third parties. Facebooks core asset is the
private information of its users it has access to.
There are some obvious concerns, of course, with attempts to support
more efficient use and investment in transport networks by using new
technology to enable greater competition and private sector
involvement in such networks (road, rail, sea and air). Public-Private-
Partnerships (PPPs) and privatizations have not been without glitches,
such as poorly designed pricing or political fallout from users disliking
prices applied to previously free goods or paying higher tolls.
Technology is also not necessarily inexpensive. London's Cordon Price,
for example, consumes 40% of its revenue in administration, and
standard e-tolled roads average between 10 and 20% of total revenues
consumed in collection costs in the US. Privacy is also a major concern,
both in the unintended use of information (e.g., through hacking or
technical faults) or intended misuse (e.g., licensing of private
information to a third party without prior consent). More sophisticated
technologically intensive pricing requires careful choices about
technical means and ends often not easily reversible, that need to
interact with a rapidly changing transport service delivery environment.
But ongoing delays in adoption of ICT-based pricing are also very
costly. There is a large knowledge base to draw upon to minimize
known problems and design of contracts between users, providers and
government, which can be optimized to ensure that when problems do
occur, there is a ready, flexible and efficient recourse and resolution.
Government generally needs to do more with sophisticated pricing as a
way of internalizing the costs new users of a network impose on others
in increasingly congested networks, including through distance
travelled and weight charges levied on users that also reflect congestion.
One of the problems preventing such transitions in the past, however,
171
may be that current collective choice mechanisms based on broad-based

tax funding of transport networks, in effect redistributes wealth across
users and other groups, subsidising some at the expense of others. The
resulting outcome may thus be difficult to change politically, even
though inefficient. It may be politically entrenched to the extent that the
outcome benefits a politically strong special interest group or the
median voter at the expense of the wider society. Technological change,
however, that enables more sophisticated pricing, and more efficient
transport networks may also enable politically feasible transitions from
current less efficient transport market equilibrium to better ones. It
seems likely to be able to compensate losers out of the gains from more
efficient and sustainable pricing systems, and/or grandparent those
resistant to change through a time limited transition.
4.6.2 Human Services Markets
Health and education markets remain two of the most poorly regulated
of any non-ICT markets (barring environmental markets), undermining
the adoption of ICT systems that could enable more sustainable
development of human service markets globally.
Sustainable Health (SDG 3)

UN SDG 3 aims to Ensure healthy lives and promote well-being for all
at all ages. The health industry accounts for 4 to 8% of GDP in most
emerging markets. In many countries, however, chronic disease rates
are rising in tandem with economic development, while infectious
diseases remain prevalent in rural areas. ICT-enabled applications
provide opportunities for more sustainable health systems. ICT-enabled
systems, for example, can better ensure low-cost access to health
services, greater efficiency and service quality. ICTs can be used to
improve healthcare services considerably. This includes so-called e-
health, or healthcare practice supported by electronic processes and
communications, and m-health, an abbreviation for mobile health, a
term used for the practice of medicine and public health supported by
mobile devices. Once again, however, poor government policy on
health-service markets may currently be preventing these developments
and need urgent review to exploit the opportunities for sustainable
172
health offered by ICTs. The policy problems exist both on the demand
side and the supply side.
On the demand side, part of this problem is due to consumer ignorance
about how to prevent poor health outcomes, and/or treat them, which
ICT markets might help to address by making information available.
There are, however, other severe problems facing the demand side of
health markets that require government intervention based on its
taxation powers. The need for tax funding stems from the fact the
demand for health services is derived from a demand for human capital
development. Health consumption for an individual is often
unanticipated and in many cases people would prefer full coverage of
costs resulting from random shocks to their health. Contracts to either
insure, or service a loan against shocks to health or human capital,
however, are not easy transactions to negotiate in private markets,
presenting a classic case of market failure. The reason is that, unlike
physical capital such as houses, asset valuations and securities over
human capital for purposes of insurance or loan contracts are difficult to
obtain. Whereas banks and insurance houses can, with relative ease,
write contracts against future benefit or income streams derived from
houses or cars because of active secondary markets in these assets, the
same is not true for human capital.
The central point here, however, is that the taxation powers at the
disposal of governments provide them with a comparatively more
efficient enforcement or funding mechanism for health loans and health
insurance enforce premium payments, loan repayments, and pool risk.
In the absence of tax-funded government interventions, many countries
suffer from very poorly developed health systems. Even poor countries,
however, with adequate ICT-enabled tax systems could move to
contributory health accounts, accessible by consumers using health
smart cards, funded out of small tax contributions they would make to
insure their health risks over their life cycle. Such health accounts
placed within the direct control of health consumers would serve to
create the demand side for a market in health services, enable
competition on the supply side, and strengthen demand for ICT-based
health solutions.
173
Very often however, taxation funded health systems are poorly

designed, serve the interests of service providers, and need reforms to
empower consumers and increase competition in the supply side of
health services. There are four basic models of health service delivery:
those that rely on trust; on command and control; on voice; and on
choice and competition. All have their merits and demerits; but there
are both theoretical and empirical arguments for preferring choice and
competition in many situations. 154 However, the relevant policies do
have to be properly designed.
On the supply side, the critical problem around the world is the lack of
competition on the supply side of health services markets. Health
markets tend to be subject to heavy licensing and regulatory burdens
that create barriers to entry, and state ownership and management of
heavily subsidised resources, such as hospitals, operating as regional
monopolies that crowd out competition from the private sector.
Government-set budgets are also often centrally determined historically
and bear little relationship to performance or activities. 155 This form of
budgeting tends to lock in traditional methods of delivering services,
and lock out better performing, new and more cost effective ones,
including ICT-based e-health and m-health service delivery systems.
Although, on occasion, such institutional arrangements can work
successfully, in many other cases they do not. In fact, typically, such
budgeting schemes provide low-quality care, are inefficient in their use
of resources, lack dynamism and innovation, are unresponsive to the
needs and wishes of patients, and do not provide incentives for adopting
innovative ICT-based healthcare solutions that can fix such problems.
Together, these demand- and supply-side problems create weak
incentives for the adoption of ICT-based solutions. As a result,
healthcare in remote rural areas is normally insufficient or not available
154
Le Grand, J. (2009). See also Gaynor M. et al (2013), on the benefits of
competition in health, a recent study showing that an English government policy in
2006 promoting competition between hospitals led to an increase in quality
without a commensurate increase in expenditure p. 135, or that the effect of
competition is to save lives without raising costs, p. 134.
155
Le Grand, J. (2009), p. 479.
174
at all and of inferior quality for lack of medical equipment and

physicians, especially medical specialists. Healthcare and medical
consultancy through ICTs could, however, obviously be provided at
low cost so that these services are accessible to rural people, immobile
senior citizens and persons with disabilities by appropriate funding and
suitable competitive incentives driving innovation. For example, most
of the sophisticated medical equipment using 3D medical imaging
technology has provided opportunities for developing new services, by
applying broadband imaging of patients. This can be used in the
diagnosis of remote patients or immobile patients due to ageing or
disability. In addition, broadband communications empowered by
computer and animation technology can provide opportunities for new
ICT start-ups in both urban and rural areas.
A 360 One-Stop Service concept using network connections, for
example, between the remote community hospitals and major city
hospitals could enable remote community physicians to use ICTs to
access centrally connected medical devices, such as X-rays, ECG and
blood tests, to consult with medical specialists, diagnose patients and
make appointments in case of repeated medical check-up or patient care
delivery. Scarce pharmaceutical products could be requested, registered
and ready for pick-up or airborne delivery by drone to the patient, if
there were allied ICT-based reforms to transport networks. Such
exploitation of economies of scale, and streamlined operational
processes, would shorten the waiting time for an appointment with a
medical specialist and provide better access for rural inhabitants and
people living in mountainous areas or those relatively immobile due to
age or disability creating a more inclusive society. The barriers to e-
health and m-health (i.e., ICT-based) developments are the lack of
funding for the ICTs and medical service fees required, and the lack of
competitive incentives for medical specialists and physicians to consult
with and diagnose patients online.
Recommendation 8: Government policy and health regulatory bodies
should seek to reduce barriers to adoption of ICTs by enhancing ICT-
based consumer controlled budgets, and promoting easier entry by ICT-
based small and medium sized enterprises (SMEs) to compete with the
incumbent health service providers.
175
Sustainable Education (SDG 4)

UN SDG 4 aims to Ensure inclusive and equitable quality education
and promote lifelong learning opportunities for all. ICT-enabled
applications provide opportunities for more sustainable education
systems. ICTs demonstrably offer enormous benefits in the education
sector by lowering costs and extending access to knowledge. Broadband
communications can be used to improve education, both traditional
classroom type (formal) education and distance learning or online
classroom from the very beginning, from pre-school to higher
education. For example, broadband communications empowered by
interactive computer and animation technology can provide
opportunities for access to cutting-edge and specialist knowledge at low
cost in poor and remote regions and facilitate new ICT start-ups in
urban and rural areas.
Many developed countries, however, have a 30 to 50% difference
between the number of people reached by digital networks (coverage)
and the number actually online (penetration).156 This gap jumps to 55 to
75%, and up to 90% in some cases in emerging markets. The gap is
63% in Brazil and 73% in Argentina. Adoption lags especially among
women and certain disadvantaged groups, such as people in remote
areas.157
A key source of this divide is the failure of national education systems
to deliver basic skills. The problem begins with low literacy rates that
make the Internet irrelevant to many. More than a billion people in
developing countries cannot read or write. This highlights the
fundamental importance of early childhood, primary and secondary
education. By adulthood, the primary reasons given by people for not
using the Internet are a perceived lack of need and perceived lack of
skills. This creates a potential virtuous circle, where improved
education will improve ICT penetration within a country, and improved
ICT penetration can improve education.
156
WEF (2015), p. 4.
157
Economic Commission for Latin America and the Caribbean (ECLAC) (2013).
176
In the absence of well-designed tax-funded government education,

however, many countries suffer from very poorly developed education
systems. Education is often not the first priority in developing countries,
where water, public health services, and transportation rank as higher-
demand goods. Public expenditures for schooling are therefore low, and
provision of public education does occur in these countries. But much
of the education occurs in the private sector. In Macau, 94% of primary
students enrol in private schools. In Zimbabwe, approximately 88% of
students at primary-level enrol in private schools. In Belize, it is
87%.158 Unsurprisingly given the lack of public infrastructure in
developing countries, the efficiency superiority for private schools is
very robust. In multiple case studies, including China, Colombia, the
Dominican Republic, India, and the Philippines, students in private
schools performed at higher levels than those in public ones even after
controlling for socioeconomic differences across students. 159
Importantly, these performance advantages in private schools also
require fewer dollar expenditures per pupil. In order to further reduce
their costs, private schools have the incentive to adopt ICT-based
education solutions that offer greater cost effectiveness. The problem
then is not a lack of performance of the privately dominated education
sector in developing countries, but ultimately the lack of scale, or the
limited extent of participation in education as a whole.
As with health, the rationale for tax funding of education stems from
the fact that financing the demand for education in private markets is
difficult. Due to a lack of collateral, it is not easy for the poor and
uneducated to secure funds for education, even though it may enhance
their future earnings and well-being. While offering a solution to such
capital market problems, government funded education policy needs to
be well designed to avoid recurrent problems or risks, on both the
demand- and the supply-side with state-funded education.
On the demand side, the key risk is that taxation-funded education
systems become captured by particular consumer groups (by gender,
158
Toma (2005), p. 4.
159
ibid, p. 4.
177
age and income) and/or by the education service providers. Reforms are
then required to better empower all consumers and increase competition
in the supply side of education services. For example, the social returns
to pre-adult education, especially early childhood education, but also
primary and secondary education, far exceed those in tertiary or higher
education. The political system, however, may fail to allocate as much
tax funding per student to universal pre-adult education as it does to
adults for higher education. The apparent reason for this is voter, and
interest group/middle-class capture where adult participants in tertiary
education (students and teachers) are able to extract greater rents from
the political system than children, even though the social returns to
education and training lie primarily in pre-adult school education. An
obvious solution to this is ICT-based smart education fixed-budget
accounts for individuals which can be drawn on at fixed rates for
different forms of education over the life cycle.
As the OECD notes, creating an environment that enables individuals to
choose and acquire appropriate skills, and that supports the optimal use
of those skills in work, also requires incentives for institutions to
improve the quality and relevance of their teaching. 160 Poorly designed
government policy, regulation and funding of education services
markets that undermine incentives for better performance will also
undermine ICT-based education and ICT-based sustainable
development.
On the supply side, the critical problem around the world is the lack of
competition in education and training services. It tends to be subject to
heavy licensing; and regulatory burdens which create barriers to entry,
and state ownership and management of heavily subsidised resources,
with regional monopolies that crowd out competition from the private
sector. There is a long-standing perception among economists161 that
competition can improve school markets performance. Research on the
effects of competition between private and public schools shows
improved outcomes but depends on how this competition is designed.
160
OECD (2015), p. 47.
161
E.g. Smith, 1776; Friedman, 1955.
178
162
The same is true in the case of school decentralization or school
autonomy.163 Thus, in voucher experiments that have introduced more
competition between private and state schools, children have
experienced higher achievement gains in private schools in some
subgroups and in some contexts.164 For example, the single group of
students who exhibit the greatest test score gains from attending private
schools in the US are minority students in inner cities. This group also
does better in terms of high-school graduation rates when in private
schools. The evidence is also consistent on cost advantages, with
private schools producing skills at lower cost particularly in low-
income countries and at the primary level.165Public administration
scholars have argued that a prime reason for the difference in output in
the two sectors of schooling can be attributed to managerial efficiencies
and the role of the principal in the private sector compared with that in
the public sector. 166
Poorly designed government policy, regulation and funding of
education services markets can thus create weak incentives for better
performance including for the adoption of ICT-based solutions in
education and training markets. These problems also manifest
themselves in the lack of education and training in ICT skills a further
key input for sustainable development. Education and training in
science, technology, engineering and maths (STEM) disciplines are
crucial inputs to the ICT sector. These ICT-related skills in STEM
complement those in the ICT sector, and a lack of adequate training of
the population in these skills limits the development of the ICT sector
itself.
Recommendation 9: The education system should be adapted and
improved to better exploit the changing ICT and digital environment
and better prepare people for the new digital economy with ICTs as the
centre of sustainable development.
162
Urquiola (2016).
163
Galiani and Schargrodsky, 2002; Hanushek et al., 2013.
164
Urquiola (2016).
165
Urquiola (2016), p. 211.
166
Toma (2005), p. 4.
179
4.6.3 Environmental Goods and Services Markets

Arguably the only markets that suffer more from poor government
policy than the health and education markets are the markets for
environmental goods and services. Indeed, often there are quite simply
missing markets in environmental goods and services. This is in large
part because of the lack of tradable property rights in environmental
goods and services. The three key UN SDGs in this area are:
SDG 13: Take urgent action to combat climate change and its
impacts;
SDG 14: Conserve and sustainably use the oceans, seas and marine
resources for sustainable development; and
SDG 15: Protect, restore and promote sustainable use of terrestrial
ecosystems, sustainably manage forests, combat desertification, and
halt and reverse land degradation as well as halt biodiversity loss.
Taking an example of SDG 13 (sustainable climate), global efforts to
establish limits on carbon emissions and create tradable rights in carbon
emissions that could support market pricing of carbon emissions and
optimally deter pollution causing climate change have progressed very
slowly. The same is true in relation to SDG 14 (sustainable oceans and
seas) and SDG 15 (sustainable terrestrial ecosystems). Significant parts
of the marine and terrestrial ecosystems are over-exploited because
large parts of these ecosystems remain in the public domain, creating a
tragedy of the commons, or are inefficiently managed under state
ownership.
This poor government policy on environmental goods and services
markets then undermines the adoption of ICT systems that could readily
enable more sustainable development of environmental goods and
services globally. ICT-enabled applications provide opportunities for
more sustainable environments. ICT-enabled systems, for example, can
better ensure sustainable environmental goods and services with ICT-
based rights trading systems and computer controlled compliance
monitoring, using inspecting sensor systems connected to laboratory
quality testing to ensure compliance with the environmental rights.
180
4.7 Conclusion
We reviewed what governments need to do for ICT-based sustainable
economic development. The key challenges relate to the nature of
government policy directly affecting ICT markets and the supply of ICT
services as well as government policy affecting non-ICT markets that
indirectly affect the demand for ICT solutions for sustainable economic
development. The chapter thus identified two important points for
governments in charting their ways forward.
First, in the ICT sector itself, government should remove policies
that prevent competition and limit innovation, and encourage and
facilitate the introduction of innovative ICT-based products, and
solutions.
Second, in non-ICT sectors of the economy (e.g. agriculture, health,
energy, transportation, commerce), government needs to actively
identify barriers that prevent competition and limit innovation in
non-ICT sectors and can indirectly limit and distort demand for ICT
solutions, preventing the efficient use of ICTs to achieve
sustainability in economic development benefits.
In many countries and across most sectors, existing government policy
is frozen in time, and prevents the efficient use of ICTs to achieve
sustainability in economic development. Hence, governments need to
adapt their visions and the objectives of their regulatory regimes to
remove all barriers to the introduction of innovative ICT-based
products, and promote ICT solutions across a wide range of sectors.
General reforms of non-ICT markets that promote competition and
innovation will thus be complementary or synergistic with direct ICT-
related reforms, and vice versa.
Acknowledgement
The authors would like to acknowledge Chulalongkorn University for
granting the time to Dr. Prasit Prapinmongkolkaran and Dr. Supavadee
Aramvith to work on this chapter. Our appreciation also goes to Prof.
Ahmad R. Sharafat, Dr. William H. Lehr, Dr. Eun-Ju Kim, and Mr.
Chakthip Nitibhon for their valuable inputs to the chapter.
181
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Biographies
George Barker is Visiting Fellow at the London School of Economics
(LSE) and past Director of the Centre for Law and Economics at the
Australian National University (ANU) 1998-2017. He obtained a DPhil.
in Economics from Oxford University, and holds a Bachelor of Law
and a Master of Economics. He has extensive expertise in economic
analysis of law, regulation, public policy, governance and market
design in Information and Communications Technology (ICT). Since
1990s, he has advised governments and private clients in Asia Pacific,
North America and Europe on privatisation and regulation of
telecommunications, spectrum use, fixed line and mobile telephony,
digital television, the evolution of the 2G, 3G and 4G markets,
191
international Internet contractual and pricing arrangements, and the

effects of ICT on economic growth. He was the Olin Fellow in Law and
Economics at Cornell University in 2000; and has been a visiting fellow
at Oxford University (2008), at the University College in London
(2010-2015), and at the British Institute of International and
Comparative Law in London (BIICL) since 2010. He is on the Editorial
Board of the European Journal of Law and Economics, currently the
President of the Australian Law and Economics Association, and a
Founder and elected Honorary Fellow of the Law and Economics
Association of New Zealand. Dr. Barker was a Member of the
Governing Board of Wolfson College at Oxford University from 1990
1992, Chief Analyst and Economic Advisor at New Zealand Treasury
(1984-1996), and Board Member of LECG Asia-Pacific Ltd. (1997-
2005), Celtic Pacific Ltd., Upstart Investments Ltd. (1999-2003), KEA
Global, and past Chairman of KEA Australia (2001-2010).
Prasit Prapinmongkolkarn is a Professor of Electrical Engineering at
Chulalongkorn University, Bangkok, Chairman of the Industry
Professional Group of the National Research Committee in Thailand,
and Member of the University Council at Stamford International
University, Thailand. He has published 4 books, more than 50 papers
and supervised 7 Ph.D. students. He was the Chairman of National
Telecommunications Commission and the National Broadcasting and
Telecommunications Commission in Thailand.
Supavadee Aramvith is an Associate Professor and head of Digital
Signal Processing Lab at the Department of Electrical Engineering,
Chulalongkorn University, Bangkok. She has published over 120 papers
in international conferences and journals as well as 3 book chapters.
She is specialized in video communication technology, and serves as a
technical advisor to the National Broadcasting and Telecommunications
Commission in Thailand. Dr. Aramvith received her M.Sc. and Ph.D.
degrees from the University of Washington, Seattle, USA, both in
Electrical Engineering.
192
Chapter 5
Business Models for ICT-Centric

Sustainable Development
Jean-Pierre Auffret*
Innovation is a key driver of future economic developments and plays

an important role in creating new jobs. This chapter highlights the
importance of establishing a business environment in which ICT-based
innovative products, services, and applications can flourish, new jobs
can be created and maintained, and sustainability in development can be
achieved. The flexibility that ICTs afford in how resources and
productive activities are organized within firms, markets, and industry
value chains renders the design of business models a choice variable.
No longer are business models dictated by legacy production
techniques. Instead, ICTs enable incumbents and entrepreneurs to
develop new strategies for promoting economic activity and achieving
development goals. In this chapter we discuss the history of business
model theory and how it is changing and being newly energized by ICT
technology, offering the potential for developing countries leapfrog
strategies to accelerate development. We provide short descriptions of
the current trends and concepts in forming and offering ICT-based
novel products and services, and discuss some important factors that are
instrumental in establishing successful ICT-based business entities.
5.1 Introduction
With industry convergence driven by wireless networks, handheld
devices, and the Internet, preparing proper business models is a vital
*
George Mason University, Virginia, USA
193
step that needs to be carefully considered and planned with a view to

ensuring sustainability in businesses, shaping realistic expectations, and
creating job opportunities in a fast changing environment.
Governments, the private sector and civil societies each have important
and specific roles and motivations in the formation and longevity of
ICT-centric businesses. As a result, a major challenge for governments
and other stakeholders is to foster an environment for the existing and
new businesses that appropriately aligns stakeholder incentives.
The business model concept became popular in the late 1990s initially
in the business press and then in the academic press. The term gained
cachet during the Internet boom when the Internet was providing a
foundation for Web based businesses to compete with the traditional
brick and mortar companies. An early overview was provided by
Magretta (2002) who gave the historical context for the business model
idea and contrasted the concept with business strategy. She defined
business models as stories that explain how enterprises work and
highlighted the American Express Travelers Check business. In the late
1890s, American Express developed the Travelers Check in order to
help travelers convert letters of credit into cash. The traveler paid a
small fee for a check that was widely accepted and insured, and
merchants accepted the checks as a means to gain customers. The
system worked because both the travelers and merchants trusted
American Express. American Express in turn benefited financially by
taking advantage of the float generated by customers paying in advance
of using the checks.
Magretta contrasted the difference between business models and
strategy by noting that while business models describe the system, they
do not consider competition. She explained that strategy is doing better
by being different and provided the two examples of Walmart and the
eCommerce bust in the early 2000s. The Walmart business model was
the same as many discount retailers but with a different strategy of
targeting customers in small towns instead of major cities. In the
eCommerce bust, many online retailers failed by having the same
business model but no strategy as to how to compete effectively.
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The origin of the business model concept can be attributed to Peter

Druckers 1994 article Theory of the Business. Drucker defined the
theory of the business as assumptions about the environment (market,
customer and technology), organizational mission, and core
competencies. He utilized the two high profile cases of GM in the
1970s and IBM in the 1980s to highlight how changing assumptions
can lead to a major change in a companys performance and prospects.
For GM after the specialization of the car market and for IBM after the
launch of the PC, their assumptions and associated theories of business
were no longer valid, and they experienced strategic crises and financial
downturns (Drucker 1994).
As noted earlier, business model innovation is also a key concept in
practice, highlighted by the academic and research community as well
as the business groups and governments. Mary Meeker highlighted the
great impact of business model innovation and coined the phrase re-
imagination of nearly everything in her Internet Trends (Meeker
2012). She described how mobile phones and new devices, Internet and
connectivity, and user interfaces have resulted in the rapid
transformation of existing industries and development of new
industries.167 As examples, she noted transitions from desktops to smart
phones, delayed news to Twitter, phone calls to email to SMS to
WhatsApp, dedicated camera and film development to smart phone
camera and photo sharing services, books to Apple iPad and Amazon
Kindle, albums and CDs to music streaming, movie rental to YouTube,
maps to crowdsourced application such as Waze, taxis to Uber, and
telephone books to Yelp.
In a review of academic literature since the 1990s, Zott, Amit and
Massa (2011) concluded that while there is not an agreed definition of
business model, there are some common themes. These include that a
business model provides a holistic view of a business and considers
both value creation and value capture. Common business model
elements include: customer value proposition, profit formula, key
resources and key processes (Johnson, Christensen and Kagermann
167
Teece (2010) also highlights how business model innovation is needed in
conjunction with technology innovation in order to develop and capture value.
195
2008); customer segments, value propositions, channels, customer

relationships, revenue streams, key resources, key activities, key
partnerships and cost structure168 (Osterwalder and Pigneur 2010); and
choices (policies, assets and governance) and consequences (flexible
and rigid) (Casadesus-Masanell and Ricart 2011).
With the increasing adoption of the business model concept, many
authors have turned to investigating the relevance of business models to
international cooperation in developing new products and services. C.K.
Prahalad in Fortune at the Bottom of the Pyramid (2006) and in an
earlier article with the same title (Prahalad and Hart 2002), proposed
that doing business with the worlds four billion poor requires radical
innovations in technology and business models. He also highlighted
how the developing countries can participate in the evaluation of
environmentally sustainable technologies and products.
A differing perspective on the bottom of the pyramid business models
was provided by Karnani (2006) who described the fortune as a
mirage, and argued that the actual potential is in considering the
worlds poor as producers and not consumers. In this manner, the
orientation is towards raising per capita incomes. He mentioned
examples such as Grameen Bank in microfinancing and e-Choupal in
creating market efficiency for soy bean farmers to bring crops to the
market. Karnani further questions the bottom of the pyramid focus on
consumers by arguing that it de-emphasizes the role of government and
policy in international development.
Many authors have pointed out that failures in emerging markets often
are caused by erroneous business models. Eyring, et al (2011) pointed
out that some firms get their business models wrong by directly
importing business models from other countries with limited
modifications. They went further and stated that many firms do not
have a systematic process for properly adjusting their business models
to their target markets. Oyedele (2016) emphasized the need for
business models that are focused on emerging markets, which can be
168
Osterwalder and Pigneur label the portrayal of the nine elements as the Business
Model Canvas.
196
achieved by utilizing the Osterwalders and Pigneurs business model

canvas.169 This theme was further elaborated in a Harvard Business
School Analytics Services study emphasizing that the need for proper
business models is often more important than technologies in
developing countries (Harvard Business School Analytics Services
2011). The study stated that differences in the utilities, distribution and
transportation infrastructures, customer sensitivities to value and cost,
labor costs, and types of firms in developed and developing countries
require changes in business models.
Recent articles focus on the need for business model innovation in
specific countries and industries. Two such examples are Goyal, et al.
2017 and Schmida, et al. 2016. Both articles emphasize the need to
develop business models appropriate to local contexts. The first article
highlighted the business model commonalities in India including the
need for understanding target segment requirements, ensuring
affordability, addressing last mile channels, effectively utilizing scarce
resources, and consistently integrating business model elements. The
second article outlined cases such as Airjaldi providing WiFi and
broadband to villages in India using network relays and solar power
(Gupta 2014). Mawingu described the provision of WiFi to rural areas
in Kenya that utilizes TV spectrum whitespace and solar power
(Muraga 2015).
Policy Insight 1. Fostering proper and innovative, yet realistic business
models is an absolute necessity for developing new businesses, creating
new jobs, and achieving the SDGs.
5.2 Business Models for ICT-Based Innovative Ventures

In business models for innovative ICT-based activities, all players and
stakeholders, including governments, the private sector, and civil
societies as well as NGOs are engaged. In Porter 1990 and OECD 1997,
169
The business model canvas is a strategic management tool that provides a template
for characterizing the key elements that comprise a business model, allowing firms
to analyze how the different elements may interact so as to better understand
tradeoffs of alternative designs (Osterwalder & Pigneur, 2010).
197
the respective roles of different players in developing an agile national

innovation system in a fluid and fast changing business environment
were highlighted. The Fraunhofer Institute for Systems Innovation
Research has emphasized this point by contrasting the national
innovation system in 2001 as shown in Figure 1 (Kuhlmann and
Arnold) with an updated one in 2016 as depicted in Figure 2 (Warnke et
al. 2016).
Figure 1. National Innovation System Model

(Kuhlmann and Arnold 2001)
In the 2001 model, industry and academia, assisted by intermediary
institutions are the key players. The objective of innovation is to meet
customers' needs, and is impacted by factors that characterize the
political and financial market environment and depends on the
foundation of national and local infrastructure. (Kuhlmann and Arnold
2001) The expanded model (Figure 2) takes into account new
requirements such as being user based and open, as well as the need to
encourage collaboration, and adds new stakeholders and elements
including collaborative innovators and creative consumers in co-
creation and sharing platforms. (Warnke et al. 2016)
198
Recommendation 1. Owners of ICT-based businesses should

meticulously utilize the available tools and methods, such as the
business model canvas, to develop realistic business models for their
ventures.
Figure 2. National Innovation System Model Revisited

(Warnke et al. 2016)
5.3 Current Concepts in ICT-Based Products and Services

Current concepts in ICT-based products, services, and applications,
including platforms, crowdsourcing, personalization, data driven, and
sharing are described briefly in the following subsections.
5.3.1 Platforms
Apple iPhone, Aadhaar, Uber, Alibaba, Facebook and Airbnb are well
known examples of platforms. Zhu and Furr 2016 defined platforms as
intermediaries that connect two or more distinct groups of users and
enable their direct interaction. They further note that a single revenue
stream for a product can become multiple revenue streams with a
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successful platform business model. A platform provides the foundation

for multiple services that can be scaled.
Indias digital identity system known as Aadhaar (meaning
foundation in Hindi) is a platform that is being used as the foundation
for Indias Digital India program. Aadhaar provides citizens with a
unique 12 digit identification number and has the objective of
empowering citizens especially those that are unbanked. Citizens enroll
by providing an iris scan and ten finger print scans as a means for
authentication and de-duplication. Aadhaar has scaled rapidly and now
has 1.1 billion Indian citizens enrolled. India first utilized Aadhaar to
provide payments to citizens for Liquefied Petroleum Gas (LPG),
Public Distribution System (PDS) and kerosene programs. Aadhaar was
then utilized for providing payments to citizens by different government
programs including pensions, EPFO (Employees Provident Fund
Organization), and payments for the National Rural Employment
Guarantee Act (NREGA). Aadhaar is also used to obtain bank accounts
and mobile numbers, and is increasingly adopted by the private sector
(Gupta 2015). Aadhaar is a key element of the Digital India program for
empowering citizens and transforming India into a knowledge economy
with priorities including better health, education and agriculture.
The Apple iPhone and App Store are also platforms. The Apple App
Store provides app developers with means to develop and offer apps for
use by iPhone owners. By connecting developers and customers
through this platform, Apple has been able to increase the value of the
iPhone to customers by way of value creation by app developers. As
with Aadhaar, the iPhone and App Store platforms have networking
effects, in which the value of the service increases with the number of
participants.
Business models for platforms are not necessarily technology based and
there are many historical examples such as shopping malls and city
markets where individual stores or sellers provide products to
customers through the intermediary of the shopping mall or the city
market. Technology though provides a means to scale and scale
quickly. In addition, a technology-based business model may lessen
reliance on ownership of physical assets.
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Key elements of platform business models are the ecosystem partners,

the nature of intermediary, trust, and governance. In Apple's case, the
ecosystem partners are the app developers and iPhone owners, the
Internet is the intermediary and Apple provides the governance and
maintains a system of trust.
The degree of openness is a key question in the design of a platform-
based business. Van Alstyne, et al. (2016 a) defined the degree of
openness as the degree of access that consumers, producers and others
have to the platform and what they are allowed to do there. Esoko, an
Africa based agricultural exchange, emphasizes the importance of
design, motivation and degree of openness in a platform. Founded in
Uganda in 2005, Esoko initially provided market price information to
rural farmers and subsequently was developed into a full marketplace.
Esoko supplements the marketplace by providing weather alerts and
crop assistance to rural farmers that have been traditionally
disadvantaged by having only limited and asymmetrical information
when selling their products to middlemen.
5.3.2 Crowdsourcing
Waze, Wikipedia, TripAdvisor, Kiva and Zooniverse are a few
examples of successful crowdsourcing in which a crowd of end-users
participate in creating and capturing value. In Waze, the crowd provides
real time traffic information; in Wikipedia, the crowd writes and edits
encyclopedia entries; in TripAdvisor, the crowd reviews hotels,
restaurants and travel; in Kiva, the crowd provides microloans; and in
Zooniverse, the crowd participates in analyzing and interpreting data in
science projects. Crowdsourcing is based on an open model and
leverages technology to facilitate the creation of value and its potential
transfer by and to a crowd. (Kohler 2015)
Crowdsourcing has its own challenges as well. As an example, Maji
Matone, a Tanzania water quality project started in 2010 has
experienced some of the difficult challenges of crowdsourcing
initiatives (Taylor 2013). Prior to the start of Maji Matone, a Wateraid
survey found that only 54% of rural water points in Tanzania were
functioning. The main idea of Maji Matone was for citizens to use their
mobile phones and SMS to report water quality issues to the local
201
authorities who would then quickly dispatch a technician to solve the

problem. In Maji Matone, the technology worked well and in cases
where citizens sent SMS messages, the local authorities were
responsive. However, the project failed because very few citizens
reported water issues due to a sense of powerlessness to affect
accountability in the government and also because of the fear of
reprisal.
The concepts of co-creation, citizens driven innovation and open
source in crowdsourcing platforms are not universal and unique on how
participants engage and who captures value. In crowdsourcing, the
platform owner gains much of the value, but in the open source, the
benefits are made available to the community. Co-creation has
similarities to crowdsourcing, but in co-creation, participation can be
confined to a few individuals and not necessarily a crowd.
5.3.3 Personalization, Localization and Contextualization of
Services and Products
Personalization, localization and contextualization provide major new
business opportunities. Tomasz Janowski in Digital Government
Evolution: From Transformation to Contextualization (Janowski 2015)
states that the fourth stage of digital government is contextualization,
which is the process of putting the information that is specific to a
country, region, locality and / or sector into context.170
Related to contextualization is localization, which is the tailoring of
products or services to the characteristics of a location or customers in
that location. Localization can apply to one aspect or several aspects of
a product or service, such as Starbucks tailoring store design to the local
context. In U.S. cities, Starbucks patrons usually come alone or in pairs,
and Starbucks designs the stores using long bar areas. In contrast, in
Mexico City and China, patrons visit in larger groups, and the stores
have bar stools that can be moved to create group seating areas.
(Stinson 2014) Localization can also refer to tailoring of the supply
170
Contextualization follows the stages of Digitization (Technology in Government),
Transformation (Electronic Government) and Engagement (Electronic
Governance) (Janowski 2015)
202
chain to the local context. As an example, Amazon has tailored its

distribution system in India by engaging local store owners in rural
villages. Amazon delivers products to the rural village store through
one of its distributors, and the store owner notifies the Amazon
customer who comes to the store to pick up the package. The store
owner collects the payment and receives in return an administrative fee
from Amazon. (Govindarajan and Warren 2016)
Personalization refers to the tailoring of a product or service to an
individual. Todays music streaming industry provides a good example
where a subscribers playlist for Pandoras new premium service is
based upon their preferences. Pandora tabulates the subscribers
preferences from the customers previous radio listening and
engagement by way of clicking on a thumbs up button when he/she
likes the music. (Wolverton 2017)
Emergency support and disaster management has, by its nature, a local
and personal context. Current instances range from locating emergency
support for patients with cardiac arrest through mobile apps showing
locations of the automated external defibrillators (AEDs), notifying
citizens trained in CPR of a nearby cardiac arrest patient, providing
emergency evacuations of patients with special needs in advance of
hurricanes and floods by utilizing the patient and location databases,
and/or developing situational awareness in the immediate aftermath of a
natural disaster through the use of mobile devices and applications.
5.3.4 Data Driven Services, Products and Applications
With data generated from mobile devices, the Internet and now the
Internet of Things (IoT), data driven businesses are becoming
increasingly common and successful. These range from the content
based businesses to newer cognitive computing based businesses. In
addition, businesses are increasingly utilizing the data provided through
the governments open data programs.
To enhance the understanding of data driven businesses, Hartmann, et
al (2014) developed a taxonomy of data driven businesses in terms of
key resources, activities, value proposition, customer segments, revenue
model and cost structure. Since data is a key resource, the authors
203
identified several sources including internal sources from the existing

IT systems or data generated through web tracking or sensors,
externally acquired or purchased data, customer provided or freely
available data, and data generated by web crawling or crowdsourcing.
They also divided the category of freely available data into open data,
social media data and web crawled data. In 2014, the World Economic
Forum undertook a survey of 300 data driven businesses in developing
countries with the objective of forming a framework for the open data
business ecosystem as well as its enabling environment (Morrison
2014). The results point to several challenges in data quality, financing
and scalability.
5.3.5 Sharing
The business of sharing is based on the concept of providing customers
with access to goods or services through a trusted intermediary.
Examples include Zipcar, Uber, Airbnb, Little Cabs in Kenya and Grab
in Indonesia. Kenya provides a good example in the adoption of sharing
goods or services (Constable 2017). Both Uber and Airbnb have
successfully entered the Kenyan market and experienced significant
growth. In addition, local companies such as Little Cabs are competing
effectively. The challenge though is that Uber and Little Cabs are
undercutting the income of existing players and stakeholders such as
cab drivers and hotel owners. Constable argues that the sharing
businesses have different roles and objectives in the U.S. and Kenya. In
the U.S., most citizens have full time employment and are
supplementing their incomes with a sharing economy gigs. In
contrast, in Kenyas informal economy, employment is more limited
and the sharing business assists the participating service providers to
find customers more frequently.
5.4 Business Model Design

Developing business models that lead to successful and sustainable
businesses is dependent on aligning suitable choices for customers,
stakeholders and their motivations, value proposition, customer
experience, channels, awareness, governance, security, credibility, trust,
and privacy, among other things. These choices depend on the national
204
and local context and should be tailored accordingly in developing the

business model for each venture.
The difference in approaches to last mile delivery for eCommerce is an
illustrative case. The business in this case is eCommerce, which
includes identification, selection and purchase of a product or service
via the Internet and its delivery. Of these elements, product delivery is
very much locally tailored. In many countries, there is a mature
logistics infrastructure with third party providers and couriers providing
physical delivery services. In contrast, in some other countries where
the logistics infrastructure for local delivery is not as developed,
eCommerce companies have adopted novel strategies to deliver goods
to customers. They are experimenting with self-pickup or other
innovative delivery channels such as establishing mini depots or lockers
at heavily frequented shops, school campuses or community locations
and / or utilizing crowd delivery mirroring the Uber model.
Policy Insight 2. Business model innovation can provide the means for
local contextualization by empowering citizens and tailoring of both
private sector and government services.
5.4.1 Customers, Stakeholders and Their Motivations
Knowing and understanding customers, other stakeholders and their
respective motivations, expectations and needs are key factors in
establishing successful businesses. Aligning stakeholders' motivations
so that all stakeholders are benefitting from the service in a manner
consistent with their interests is important for successful ventures.
Recommendation 2. Governments and private sector should ensure
alignment of stakeholders interests and motivations in the development
and establishment of new businesses.
5.4.2 Value Proposition
Value proposition is the perceived benefits and costs of a business for
different stakeholders and is important in any business model. Eyring,
et al (2011) use this term to denote the cost of doing a job for a
customer and the price the customer is willing to pay. In many cases,
technology plays a key role in delivering value. A very recent example
205
is Zipline in Rwanda which delivers blood and medical products to 21

hospitals in Rwanda by fixed wing drones. Ziplines value proposition
is to deliver quickly, reliably and with product integrity to Rwanda's
rural hospitals that are often difficult to reach by road. Zipline makes
deliveries seven days a week and also during rainstorms and at night.
Ziplines value proposition also includes good customer experience
with text based ordering and notification of the physician.
5.4.3 Customer Experience
Customer experience is the perception of the full range of interactions
with other players and stakeholders that are involved in delivering a
product or providing a service. When customers are satisfied with a
given service or product, they expect the same quality of experience in
other cases involving other businesses. The value of customer
experience for a large transaction based business and a large
subscription based business was quantified in Kriss 2014, where it was
noted that customers in the transaction based business with customer
experience score of 10 spent 140% more than those with customer
experience score of 1 to 3 in the following year. Similarly, for the
subscription based business, customers with experience score of 1 were
only 43% likely to retain their subscription for the following year while
those with a customer experience score of 10 were 74% likely to
continue. The Canadian Governments Institute for Citizen-Centered
Services has identified some important drivers for citizens satisfaction
of public service delivery, which are timeliness, outcome (receiving
what was needed), extra mile (supportive staff), and fair and
knowledgeable staff (Marson 2007).
Recommendation 3. Government policy makers and private business
owners should consider customer experience as a key element in
providing new services or establishing new businesses.
5.4.4 Channels
Channels are the paths for governments and private companies to
connect with citizens and customers. Channels can include persons as in
the citizen kiosks, Internet, phone, etc.. Two major channel trends are
omnichannel in retail and multichannel service delivery in
206
governments. With the transition from the traditional retail stores to

online shopping, shop owners are increasingly adopting a channel
strategy of integrating online channels and their physical stores in a
manner that provides an advantage over solely online retailers. In turn,
some historically online only retailers such as Amazon are now opening
physical stores. In a study of 46,000 shoppers at a major U.S. retailer
from June 2015 to August 2016, it is reported that 7% shopped online
only, 20% in store only and 73% utilized both online and in store
channels. It was reported that customers, who were engaging through
multiple channels, made more purchases in stores and online and were
also more loyal (Sopadjieva, Dholakia Benjamin 2017). Multichannel
service delivery is conceptually similar, but it integrates the back office
in multiple paths (e.g., Internet, in person and phone) for customers to
connect with a government service provider.
5.4.5 Awareness
Scaling Aadhaar to 1.1 billion enrolled Indian citizens required the
development and successful implementation of a communications plan
to increase awareness about Aadhaar and its value proposition amongst
the India population. The Indian Government developed different
messages for the rural and urban citizens highlighting the government's
subsidies in the rural areas and conveniences for citizens in urban areas.
Similarly, in order to increase the use of online services for renewing
the drivers license, the State of Texas in the U.S. has utilized television
and billboard advertising to promote the availability and value
proposition of online renewal.
GSMA undertook an interesting study on the differences in the
implementation and adoption of M-PESA in Kenya and Tanzania
including a review of advertising strategy (GSMA 2009). The initial M-
PESA advertisements in Kenya used the tagline Send Money Home
which was tailored to the remittances sent from cities to rural villages
by family members who had moved to cities for employment. Early
adopters then promoted M-PESA to other citizens so they would also be
on the network and send or receive transfers. In contrast, early
advertising was not as effective in Tanzania, as Tanzania is not
urbanized as Kenya and the tagline was not as effective. In addition,
207
advertisement needed to highlight the benefits of M-PESA as well as

the benefits of having a financial account and being able to transfer
money.
Consistent with the earlier discussion on localization and national
differences in business needs, the strategy for building awareness also
needs to be tailored to take into account the local conditions.
Zarantonello, et al (2013) reviewed 256 commercial television tests
from 23 countries and concluded that in general, functional advertising
about a products features and benefits was more effective in emerging
markets while advertising that appeals to sensations, feelings and
imagination was more effective in the economically developed areas.
5.4.6 Governance
Governance is also a key element of ICT-driven businesses. Casadesus-
Masanell and Ricart (2011) define governance as how an organization
(or system) approaches policy choices and asset choices in shaping its
business. Aadhaar was rolled out by an innovative organizational
structure called the Unique Identity Authority of India (UADAI).
Established as an office in the India Planning Commission in 2009,
UADAI comprised of leadership and staff from both the government
and private sector. Nandan Nilekani, the co-founder of Infosys, was the
first UADAI chairman having the rank of cabinet minister. In
November 2010, sixteen months after UADAIs start, it had 140 staffs
from the government and 60 from the private sector. UADAI also was
innovative by having a hybrid governmenthigh tech culture. The New
Delhi headquarters operated in a manner closer to traditional Indian
Government in terms of organizational structure and communications,
but its Bangalore technology center was closer to that of a high tech
startup. As a result, the Aadhaar' governance was shaped jointly by the
government and the private sector.
Recommendation 4. Governments should encourage and facilitate joint
initiatives through cooperation by different stakeholders, including the
government, the private sector, and civil societies.
208
5.4.7 Security, Credibility, Trust and Privacy

Cybersecurity, credibility, trust and privacy are related though
somewhat different, and each is a key element in ensuring the success
and flourishing of ICT-driven businesses. Without effective
cybersecurity in terms of confidentiality, availability and integrity, the
customers and citizens will not use the services due to lack of trust and
confidence. Privacy is increasingly becoming more important as
wireless devices are vital elements of daily life around the world.
Trust and security are also vital in all ICT-driven services such as
mobile banking. Ericsson ConsumerLab interviewed citizens in Kenya,
South Africa, Ghana, Mexico, Argentina, Brazil, Vietnam, India and
Indonesia in regard to the potential use and adoption of mobile banking
services (Ericsson ConsumerLab 2015). A major finding was that
security concerns are a major barrier to adoption of mobile banking
services (other considerations included convenience and ease of use). In
addition, circles of trust with relatives, friends and colleagues play an
important role in loans and savings due to the trust in the existing social
structures and distrust in newer or existing institutions.
Recommendation 5. Government policy makers in cooperation with
the private sector should develop effective policies to enhance and
ensure trust and confidence so that the end users utilize new ICT-driven
services without fearing cyber threats.
5.4.8 Path to Scalability and Sustainability
A good business model provides a path to scalability and sustainability.
In countries with large populations, the challenge is to scale quickly and
effectively across the population. In countries with smaller populations
and markets, the challenge is to design the business model in a way that
can be adopted and then scaled. In general, the existing approaches to
implement scalability and growth are: organic growth with selective
outsourcing to partners, and multi-stakeholder partnership working with
partners for scaling, licensing, open licensing and getting acquired.
209
Recommendation 6. Government policy makers and the private sector

should encourage and facilitate scalability and sustainability in the
design and deployment of new ICT-driven services and applications.
5.5 Conclusion
In this chapter, we highlighted the importance of establishing a business
environment in which ICT-based innovative products, services, and
applications can flourish, new jobs can be created and maintained, and
sustainability in development can be achieved. We also emphasized the
vital importance of meticulously utilizing the available tools and
methods, such as the business model canvas, to develop realistic
business models for ICT-based ventures. In addition, we provided short
descriptions of the current trends and concepts in forming and offering
ICT-based novel products and services, and discussed some important
factors that are instrumental in establishing successful ICT-based
business entities.
Acknowledgement
I would like to congratulate ITU-D for twenty-five years of fostering,
facilitating and promoting the development of telecommunication
networks as well as application of ICTs to many development and
societal challenges. I also thank Dr. Eun-Ju Kim for organizing and
leading the ICTSDGs academic group, Director Brahima Sanou for
his support and encouragement, Professor Ahmad R. Sharafat for his
leadership and guidance and Dr. William H. Lehr for his many insights.
Lastly, I would like to thank all of the academic group members it has
been a tremendous pleasure meeting everyone and discussing ICT4D
and related topics.
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Biography
Jean-Pierre Auffret is Co-Founder of the International Academy of
CIO, an NGO in Tokyo, Japan with to foster best practices on CIO and
ICT leadership. He is also Director of Research Partnerships in the
School of Business and Associate Director in the Center for Assurance
Research and Engineering in the Volgenau School of Engineering at
George Mason University. Dr. Auffrets work and research span a range
of applied technology fields including ICT leadership and governance
and cybersecurity and with APEC, NSF, IBM and World Bank. He has
30 years of industry and academic experience including executive
positions with MCI and its joint venture with British Telecom, Concert,
and academic positions with George Mason University, Duke
University and American University. Dr. Auffret earned a B.S. from
Duke University where he was an A.B. Duke Scholar, M.B.A. from the
University of Virginia and Ph.D. in Physics from American University.
213
Chapter 6
Job Creation and Sustainable

Development
Raul L. Katz*
This chapter reviews the evidence generated from academic research on

the impact of ICTs on employment. It outlines three types of
employment effects: the construction effect which yields direct,
indirect and induced jobs resulting from the deployment of
telecommunication networks and data centers; the spill-over effect on
jobs in the traditional economy, which can simultaneously lead to new
jobs triggered by unlocking scalability in certain sectors while reducing
jobs through enhanced productivity in other labor-intensive industries;
and the innovation effect, which involves creation of new jobs due to
the development and introduction of new services and applications such
as telemedicine, Internet information searches, electronic commerce,
distance education and social networks, new forms of trade and
financial intermediation, and the development of new products and
services. Additionally, empirical evidence is reviewed on the impact of
ICTs on labor conditions, emphasizing positive contributions, such as
flexibility and income growth. On the basis of this evidence, public
policy prescriptions are outlined to maximize job creation and help
mitigate any potential disruptions in labor markets that are likely to
*
Columbia Institute for Tele-Information, Columbia University, New York, USA
214
6.1 Introduction
The Sustainable Development Goal (SDG) 8 establishes Promotion of
inclusive and sustainable economic growth, employment and decent
work for all as a key objective. More specifically, SDG 8 states that
Putting job creation at the heart of economic policy-making and
development plans, will not only generate decent work opportunities
but also more robust, inclusive and poverty-reducing growth.
In this context, it is absolutely pertinent to research how Information
and Communication Technologies (ICTs) 171 can contribute to
achieving this objective. The purpose of this chapter is to present the
evidence that has been generated from academic research over the past
years on the impact of ICTs on employment. On this basis, specific
recommendations will be put forward to both create new jobs and
replace those that would be lost due to the impact of automation with
other ones. The chapter begins by presenting research on the impact of
ICTs on job creation, putting it in the context of overall economic
contributions. Following this, empirical evidence will be presented on
the impact of ICTs on labor conditions, emphasizing aspects such as
flexibility and incomes. The evidence will show, as is the case in many
areas of social science, that the contribution of ICTs to job creation can
only be detected under certain conditions. This is why the third section
of this chapter will provide public policy prescriptions that can help
mitigate any potential disruptions in labor markets that are likely to
6.2 ICT Contribution to Job Creation
ICTs contribute to economic growth initially through a series of effects
similar to those generated by the deployment of any type of
171
Here, ICT means the integration of information technology (computing, cloud
processing, etc.) and telecommunications networks (fixed and mobile broadband
access). It also includes all the functionality associated with the Internet use. Most
empirical research on the economic impact of ICTs focus on a specific technology,
such as broadband, in order to generate a measurable independent variable.
Throughout this chapter, when research has been conducted on broadband impact
on job creation, it is considered to be a key component of the ICT value chain.
215
infrastructure. Beyond deployment effects, ICTs, as general-purpose

technologies, generate externalities, ranging from GDP growth to job
creation and enhancement of consumer surplus.
IV
Residential Consumer
III surplus
penetration
Direct Household
benefits income
Enterprise
ICT
penetration
Deployment
Total Factor
Productivity Contribution to
Investment in
employment
Infrastructure
and GDP
deployment
growth
II
I
Figure 1. Social and Economic Contribution of ICTs

Source: Katz (2012)
Figure 1 depicts four distinct social and economic contributions of
ICTs. Effect I refers to the impact on GDP and job creation resulting
from investing in the deployment of fixed and mobile broadband
networks, as well as data centers (also called the construction effect).
Effect II depicts the impact of ICTs on business productivity by
reducing transaction costs and enhancing the efficiency of enterprises
(sometimes referred to as the spillover effect). Effect III posits the
increase in the average household income as a result of enhancing the
capacity of the population to market its skills. Effects II and III
contribute in turn to GDP growth. Effect IV, which is not captured in
the GDP statistics, has to do with an increase in consumer surplus,
which is measured as the value created to consumers when they access
the Internet (for example, to use e-Government and e-Health
applications, or download information and entertainment). This section
will present the results of research conducted over the past twenty years
in support of the argument that ICTs have a significant impact on job
creation.
216
The Construction Effect

The construction of fixed and mobile broadband networks, combined
with the deployment of data centers, has three effects on job creation.
First, ICT infrastructure deployment creates direct jobs (for example,
technicians, construction workers and equipment manufacturing
operators) to install these networks. Second, direct job creation has an
impact on indirect jobs (for example, metallurgical and electrical
product industries that supply inputs to the industries directly involved).
Finally, household spending generated by direct and indirect jobs leads
to induced employment.
Input-output tables help calculating the direct, indirect, and induced
effects of ICT infrastructure construction on employment and
production. The interrelationship of these three effects can be measured
through multipliers, which estimate how one unit change on the input
side affects total employment change throughout the economy
(Figure 2).
As such, input-output analysis helps determine the impact on GDP and
jobs created by broadband deployment. For example, this author (Katz
et al., 2009) estimated that the investment by the US government in
broadband deployment in 2009 as part of the American Recovery and
Reinvestment Act (US$ 6.4 billion) would result in the creation of
128,000 direct, indirect and induced jobs/year172.
There are, at least, six studies that estimate the impact of ICT
infrastructure construction on employment based on input-out matrices:
Crandall et al. (2003), Katz et al. (2008), Atkinson et al. (2009), Katz et
al. (2009), Liebenau et al. (2009), and Katz et al. (2010a). All of these
studies estimate the number of jobs created as a result of capital
investment for the deployment of broadband networks: US$ 63 billion
required to deploy broadband services throughout the U.S. (Crandall et
al., 2003); CHF 13 billion to build a national fiber optic network in
Switzerland (Katz et al., 2008); US$ 10 billion (Atkinson et al., 2009)
and US$ 6.3 billion as part of counter-cycle stimulus packages in the
172
These did not include any secondary job creation resulting from broadband spill-
overs.
217
Figure 2. Structure of Input-output Table

Source: Adapted from Katz et al. (2008)
United States (Katz et al., 2009); US$ 7.5 billion to complete the
deployment of broadband in the United Kingdom (Liebenau et al,
2009); and US$ 47 billion to implement the National Broadband Plan in
Germany (Katz et al., 2010a). All of these studies have calculated
multipliers173, which measure the total employment change throughout
the economy resulting from the deployment of a national broadband
network (Table 1).
173
All studies that have relied on input-output analysis have calculated multipliers,
which measure the total employment change throughout the economy resulting
from the deployment of a broadband network. Beyond network construction (direct
employment effects), broadband construction has an employment effect at two
additional levels. Following the sector interrelationships of input-output matrices,
network deployment will result in indirect job creation (incremental employment
generated by businesses selling to those that are directly involved in network
construction) and induced job creation (additional employment induced by
household spending based on the income earned from the direct and indirect
effects).
218
In the input-output studies, two types of multipliers are considered:

Type I multipliers measure the direct and indirect effects (direct plus
indirect divided by the direct effect), while Type II multipliers measure
Type I effects plus induced effects (direct plus indirect plus induced
divided by the direct effect). Cognizant that multipliers from one
geographic region cannot be applied to another, it is useful to observe
the summary results for the multipliers of the six input-output studies.
According to the sector interrelationships in Table 2, European
economies appear to have lower indirect effects than the United States.
Furthermore, the differentiation of multipliers also indicates that a
relatively important job creation effect occurs as a result of household
spending based on the income earned from the direct and indirect
effects. These induced effects are also significant.
While the input-output table is a reliable tool for predicting investment
impact, two words of caution need to be given. First, input-output tables
represent static models reflecting the interrelationship between
economic sectors at a certain point in time. Since those interactions may
change, the matrices may lead us to overestimate or underestimate the
impact of network construction. For example, if the electronic
equipment industry is outsourcing jobs overseas at a fast pace, the
employment impact of broadband deployment will diminish over time
and part of the potentially counter-cyclical investment will leak
overseas. Second, it is critical to break down employment effects at the
three levels estimated by the input-output table in order to gauge the
true direct impact of broadband deployment. Having said this, all these
effects have been codified and hence, with the caveat of the static nature
of input-output tables, we believe that the results are quite reliable.
The Spill-Over Effect
Beyond job creation as a result of the construction of broadband
networks, ICTs can help relax scalability constraints, thereby allowing
traditional sectors of the economy to grow more rapidly. It is common
to observe that many traditional sectors of the economy are growth-
constrained by limited access to resources such as raw materials or
distribution channels. In this context, ICTs can provide a way to allow
219
businesses to scale further, addressing additional final demand and

thereby creating increased need for factor inputs, such as labor.
Table 1. Broadband Construction Impact on Job Creation
Country Study Objective Results

Crandall Estimate the Creation of 140,000
et al. employment impact jobs per year over ten years
(2003) of broadband Total jobs: 1.2
deployment aimed at million (including 546,000
increasing household for construction and 665,000
adoption from 60% indirect and induced)
to 95%, requiring an
investment of US $
63.6 billion
United
States
Atkinso Estimate the impact Total jobs: 180,000
n et al. of a US $10 billion (including 64,000 direct and
(2009) investment in 116,000 indirect and
broadband induced)
deployment
Katz Estimate the impact Total jobs: 127,000
et al. of 2009 broadband (including 37,000 direct,
(2009) stimulus bill included 31,000 indirect, and 59,500
in the American induced)
Recovery Act
et al. of deploying a over four years (including
(2008) national broadband 83,000 direct and 31,000
Switzerland
network requiring an indirect)
investment of CHF
13 billion
Liebena Estimate the impact Total jobs: 211,000
u et al. of investing US $ 7.5 (including 76,500 direct and
United
(2009) billion to achieve the 134,500 indirect and
Kingdom
target of the "Digital induced)
Britain" Plan
et al, of Germanys 2014 (including 158,000 direct,
Germany
(2010a) National Broadband 71,000 indirect, and 75,000
Strategy induced)
220
Table 2. Employment Multiplier Effects of Studies

Relying on Input-Output Analysis
Country Study Type I Type II

Crandall et al. (2003) N.A. 2.22
United States Atkinson et al. (2009) N.A. 1.81
Katz et al. (2009) 1.84 3:45
Switzerland Katz et al. (2008) 1.37 N.A.
United Kingdom Liebenau et al. (2009) N.A. 2.76
Germany Katz et al. (2010a) 1.45 1.92
Note: Crandall et al. (2003) and Atkinson et al. (2009) do not differentiate between
indirect and induced effects, therefore Type I multipliers cannot be calculated; Katz el
(2008) did not calculate Type II multiplier because induced effects were not estimated.
Source: Adapted from Katz (2012)
The initial push for alleviating the scalability constraint has been
identified in several pieces of research:
Improved productivity as a result of the introduction of more
efficient business process support by ICTs, and marketing of excess
inventories and supply chain optimization 174 (Atkinson et al., 2009)
Revenue growth resulting from extended market coverage (Varian
et al., 2002 and Gillett et al., 2006)
Impact on the composition and deployment of industrial value
chains. ICTs can attract jobs from other regions as a result of the ability
to process information and provide services remotely. The services
most greatly impacted are outsourcing and the deployment of virtual
customer care centers.
For example, with regards to business expansion, Clarke (2008) studied
the impact of broadband access on exports of manufacturing and service
174
Efficient telecommunications make it possible to reach a broader market,
facilitating business processes. They also result in reduced input costs as the
capacity to search for lower prices increases.
221
firms. The analysis was performed for countries of medium and low
levels of development in Eastern Europe and Central Asia. The study
controlled for variables such as firm size, industrial sector, foreign
ownership, firm performance, level of domestic competition,
international trade organization affiliation, progress in privatization, and
telecommunication infrastructure. The author found that in the
manufacturing sector, firms with broadband Internet access generated
6% more foreign sales than the rest. This particular effect has been well
researched in the microeconomics literature. The opportunity provided
by broadband to increase market reach and seek out the highest possible
selling price in open economies is essential in the development of a
vibrant manufacturing sector. In the service sector, firms with
broadband Internet access generate between 7.5 % and 10 % more sales.
In this case, the impact is primarily driven by enhanced access to
foreign markets. In both cases of manufacturing and service industries,
broadband improves export performance by facilitating communication
with foreign buyers, improving information on overseas markets,
consumers and standards, by ultimately linking the enterprise to
consumers, and by allowing to bid for contracts or participate in
business-to-business platforms.
Research has also allowed extending the causality from alleviation of
the resource constraint to increased demand for labor. According to
Crandall et al. (2007), the job creation impact of broadband tends to be
concentrated in service industries, (e.g., financial services, education,
health care, etc.) although the authors also identified a positive effect in
manufacturing as well. In another study, Shideler et al. (2007) found
that for the state of Kentucky in the United States, county employment
was positively related to broadband adoption in multiple sectors,
including manufacturing and certain services. This specific effect has
also been analyzed by Katz et al. (2010b) for rural economies of the
United States. In this research, it was found that within rural counties,
broadband penetration contributed to job creation in financial services,
wholesale trade and health sectors. This is the result of enterprise
relocation enabled by broadband, which benefits primarily urban
communities in the periphery of metropolitan areas (Katz et al. 2010b).
The only sector where a negative relationship was found with the
222
deployment of broadband (0.34% 39.68%) was the lodging and food

services industry. This was the result of a particularly strong
capital/labor substitution process taking place, whereby productivity
gains from broadband adoption reduced employment. Similarly,
Thompson and Garbacz (2008) concluded that for certain industries,
there may be a substitution effect between broadband and
employment175. Therefore, one may conclude that while alleviating
scalability constraints in certain sectors, the productivity impact of
broadband can cause capital-labor substitution and may result in a net
reduction in employment.
In summary, research on job creation in the traditional economy is
starting to pinpoint different ICT employment effects by industry
sector. ICTs may simultaneously cause labor creation triggered by
unlocking scalability in certain sectors while enhancing productivity in
other labor-intensive industries. Nevertheless, while a robust
explanation of the precise effects by sector and the specific drivers in
each case is still missing, it is reasonable to expect that the deployment
of ICTs should not have a uniform impact across the old economy.
The Innovation Effect
Beyond job creation in the traditional economy, the impact of ICT
externalities on employment, referred to as innovation effects or
network effects (Atkinson et al. 2009) have also been quantified. By
studying the externalities resulting from the adoption of ICTs, at least
four effects have been identified:
Introduction of new services and applications such as telemedicine,
Internet information searches, electronic commerce, distance
education and social networks (Atkinson et al., 2009). For example,
in countries with high broadband penetration, by 2015 the
percentage of total retail trade conducted through electronic
commerce had already exceeded 10% (South Korea: 15.09%,
Denmark: 12.63%, United Kingdom: 13.41%)176.
175
This effect was also mentioned by Gillett et al. (2006).
176
Source: Euromonitor.
223
New forms of trade and financial intermediation (Atkinson et al.,

2009). A correlation analysis of Internet penetration versus
electronic commerce as a percentage of total retailing per country
indicates that after Internet adoption reaches a threshold of
approximately 60%, electronic commerce flows as percentage of
retailing tend to grow exponentially. In other words, the Internet
creates a new more efficient retail distribution channel, which is
massively adopted by consumers (Katz, 2017).
Development of new products and services (Atkinson et al., 2009),
such as the whole range of collaborative platforms that characterize
the digital economy (Uber, Airbnb).
Growth of some industries within the services sector (Crandall et al.,
2007): For example, growth in software development and business
process outsourcing. Abramovsky et al. (2006) analyzed an
extensive dataset of UK firms and found that broadband Internet use
increases the probability of a firm offshoring business processes and
services between 6% and 12%, from which an emerging economy
can greatly benefit.
Additionally, ICTs have been found to have a positive impact on the
development of new businesses. This results from the network effects
of connectivity. When a large enough number of households are
connected to broadband, the incentive to develop new businesses
around information search, advertising and electronic commerce
increases. For example, Crandall et al. (2007) estimated that the
network effects of universal broadband access could have a multiplier
of 1.17 on the investment in infrastructure. Similarly, as a result of 40%
lower broadband penetration in the United Kingdom, Liebenau et al.
(2009) estimated the multiplier to be somewhat lower (0.33) for the
British economy. This would imply that innovation effects increase
with broadband penetration, a concept akin to return to scale.
Empirical evidence has also been generated to support the existence
of an innovation effect triggered by ICTs. For example, the
entertainment sector is an important component in the supply and
demand for digital content. The development of the Internet has
resulted in the emergence of a huge potential market for creating
local content and applications in native languages. In addition to
224
creating jobs in the production, distribution and management of a

local content digital industry, its development has multiple benefits,
including helping to strengthen national cultural identities, reducing
foreign trade imbalances, and promoting demand for local ICT
infrastructure services (e.g., domestic ISPs and cloud services to
support domestic content). Our analysis of the 100 most popular
Internet sites by country around the world indicates that in many
emerging countries, locally developed sites represent only between
15 and 20. The development of local digital content entails
enormous opportunities not only to develop a vibrant domestic
content and applications industry but also to meet the needs of
population that would only adopt broadband if they were to find a
product that is culturally relevant to its needs.
Similarly, on-line B2B and B2C platforms allow domestic
businesses to address international markets, which in turn, yield an
increase in employment. As an example, as of 2015, the videogame
industry in Latin America comprised 418 companies employing
approximately 7,000 developers, while developers of applications
relying on Facebook platform amounted to approximately 20,000
(Katz, 2015). In the case of Latin America, Mercado Libre, the most
important e-Commerce platform has triggered the creation of
approximately 120,000 registered users offering their goods through
the network177. This number vastly exceeds the direct jobs created
by the platform (2,635). Additional new jobs created by the new
economy could include support services for these businesses include
advertising, platform maintenance and management, and the like.
Aggregate Estimation of Externalities
Job creation as a result of ICT externalities in the old and new
economies has been studied by using econometric analysis of historical
data series, and has provided important conclusions. These studies have
been carried out initially in the United States. However, once time
series became available internationally, several studies were completed
in other countries as well. Table 3 presents the econometric studies that
177
Mercado Libre (2015). Business Overview.
225
were used to estimate the impact of ICTs on creating jobs as a result of

positive externalities.
According to these studies, once broadband is deployed, its contribution
to employment growth ranges from 0.14% to 5.32%, depending on the
territory and the industrial sector composition. More precisely, a 1%
increase in broadband penetration contributes between 0.002% and
0.5% to employment growth.
Like the relationship between ICTs and GDP growth, its contribution to
employment is also conditioned by a number of special effects that need
to be considered when formulating public policy initiatives. As an
example:
Is there a decreasing return in employment generation linked to ICT
infrastructure penetration?
Does the impact of ICTs on employment differ according to
geographies?
On the first question, some researchers have found a decreasing impact
of ICTs on employment. While Gillett et al. (2006) observed that the
magnitude of impact of broadband on employment increases over time,
they also found that the positive contribution of broadband to
employment tends to diminish as penetration increases. This finding
may support the existence of a saturation effect. Coincidentally,
Shideler et al. (2007) also found a negative but statistically significant
relationship between broadband saturation and employment generation.
This would indicate that at a certain point of broadband deployment, the
capability of the technology to have a positive contribution to job
creation starts to diminish. The evidence regarding declining returns on
job creation is not that clear, however. On the one hand, as it has been
demonstrated in diffusion theory, early technology adopters are
generally those who can elicit the higher returns of a given innovation.
Conversely, network externalities would tend to diminish over time
because those effects would not be as strong for late adopters. On the
other hand, while job creation in traditional industries tends to diminish,
the emergence of new economy jobs compensates for the former
effect. Clearly, the job mix will change over time but the positive net
impact will remain.
226
Table 3. Impact of Positive ICT Externalities on Employment
Country Authors Data Effect

Katz, 2000-2006 for A 1% increase in broadband
Germany et al. Germany counties penetration contributes to
(2010a) employment growth by 0.002%
Gillett, 1998-2002 United Availability of broadband access
et al. States zip codes increases employment growth
(2006) between 1% and 0.5%
Crandall, For 48 states in the For every 1% increase in
et al. United States broadband penetration in each
United (2007) state, employment would increase
States by an estimated 0.2%, and 0.3%
per year if the economy were not
at full employment.
Thompson, 2000-2006 for 48 Job creation varied by industry
et al. states in the United
(2009) States
Shideler, Data broken down A 1% increase in broadband
State of
et al. by county in the penetration contributed between
Kentucky
(2007) state of Kentucky 0.14% and 5.32% to employment
(United
for 2003-4 growth, depending on the
States)
industry.
Kolko 1999-2006 for The study does not find a
State of
(2010) California zip significant relation in part because
California
codes broadband service availability is
(United
measured based on the number of
States)
operators per zip code.
Katz & Econometric model 0.56% increase in employment
Callorda of Ecuador data rate for every 10 % increase of
Ecuador
(2013) between 2008 and fixed broadband penetration
2012
Katz Econometric model 10% increase in the digitization
(2015) of 144 countries index yields a 0.72% reduction in
measuring the job unemployment rate
impact of
Worldwide digitization,
controlling for
fixed capital
formation and
human capital
227
On a related issue, the impact of ICTs on job creation also varies

between developed and emerging regions. The research on broadband
impact in Germany (Katz et al., 2010a) highlighted differential job
creation impact between advanced and emerging regions. In regions
with high broadband penetration, once penetration increased, the effect
of job creation is significant in the short term, fading over time due to a
potential saturation effect. On the other hand, in places with low
broadband penetration, the increase in broadband deployment results in
a negative impact on job creation (in other words, a reduction in the
number of jobs) in the short term, reaching a positive effect in the long
term. A comparison of these effects is shown conceptually in Figure 3.
Each graph conceptually depicts the impact that an increase in
broadband penetration at time T would have over time (horizontal axis
labeled T+1, T+2, etc.) in a given region. In the graph to the left in
Figure 3, the deployment of broadband in geographies exhibiting high
penetration at the inception point is extremely high both in terms of
GDP and job creation. Increased broadband deployment in more
advanced regions creates a supply shock within the context of
companies who can immediately leverage technology to generate new
businesses, as described above, while yielding production efficiencies.
The fact that employment and GDP grow in parallel indicates that
broadband is having a significant impact both on innovation and
business growth, thereby overcoming any potential employment
reduction resulting from productivity effects.
In contrast, in regions with lower broadband adoption (graph to the
right in Figure 3), the increase in broadband penetration leads to an
initial substitution between capital and labor, in which the productivity
generated by the technology produces a decline in employment. This
effect was alluded to by Gillett et al. (2006) in indicating, broadband
can facilitate the capital-labor substitution, resulting in lower rate of
employment growth. Thompson et al. (2008) also mentions it is
possible that a substitution effect between broadband and employment
exists. In the medium term, the increase in adoption has a positive job
impact, which can be explained in terms of learning in the assimilation
of the technological input and the generation of innovations that create
jobs. In other words, in those regions lagging behind in ICT penetration,
228
the effect of broadband is increased productivity in the short term and,

as a result, the loss of jobs; in the medium and long term, innovation
leads to job creation.
Figure 3. Impact of ICT Infrastructure on Job Creation

Source: Katz et al. (2010a)
In sum, while there is a strong consensus in the positive and statistically
significant effect of ICTs on economic growth and job creation, when
comparing findings across research, a number of caveats need to be
raised. First, ICTs have a stronger productivity impact in sectors with
high transaction costs, such as financial services. In some industries,
this effect unlocks a resource constraint leading to an increase in labor.
Second, in less developed regions, as postulated in economic theory,
ICTs enable the adoption of more efficient business processes, leading
to capital-labor substitution and, therefore loss of jobs (this could be
labeled the productivity shock theory). Third, the impact of ICTs on
small and medium enterprises takes longer to materialize due to the
need to restructure the firms processes and labor organization in order
to gain from adopting the technology (called accumulation of
intangible capital).
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6.3 ICT Contribution to Labor Conditions

In recent years, conducting the national household surveys that now
include ICT modules has allowed to research the impact of ICTs based
on microeconomic data. For example, using information from the
Peruvian households between 2007 and 2009, De Los Rios (2010)
found that, during this time period, the Internet adopters experienced
significant income growth relative to those households that did not have
the service.
The author of this chapter conducted a study evaluating the impact of
ICTs on household income in Ecuador (Katz and Callorda, 2013). To
estimate the contribution of ICTs on poverty reduction using microdata,
the authors calculated the impact of broadband deployment on the
average income at the provincial level. Ecuador is an appropriate case
for this analysis because, while at the end of 2009 the country had a
limited offering of residential broadband services, between that year
and 2011, CNT (Ecuadors telecommunications incumbent fixed
broadband provider) greatly expanded its coverage. As a result, the
population in newly served townships could access fixed broadband
service for the first time. This expansion led to a significant increase in
broadband penetration at the provincial level in the country. Based on
disaggregated data, a variable was built indicating the regions that
lacked broadband access in 2009 (due to a lack of coverage) but gained
service by late 2010 / early 2011 (thanks to the aforementioned
extension of the state-owned telecommunications operators network).
Through this process, two groups were created: 1) a treatment group,
comprised of those individuals living in regions where broadband was
introduced during the 2010-11 period, and 2) a control group,
comprised of those individuals living in regions that already had access
to residential broadband services by the fourth quarter of 2009. Using
this approach, and given that the treatment group and the control group
are statistically equal at the baseline of the observed variables, a
regression model that estimates the impact of treatment on individual
income levels was built. Controls were included for the variables that at
the individual level can affect income (age, gender, employment status
and healthcare coverage, level of formal education, and role within the
family).
230
The results indicated that broadband adoption increased the average

individual income by US$ 25.76, which represents a 7.48% increase in
relation to the initial average income of the entire sample. Given that
the introduction of broadband occurred over the course of two years -
between December 2009 and December 2011 - the annual increase in
the income level was 3.67%. This figure captured the increase in
income generated directly by broadband use, the impact on the job
market as a result of the labor required for network deployment and the
new staff hired by companies to provide the service, as well as the
spillover effect on society. The impact on income was shown to be
greater among households owning a computer. As evidence, computer
users witnessed an average income increase of US$ 38.36, which
equates to a total 8.00% increase, or 3.92% per year. Finally, the largest
impact occurred among the Internet users, who benefited from
increased speed and, in the case of those users who previously used
dial-up Internet, elimination of the incremental cost of usage. Users
who could access the service directly in their homes as a result of
network deployment also benefited. For this group, the increase in the
income level was substantially greater than in the previous cases: Their
income increased by US$ 51.86, a 10.27% rise relative to their initial
income, or a 5.01% increase per year. A somewhat similar effect has
been identified by Bohlin et al. (2012). A study covering a cross-section
of 8 OECD countries and 5 emerging countries detected that in OECD
countries, access to 4 Mbps service increased household income by
US$ 2,100 per year. In the three emerging nations, introducing a 0.5
Mbps broadband connection increases household income by US$ 800
per year. This last estimate, covering Brazil, Mexico, South Africa,
India and urban China is fairly close to the microdata-based model
developed by Katz and Callorda (2013). Similarly, Dutz et al. (2009)
showed with US data that gaining access to broadband-enabled
applications enables more effective and productive ways of working,
thereby boosting personal productivity.
This research demonstrated that the introduction of broadband services
has a positive impact on household income, as well as working
conditions. While the causes for this increase can vary, broadband does
have an impact through four effects. First, broadband deployment
231
requires infrastructure construction in order to provide the service (the

construction effect referred to above), additional workers for the
operators new commercial offices, and technical personnel for the
installation and maintenance of the new infrastructure. The new demand
for labor in a market with an unemployment rate that is already below
5% generates a shift in the demand curve for workers, which leads to an
increase in equilibrium wages. In other words, at full employment,
additional demand for workers tends to result in an increase in
compensation. Furthermore, the rise in wages through this channel may
reflect a need for better compensation for those workers who, given the
low unemployment rates, should receive better wages to meet or exceed
their expectations.
A second explanation for the income increase is that, as seen in Katz
(2012), broadband has a positive effect on worker productivity. Classic
labor economics literature shows that wages in competitive markets
equal marginal productivity. As a result, higher labor productivity
should yield higher wages. This is labeled as the productivity effect.
Third, research also shows that the effect of broadband deployment is
greater for computer and Internet users. In this sense, the introduction
of broadband allowed workers with digital literacy skills to signal their
computer knowledge to potential employers and then use those skills in
the workplace in return for a higher wage. We call this impact the skill
signaling effect.
Finally, the introduction of ICT can also help to reduce the time
otherwise required for an effective job search, allowing underemployed
workers to look for full-time work using broadband services. This
increase in efficiency leads to a reduction in unemployment periods and
generates an increase in the migration of underemployed workers to
full-time positions, which, in turn, results in higher labor income. In
other words, reduced transaction costs related to finding employment
can ultimately result in higher income.
6.4 Public Policy Implications

Research has generated compelling evidence that concludes under
certain conditions, ICTs have a positive contribution to job creation.
232
Firstly and foremost, the evidence is fairly conclusive about the

contribution of ICTs to job creation in the new economy. As a result,
ICT employment impact is higher when promotion of the technology is
combined with stimulus of innovative businesses that are tied to new
applications. While the size of this contribution varies, discrepancies
can be related to different datasets as well as model specifications.
Secondly, ICTs contribute to employment growth with spillover
impacts on the rest of the traditional economy. While deployment
programs are, as expected, concentrated in the construction and
telecommunication sectors, the impact of externalities are greater in
sectors with high transaction costs (financial services, education, and
health care). Thirdly, ICTs can also contribute to job destruction
particularly in certain labor-intensive sectors as a result of the
productivity effect or in certain geographies with low ICT penetration.
In other words, the impact of ICTs on job creation is neither automatic
nor uniform across the economic system. This emphasizes the
importance of implementing public policies not only for ICTs, but also
in education, economic development and planning, science and
technology, finance, and others especially in the converged ecosystem.
Among the initial recommendations, the followings are highlighted.
1) Coordinate ICT Infrastructure Deployment with Job
Creation and Retention Programs
Externalities resulting from ICT deployment programs can be sizable.
However, their fulfillment is driven by success in implementing job
creation and retention programs in parallel with infrastructure
deployment. As an example, governments need to work with private
sector companies in using this new infrastructure for employment
generation. In many cases, job creation is not an automatic effect
resulting from broadband deployment. Broadband construction has to
be followed by additional stimuli such as establishing innovation labs
geared to launching applications, adopting new business models, and
developing new digital content.
On the other hand, it is critical to deploy initiatives aimed at creating
ICT-enabled jobs. As an example, governments should stimulate the
development of rural virtual call centers as a way to bring jobs that were
233
outsourced overseas. Virtual call centers rely on rural population linked

to a centrally located supervisor. They have become increasingly
popular in the US due to the quality of the labor pool and economics
close to matching call centers overseas. Virtual call centers rely on
home-based agents to complement/replace traditional call centers from
emerging markets. This concept, enabled by home-based information
technology and broadband infrastructure, has a number of distinctive
advantages. It avoids overhead related to traditional call centers,
including real estate and utilities, as well as up-front investment/capital
expenditures particularly for the rapid-growth companies. It lowers
staff turnover due to work from home and flexible schedules, and
improves service level and/or labor utilization due to flexible staffing
management of time of day and seasonal peaks. Finally, it provides
greater responsiveness to unforeseen changes in demand and lowers
labor costs by being able to attract talent at lower wages and benefits.
From an economic standpoint, a virtual call center located in an
industrialized country offers 15%-30% cost advantage over the
traditional centralized model
2) Carefully Select Areas to Accelerate ICT Deployment
Consider deployment not only in unserved and underserved areas, but
also in regions where the possibility of developing regional growth, in
coordination with ICT deployment, could act as a magnet to stimulate
relocation, business creation, and, consequently, jobs. While it is
possible that private operators have already targeted such areas, it is
reasonable to assume that opportunities for regional core development
could also be found. The experience of Germany, Sweden and the
Netherlands could be very instructive in this regard. Along those lines,
policy makers, particularly in emerging countries, facing decisions of
where to focus ICT deployment, need to consider important trade-offs.
A natural inclination might be to address any inclusion gaps, by
focusing the universal service funds on the unserved areas (e.g., rural
and isolated areas with concentration of disadvantaged population).
However, it is important to emphasize that other options could be
available. For example, how about focusing on areas where ICTs could
have a maximum economic impact, with subsequent social spill-overs
(for example, bring the ICT infrastructure up to world class
234
performance)? This raises the need to equip government planning units

with the necessary social and economic impact skills to conduct such
comparative analysis. Additionally, even before tackling the analysis of
impact trade-offs, policy makers need to clearly outline what are the
prioritized objectives to be maximized through ICT deployment.
3) Centralize Program Evaluation
As a corollary to the first recommendation, given that the ability to
generate jobs as a result of externalities is dependent on the regions
being targeted, it would be advisable to centralize the process of
allocating funds for ICT deployment and rely on a common framework
for evaluating requests focused on economic growth and job creation.
In this context, it is critical to enhance the governments ability to
monitor spending and outcomes, especially if the stimulus program is
largely mandated like an earmark as opposed to some other methods
that have more controls. This compels policy makers to have access to
social, economic, and technology data and have the necessary impact-
modeling skills to conduct trade-off analysis, such as the ones referred
to above, that support the decisions on how to maximize the impact of
technology development.
4) Reduce Disruption Costs
Governments need to stand ready to help reduce the costs of disruptions
and adjustments resulting from ICT deployment and automation. If ICT
deployment leads to job destruction in certain areas or sectors,
governments should be ready to implement retraining programs and
temporary safety net mitigation initiatives. Broadband technology is
just one of the many components of a development strategy. The
experience of deployment of the technology in emerging regions such
as Chile and Saudi Arabia has highlighted the fact that once broadband
is available, job creation is directly a function of human capital
availability. Studies in digital economy development tend to underscore
the fact that once the infrastructure gap has been addressed, human
capital becomes the stumbling block. To rapidly tackle this barrier,
governments are implementing short training programs focused on
creating the necessary skills to utilize the technology in the
development of new businesses.
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6.5 Concluding Remarks

Research evidence generated over the past fifteen years confirms the
positive effects of ICTs on employment, particularly in terms of
creating new jobs through deployment, unlocking of resources in
traditional industries, and creating new businesses. Furthermore, ICTs
have a positive contribution to increasing incomes and improving work
conditions. On the other hand, under certain conditions, ICTs may have
a negative employment effect: By enhancing productivity in certain
labor-intensive sectors, ICTs can result in the elimination of jobs.
Furthermore, ICT adoption will require the implementation of skills
development programs.
In light of the benefits and potential disruptions, policy makers need to
play an active role in order to maximize ICTs job creation potential. In
many cases, job creation is not automatic by ICT deployment. Network
construction has to be followed by additional stimuli such as
establishing innovation labs geared to develop new applications,
adopting new business models, and creating new digital content. It is
also critical to deploy initiatives aimed at creating ICT-enabled jobs.
Policy makers should consider deployment not only in unserved and
underserved areas but also in regions where the possibility of
developing regional growth, in coordination with ICT deployment,
could act as a magnet to stimulate relocation, business creation, and,
consequently, jobs. In light of this, given that the ability to generate
jobs as a result of externalities is dependent on the targeted regions,
it is advisable to centralize the process of allocating funds for ICT
deployment and rely on a common framework for evaluating
requests focusing on economic growth and job creation. This
compels policy makers to have access to social, economic, and
technology data and have the necessary impact-modeling skills to
conduct trade-off analysis that support the decisions on how to
maximize the impact of technology development.
Finally, governments need to stand ready to help reduce the costs of
disruptions and adjustments. If ICT deployment leads to job
elimination in certain sectors, governments should implement
retraining programs and temporary safety net mitigation initiatives.
236
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Biography
Raul Katz is a Director of Business Strategy Research at the Columbia
Institute for Teleinformation at Columbia University and a Visiting
Professor at the Universidad de San Andres in Argentina. His research
focuses on the economic and social contribution of digital technologies,
and digitization of production processes. He advises governments,
multilateral organizations and private companies in the development of
their digital agendas. In 2004 he retired after twenty years of service as
a Partner with Booz Allen & Hamilton, where he led the North
American and Latin American Telecommunications Practices, and was
a Member of its Leadership Team. He has published five books in the
fields of broadband demand stimulation, economic impact of ICT on
development, and the digital economy. Dr. Katz holds a PhD in
Management Science and Political Science, and a MS in
Communications Technology and Policy from MIT, a Maitrise and
Licence in Communications Sciences from the University of Paris, and
a Maitrise in Political Science from Sorbonne.
238
Chapter 7
The Future of ICT-driven

Education for Sustainable
Development
James F. Larson*
This chapter examines the role of education as the basic process in the
hyper connected information era, one that is a central requirement and
key tool for achieving the SDGs. It examines both the role of ICTs in
the broad and global transformation of education, on the one hand, and
on the crucial role of education in building a strong and healthy ICT
ecosystem, on the other. Lifelong learning, massive open online courses
(MOOCs) and international education hubs are all indicators of how the
digital platform revolution is disrupting education. The chapter makes a
series of policy recommendations on teaching ICT technologies and
skills in 21st century, the need for lifelong learning, and the value of
public-private partnerships in developing education platforms.
Furthermore, it suggests that ICT education is needed to familiarize all
stakeholders with the Internet and digital networks, big data, the mobile
revolution, the Internet of Things and digital tools such as robotics, AI,
and virtual and augmented reality.
7.1 Introduction
Education is the sine qua non for both the development of information
and communication technologies (ICTs), and also for their effective
utilization to achieve sustainable development. Without education, both
*
SUNY Korea Stony Brook University, Incheon, Republic of Korea
239
the development of the ICT sector and its role in achieving sustainable
development would be almost inconceivable. As noted by Yochai
Benkler, the worlds advanced economies have made two parallel shifts.
The first move, in the making for more than a century, was from an
industrial economy to one centered on transmission of information,
creation of content, and manipulation of symbols. Examples of the new
economic focus include financial services, accounting, software,
science, films and music. The second shift is the move to a
communication environment built on inexpensive processors with high
computation capabilities, interconnected in a pervasive network called
the Internet. (Benkler, 2006, p. 7). The transformation was accompanied
by a shift in the focus of research and scholarly attention related to the
advances in ICTs to the role ICTs for sustainable development, which is
the focus of this book (Schramm, 1964) (ITU, 1984).
Although the arrival of digital networks has had broad economic, social,
and political impact, one of its greatest effects has been on education,
which is the basic process of the information age (Oh M. a., 2011, p.
188). Education plays a dual role in relation to the challenges posed by
sustainable development. First, advances in ICTs are at the heart of a
broad transformation of education itself. ICTs have insinuated
themselves into all fields, forms and levels of education around the
world. Consequently they will inevitably play a role in all education
that bears on achieving the Sustainable Development Goals (SDGs).
Second, education plays a vital role in building a strong and healthy
ICT ecosystem, a necessary requirement for optimizing the impact of
ICTs on the SDGs. In addition to ensuring basic digital literacy, this
includes inculcating an understanding of a growing range of key ICT
trends and concepts, including networks, platforms, big data and
mobility. Such education is a prerequisite for widespread adoption of
the rapidly evolving digital technologies. All stakeholders, particularly
those with policymaking or executive responsibilities, need to
understand both of these roles in order to maximize the positive impact
of ICTs for achieving the SDGs.
One byproduct of the adoption and use of the Internet and other ICTs
around the globe and across all sectors is the increased need for
governments and political leaders to consistently plan for and invest in
240
broadband networks and other ICT infrastructures. In this hyper

connected era, it is impossible to imagine effective education without
optimal use of ever-changing digital technologies. In considering the
possible impact on achievement of the SDGs, one thing seems clear:
ensuring positive impact will require successfully reaching and
engaging most of the worlds citizens, not just the elites. Such
engagement will require a broad paradigm shift in education to harness
the positive power of ICTs to develop the new skill sets required by
emerging digital economies and to facilitate re-training and manage
transitions to accommodate disruptions and to ensure inclusive
enjoyment of the benefits that ICTs can deliver. Education, augmented
by ICTs, is the key tool that can enable achievement of the SDGs.
Furthermore, education for the 21st century must address the skills that
are necessary to leverage the power of ICTs and focus their practical
use on solving the real world problems that are the barriers to
realization of the SDGs. This means problem based learning or
education that makes the connection between theory and practice.
Recommendation 1: All major stakeholders in sustainable
development should be taught some core skills that will drive education
and employment in the 21st century. These include, among others,
skills in the use of Internet search, cloud-based and mobile applications,
web site creation and management, effective use of blogs and social
media and the collection, analysis and visualization of unstructured big
data.
As this chapter will argue, education broadly conceived is essential for
innovation, economic growth, employment and achievement of the
SDGs. The digital revolution creates a need to develop new approaches
in such aspects of education as the followings:
Teachers the role of human teachers, professors, mentors and
peers, as well as AI-driven robots and virtual teachers and
environments.
Curricula the content and skills that are taught.
Location brick and mortar classrooms, local, global and virtual
realities in cyberspace.
Educational media books, journals, videos and other forms of
241
digital and non-digital media.

Teaching and learning methods including the flipped classroom
and the shift toward team-based, collaborative, problem-based
learning focused on relevant questions.
Timing and duration lifelong learning is increasingly accepted as
the norm in order to update skills and knowledge required to work
with new and changing technologies in the workplace.
Bridging the digital divide success in educating people makes the
assumption that the digital divide among and within countries can
be removed or dramatically reduced.
The goal of this chapter is to indicate in broad outline of what needs to
be done by academic and other organizations to educate people in the
21st century, in a manner that optimizes chances to achieve the SDGs. It
treats the role of education in relation to the following ongoing
processes: the digital disruption in education, education to build the ICT
sector and the role of digitally supported education in achieving
sustainability in each of its important dimensions, including
environmental, social and economic aspects.
7.2 Education at Global Scale: Lifelong Learning, MOOCs

and Education Hubs
The pace of digital transformation has varied across nations, cultures,
and educational organizations. The large differences across and within
countries in the rate of diffusion of access to the Internet and actual use
of information resources constitute digital divides (NorrisPippa, 2001).
The clear challenge is how to bridge the digital divide in education,
between and among countries as well as within nations. In order for
policymakers, corporate executives, teachers and citizens to know what
must be done in any particular local context, it is important to know
what best practices are in use around the world. In what follows, we
describe how ICTs are changing education and the important role of
education in building the ICT sector.
242
A key feature of the rise of digital economies is the growing importance

of digital platforms in a growing range of markets and sectors. 178 The
platform revolution places information and knowledge at the center of
the new economic and social order. A platform, simply defined, is a
business that enables value-creating interactions between external
producers and consumers (Parker, 2016, p. 5). Through the 20th century
industrial era, businesses employed a linear pipeline model in which a
firm initially designed a product or service, then put it up for sale or
devised a system to deliver the service, after which customers showed
up and made purchases. Today, platform structures in which producers,
consumers and the platform itself interact have replaced the pipeline in
many industries. Prominent examples of platform-based businesses
include Google, Apple, Amazon and Airbnb (Parker, 2016, p. 6).
A global survey of platform enterprises showed a significant disparity
among regions, with North America and increasingly Asia home to a
large and diverse group of companies, and Europe along with Africa
and Latin America lagging. The survey showed that Asia leads the
world in the number of transaction platforms, while North America
leads in the categories of innovation and integrated platforms (Evans,
2016, p.16). It defined platform types as:
Transaction platforms act as a conduit to facilitate exchanges or
transactions between different sets of users, buyers, or suppliers.
Most of the platforms in the survey fall into this category, which
includes Uber, Tencent, Baidu, Netflix, Snapchat and Paypal.
Innovation platforms serve as a foundation on which other firms
develop complementary technologies and services. This category
includes companies with large third party developer networks, such
as Microsoft, Oracle, Intel, SAP and Salesforce.
Integrated platforms are both a transaction and an innovation
platform. This category includes Google, Facebook, Apple, Alibaba,
Amazon and XiaoMi.
Investment platforms offered by companies that have developed a
platform portfolio strategy and act as a holding company, active
178
Chapter 3 includes further discussion of the importance of digital platforms.
243
platform investor or both. This category includes Priceline Group

and IAC Interactive in the U.S., Softbank of Japan, Naspers of
South Africa and Rocket Internet in Germany (Evans, 2016).
Education is the prime example of a large industry ripe for platform
disruption. The drive to build education platforms such as Skillshare,
Udemy, Coursera, EdX and Khan Academy is well under way, with
varying results. Furthermore, the platform-based unbundling of
educational activities is separating the learning of specific skills from
reliance on traditional universities, enabling a larger number of citizens
to access learning opportunities more flexibly in a wider range of
contexts (Parker, 2016, pp. 265-267). These can contribute to
expanding inclusion, addressing gender disparities, and enabling life-
long learning. At the same time, the rise of new digital platforms for
education can disrupt traditional educational institutions and processes.
To ensure that the benefits of new opportunities are realized and the
adjustment costs inherent in adapting to the disruptions arising from
digital transformations are minimized, will require active policy
coordination.
Future economic growth, employment and other attributes are likely to
flow from three fundamental characteristics of information that
distinguish it from other economic goods and services. First, it is non-
rival. Unlike other goods, the consumption of information by one
person does not prevent its consumption by others, which is not the case
for physical goods, e.g., once a bushel of apples is sold and consumed,
it is no longer available for consumption by others.
Second, once a single unit of information is produced, the marginal cost
of producing additional units can be negligible. The physical paper for a
book may cost something, but the information it contains only needs to
be created once (Benkler, 2006, p. 36). Owing to this economic
characteristic of information, the digital network revolution is forcing a
rethinking of the educational process itself, including a radical overhaul
of pedagogy, how access to education is provisioned, and the manner in
which education is financed. Already for millions of students, Massive
Open Online Courses (MOOCs) have significantly reduced the
marginal cost of securing college credits (Rifkin, 2014, p. 109).
244
Third, all knowledge builds on existing knowledge (Stiglitz, 2014).

Everyone uses existing information as well as new insights, novel
concepts, and innovative ideas to create a new product, invent a new
service, or introduce a new application. In the digital network era, the
economic characteristic of information is accentuated because of the
ability to generate, store and communicate large amounts of data.
Furthermore, the availability of massive amounts of information and a
far wider collection of prior research, together with current and future
trends and technologies in ICTs such as big data analytics179, artificial
intelligence (AI), deep learning, machine learning, robotics, augmented
reality, virtual reality, etc. fundamentally change the role of human
decision-maker and the skills that are necessary to understand the
increasingly abundant information, and to advance research,
developments and innovations. Accordingly, the trend in research and
education is toward synthesis, analysis and problem solving, and away
from rote learning. The rapid pace of changes in ICTs and continuous
emergence of advance, new and powerful tools, technologies, services,
and applications together with markets that embrace new offerings
shape the future of education, which is to enable people to adjust to
these changes in both what needs to be learned and how people learn.
A caveat is in order with regard to the economic characteristics of
information. Proprietary information still exists, as do transaction costs
for accessing and transmitting information. For students and educators
massive amounts of information illustrates the double edged sword
characteristic of digital technologies. On the one hand, more
information is available more quickly to share and from which to learn.
On the other hand the same technology contributes to the phenomenon
of information overload in which machine-generated content farms
play a role. Content farms are websites that typically contain large
quantities of content pulled from other sites with the sole purpose to
increase the websites ranking by Google or other search engines. The
explosion of digitally accessible information underscores the
179
Big data analytics involves tools, methods and technologies to process massive
amounts of empirical data to make decisions, in many cases, without understanding
the underlying causes.
245
importance of the ability to search and find relevant information, and

then to discern good and useful from worthless information.
Existing education systems have not kept pace with such changes.
Neither possession of a college degree nor vocational training are able
to meet the growing demand for lifelong learning to gain the skills and
knowledge needed to work with continually changing technologies. To
remain competitive and provide workers the best chance for success at
all skill levels, nations need to offer training and career-focused
education throughout the peoples working lives.
This failure to keep pace extends even to elementary school education.
While most K-12 institutions have adapted their curriculum by adding
courses in entrepreneurship and computer skills, and have incorporated
technology in the classroom, this is not be adequate. (Menon, 2014)
The achievement of the sustainable development goals will require
citizen engagement on a global level never seen before. What is the
nature and purpose of that engagement? To answer this question, one
must clearly address the related question of what should be taught. On
the level of skills, we might venture that the following, among others
will be necessary for todays younger generations to confront the
challenges posed by the SDGs.
Ability to search for, find and assess the credibility and strength of
evidence based scientific information.
Understanding of big data and the ability to analyze with algorithms
and technical skills from statistics and mathematics.
Computer programming and scripting skills, including those relating
to mobile applications.
However, before extending such a list, the caveat must be noted that
technology is constantly changing and with it the skills that should be
taught. Consequently, as laid out so far in this chapter, there is a need
for lifelong learning.
One of the greatest changes brought to education by the digital network
revolution involves the global scope and scale of the Internet. While
study-abroad programs have long existed, the global Internet makes it
possible to bring education to students wherever they are. This greatly
246
expands the potential for making educational opportunities accessible to

more people in more flexible contexts, with the benefit of expanding
inclusion.
Recommendation 2: Government, industry and education sector
stakeholders should incorporate lifelong learning into their long term
planning. The assumption should be that continued growth and
development of digital networks and related technologies will change
both the media and content of education.
For many people around the world, education and especially higher
education is synonymous with the media used to teach and learn.
Through most of the 20th century these included printed books and
journals, slide presentations, audio recordings and film or movie
presentations. All these media have changed dramatically thanks to
digitization. Considering all forms of education both in and out of
colleges and universities and at all levels from kindergarten through
pre-college, the impact of digital media has been profound.
The increasing availability of video, including mobile games, along
with advances in augmented and virtual reality are changing the way
education is delivered in many contexts. For example, the ability of
students to access videos and other multimedia before classes changes
how class time is used. In the flipped classroom, students review
material before the class, instead of confronting it for the first time
through traditional lectures. Then, classroom time can be devoted to
interpreting the content, problem-solving, discussions, and interactive
in-class exercises. This leaning-back experience of traditional lecture-
based rote learning is replaced with more active, leaning-forward
learning with the teacher. The flipped classroom is also more generally
referred to as flipped learning. Related educational initiatives in
recent decades include project-based learning and problem-based
learning. All of these innovations in pedagogy have one thing in
common. They are a reaction to revolutionary developments in digital
technologies and the accompanying growth of open courseware and
related forms of sharing on the Internet. (Bishop, 2013) The media
environment for teaching at all levels and in all contexts is today being
shaped by the rise of MOOCs, videos, blogs and a growing array of
247
online educational resources. However, to use these educational

innovations effectively requires access to appropriate digital
infrastructure (a necessary precondition for the option to even be
effectively available), as well, as teacher re-training and
course/curricula redesign. This requires planning and investment in
adopting the new digital teaching methods.
The Internet, by allowing increasingly realistic and immersive video
conferencing, effectively changes our perception of distance. Given this
inherently global scope of the Internet, the arrival of MOOCs was
probably inevitable. Open online courseware makes it possible for
anyone with a sufficiently fast connection to the Internet to take a broad
range of courses. For skills-oriented courses such as computer
programming, the completion of an online course may frequently carry
just as much weight on a students resume and have just as much
impact on their employability as a course taken in a recognized and
accredited college or university.
Global access to university-level course material has existed for some
time. For example, MIT OpenCourseWare published its first 50 courses
in 2002 (MIT). The origins of the MOOC revolution are frequently
dated from 2011 when Stanford University Professor Sebastian Thrun
offered a free course on artificial intelligence (AI) online. It was similar
to the course he taught at Stanford where about 200 students enrolled.
When the AIs MOOC started, there were 160,000 students from
virtually every country in the world enrolled. Based on this experience
and the irony that Stanford students were paying $50,000 or more
annually to attend world-class courses like his, Thrun and two
colleagues founded an online university called Udacity (Rifkin, 2014,
pp. 114-115). Udacity was soon followed by Coursera, EdX and many
others. Access to knowledge, which for centuries was largely confined
within the walls of academic institutions and available only to those
who could afford tuition, was now available globally. Digital networks,
led by the Internet, are one major reason that the walls of the so-called
ivory tower have fallen. This is not to suggest that there will be no
future role for physically located universities and face-to face
interaction among students and scholars. To the contrary, digital
networks and tools extend, but do not replace, human senses and
248
intelligence, especially considering the variety of linguistic, cultural and

national contexts in which education takes place.
The importance of physical campuses and direct personal interaction in
education is underscored by a related transformation, the rise of
international branch campuses and education hubs in many parts of the
world. Although some international branch campuses were opened as
early as the mid-1950s, their growth in numbers began in the late 1990s
and accelerated rapidly after the turn of the millennium, increasing from
84 at the end of 2000 to 249 at the end of 2015 (ICEF Monitor, 2016)
(Crist, 2015). Some of these international branch campuses are located
in so-called education hubs such as Education City in the UAE,
Dubai International Academic City or the Incheon Global Campus in
The Republic of Korea.
Closely related to the expanded geographical scope of education is the
transforming influence of ICTs on pedagogy, the methods and practices
of teaching or learning an academic subject. The model of instruction in
which a teacher or professor who is an authority on a subject lectures to
students has given way to collaborative, team based approaches, also
referred to as the flipped classroom mentioned earlier. The flipped
classroom is a pedagogical approach in which the typical lecture and
homework elements of a course are reversed. Typically, such classes
are divided into teams, allowing students to collaborate with each other
to explore topics and solve real world problems. The rapid spread of
smart mobile devices around the world is expected to place a wider
range of educational resources in the hands of students for their use at
convenient times and in various locations. (Educause, 2012) This aspect
of the digital revolution is most relevant to the role of ICTs in achieving
the sustainable development goals. It supports the notion that learning
should be applied to real world problems, and opens up possibilities for
experiencing those problems and attempting to solve them in real
communities where people live and work. (Rifkin, 2014, p. 111)
Another indication of the profound effect of digital technologies on
teaching and learning is the increased use of the term blended
learning. Blended learning, by most definitions, refers to education
249
that combines the use of Internet and digital media with traditional
classroom methods.
Recommendation 3: Governments should work with private sector
partners, schools and universities to strengthen understanding, use, and
impact of education platforms that address the SDGs. These include,
but are not limited to MOOCs, flipped classroom or flipped learning
teaching methods, problem-based and experiential learning.
7.3 The Future of ICT Curriculum and Content: The

Innovation Imperative
While ICTs play an important and growing role in education, the
converse relationship in which education influences the ICT sector is
also vital. This section explores the essential role of education in
building ICTs and shaping the infrastructure of the ICT sector itself.
Such education is necessary to ensure the continuity of demand for new
digital services such as mobile broadband, smart phones or other
devices. It is also necessary to ensure the existence of vital support for
the long term in expensive projects of building the next generation
digital networks.
As emphasized in a 2015 report by the World Economic Forum (WEF),
the building of digital infrastructure alone, while necessary to boost
economic growth, is not sufficient. The presence of infrastructure itself,
or access to the broadband Internet, does not itself ensure that it will be
used or will have any impact on particular SDGs. The WEF report notes
that in many developed countries there is a 30-50% difference between
the number of people reached by digital networks and the number
actually online. In emerging markets, on the other hand, this gap jumps
to 55-75% and in some cases up to 90%. The same report cited research
showing that there are three main reasons for not adopting the Internet:
1) a perceived lack of need, mainly because of lack of local-language
content, 2) a lack of skills and 3) affordability (World Economic
Forum, 2015, p. 4).
The WEF report later elaborates on lack of skills, referring to them as
low literacy rates, including own language, English and digital
250
literacy. It notes that although billions of consumers have discovered

the Internet on their own, governments and private companies alike
might reap benefits from following the best practices in four key areas.
These are furthering local content development, building digital
literacy, simplifying access and use, and reducing the cost of devices
and access (World Economic Forum, 2015, p. 10).
The rapid evolution of the ICT ecosystem makes the important question
of what to teach very challenging. What seems obvious given the
state of technology today may change within a matter of months or a
few years. Consequently, we now focus on providing some criteria for
making decisions about new courses, curriculum and content. The
existing evidence, as partially elaborated earlier in this chapter point out
that there is a serious need to replace / augment the existing courses in
ICT-related fields of study to include coding (programming) skills;
storage, retrieval, and processing of video information; big data
analytics; application development; artificial intelligence; machine
learning; deep learning paradigms; cloud computing and storage; and
future networking paradigms.
The importance of developing skills and capabilities rather than
focusing on content knowledge is rather widely accepted by scholars
looking toward the future of ICT education. The following capabilities
will be needed as todays students of all ages grapple with the SDGs
and ICTs.
Reflective and critical thinking skills
The ability to work in a team environment, where members not only
do their own respective tasks, but help others to achieve their
objectives in a timely and cost effective manner
A capacity to weigh and choose from conflicting scientific evidence
Ability to search, find and evaluate scientific evidence for and
against a proposition.
Communication skills including the capability to express oneself
orally, in writing and with video or graphic information in a clear,
unambiguous, logical and concise manner.
251
The rise of the Internet and the rapid advancement of digital technology
make it ever more important that there be stronger and more continuous
connections between education and employment. Although this is not
the only role of ICT education, it is an emerging reality. Increasingly,
people need to learn new theories and knowledge and acquire new skills
and technological competencies both on-the-job and during transitions
between employment positions. Burning Glass Technologies, a Boston
startup that analyzes labor markets by scraping data from online job
advertisements finds that the greatest demand is for new combinations
of skills. Coding skills, for example, now extend well beyond the
technology sector, and still are the most important job skill of the
future. In the United States, 49% of the postings in the highest paid
quartile of occupations are for jobs that frequently require coding skills,
as shown in Figure 1. As another example of rapid changes in the
composition of new jobs, demand for data analysts increased by 372%
over the past five years and within that segment, demand for data
visualization specialists shot up by more than 2,500%. (The Economist,
2017, p. 5)
Figure 1. Percent of job openings in US in 2015

that value coding skills, by earnings quartile
Source: Burning Glass Technologies
252
Innovation, which involves the creation and diffusion of new products,

services, processes and methods, will be necessary for the nations to
move toward more inclusive and sustainable economic growth.
Innovation provides an important foundation not only for economic
growth but also for addressing social and global challenges, and
requires the following priorities:
Strengthening investment in innovation to foster business
dynamism.
Investing in and shaping an efficient system of knowledge creation
and diffusion.
Seizing the benefits of the digital economy.
Fostering talents and skills that optimize their use.
Improving the governance and implementation of innovation
policies. (OECD, 2015)
Several of the priorities identified by the OECD touch on the important
role of research and development. As shown in Figure 2, the intensity of
R&D investment by some of the worlds leading nations increased
between 1991 and 2014. The figure also shows that Koreas R&D
intensity, the ratio of research and development expenditure to gross
domestic product, increased at a much faster rate than other leading
OECD countries over the decade from 2004-2014. As of 1999, the
nations investment in R&D amounted to only 2.07% of its gross
domestic product (GDP), a percentage that increased to 4.29% by 2014,
putting it ahead of the runner up Israel. Although the majority of the
investment went toward applied research and development in industry,
the government made a big investment in basic science as well.
(ZastrowMark, 2016)
It is imperative for the educational system in general, and for ICT
education in particular to enable students to participate and contribute to
the enormously challenging innovation-based economic development in
the years to come. The 17th and last of the SDGs, Partnership for the
Goals, makes it clear that their accomplishment will require active
collaboration among public, private and civil society stakeholders. All
of the other SDGs are cross cutting involving multiple economic sectors
and segments of society. Consideration of the future impact of
253
education on achieving the SDGs would hardly be complete without

recognizing the growing role of networked digital technologies
including robotics, big data, artificial intelligence and machines in
education.
Imbued with the burgeoning capabilities of artificial intelligence and
machine learning, there can be little doubt that service robots with
increasingly human characteristics will play an ever-increasing role in
education. As of 2008, the number of service robots in use around the
world already outnumbered industrial robots. (Mubin, 2013, p. 1)
The engagement imperative for 21st century education also requires that
individual students and teachers, wherever in the world they are located
to achieve a global perspective in which each person realizes his or her
personal connection to the global issues represented by the SDGs. This
is what UNESCO calls building a sense of belonging to a common
humanity and helping learners become responsible and active global
citizens. (UNESCO)
Figure 2. Gross Domestic Spending on R&D, % of GDP, 1991-2014

Source: OECD Data
254
Recommendation 4: To the extent possible, educational efforts should

familiarize students with the technological structure and future
directions of digital technologies, with emphasis on four areas.
1) digital networks starting with the Internet and including cloud
storage and computing; 2) big data including data science, data mining
and data visualization; 3) the mobile revolution, its impact and
applications; and 4) the Internet of Things (IoT) and digital tools, such
as robotics, Artificial Intelligence (AI), virtual or augmented reality.
ICT education should also provide students with new combination of
skills including the coding and computer programming.
7.4 Conclusion
As the foregoing discussions made it clear, consideration of the future
role of ICTs in education and in achieving the SDGs cuts across
different academic fields and disciplines. Hence, in order to properly
address the role of education for achieving SDGs, a holistic approach is
needed. This need applies equally to government policymakers at all
levels, teachers, professors, researchers, technical staffs and corporate
executives. We examined both the central role of ICTs in transforming
education and also education focused on building the ICT sector and
ecosystem. The tendency of digital networks is to encourage
convergence of disciplines, fields, and departments. This highlights the
need to integrate business, science, math, engineering and other fields
in education aimed at achieving sustainability.
Acknowledgement
This chapter benefited greatly from discussions and debates with the
editors of this book (Prof. Ahmad R. Sharafat and Dr. William H. Lehr)
and authors of other chapters. The overall framework of this chapter
was built upon my earlier work with Dr. Myung Oh, a leader in both the
ICT and education sectors in The Republic of Korea. Finally, my ideas
benefited from my work over more than three years with senior
administration, faculty and staff of SUNY Korea in Incheon Songdo, an
exciting new venture in education for the 21st century.
255
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Biography
James F. Larson is Vice President for Academic Affairs and Chair of
the Department of Technology and Society at SUNY Korea, part of the
Incheon Global Campus and an extended campus of Stony Brook
University. He taught at major research universities in the U.S.,
Singapore and The Republic of Korea, and directed a large executive
training program for Korea Mobile Telecom (now SK Telecom) at the
University of Colorado in Boulder, 1994-95. He served as Associate
and Deputy Director of the Korea Fulbright Commission from 1996-
2010. He is a Member of the Expert Committee of SafeNet Forum, a
multi-stakeholder organization involved with Koreas new Public
Safety-LTE networks. His books include The Telecommunications
Revolution in Korea (1995 Oxford University Press) and (with Myung
Oh) Digital Development in Korea: Building an Information Society
(2011, Routledge). He received the M.A. and Ph.D. degrees in
Communication from Stanford University in 1976 and 1978,
respectively.
257
growth, innovation
Telecommunication Development Bureau
Place des Nations
and job creation

CH-1211 Geneva 20
Switzerland
www.itu.int
ISBN: 978-92-61-24421-7
41540
9 789261 244217
Printed in Switzerland
Geneva, 2017

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International Telecommunication Union

and job creation

All rights reserved. No part of this publication may be reproduced, by

(Anglia Ruskin University and Hughes Hall College, University of

Whereas much of the earlier literature and efforts related to ICTs in

Over two years, the team of experts collaborated in reviewing and

Ahmad R. Sharafat &

1 - ICT Engines for Sustainable Development ........................... 1

2 - ICTs, Sustainability and Development: Critical Elements ... 37

3 - Digital Divide and Digital Multiplier: A Paradigm Shift

3.3 Examples of ICT-Centric Innovation Ecosystem and

4 - The Role of Governments in ICT-Based Sustainable

5 - Business Models for ICT-Centric Sustainable Development 193

6 - Job Creation and Sustainable Development .......................... 214

6.3 ICT Contribution to Labor Conditions ............................. 230

7 - The Future of ICT-driven Education for Sustainable

ICT Engines for Sustainable

This chapter discusses the origins of the Sustainable Development

Table 1: Millennium Development Goals for 2000 to 2015

GOAL 1: Eradicate extreme poverty and hunger

promote an economically, socially, and environmentally sustainable

1.2 Sustainability: The New Focus in Development

to expand productive economic opportunities for all people; and

GOAL 1: End poverty in all its forms everywhere

The development community has come to recognize that without

produced and used, fundamentally restructuring the economy and

their businesses.7 Increasingly and worldwide, all sizes of businesses,

Figure 1. ICT Penetration Levels by Level of Development 11

ICT infrastructure alone, however, is not sufficient to realize the

and sustainability in their own right. Luckily, the history of ICT

1.3 Review of Research Evidence of ICT Impacts

Figure 2. Total Energy Consumption per Capita, 200814

1.3.1 ICT Contributions to Economic Growth

businesses to source labor and other resources more efficiently and at

accumulation of ICT capital accounted for almost 20 percent of global

faster economic growth (Gordon, 2000, 2014). If global economic

helps enhance the quality/performance of goods and services, while

Figure 3. ICT Sector as Share of GDP and Contribution to Growth 29

Table 3. Summary of Research Results on Skill-biased Change30

Alternatively, ICTs create new job opportunities in the digital economy

Digital Dividends, released May 2016, available at

Figure 4. Jobs Susceptible to Automation31

competition puts greater pressure on wages. Moreover, because ICTs

inclusion, and the improvements observed since 2000 demonstrate

businesses to scale multinationaly, while keeping costs low. ICTs also

Figure 5. Falling Labor Share of Income, #2 35

1.4 ICT Ecosystem

(WEF, 2009).36 The effects of ICTs spill-over across business functions,

Figure 6. Falling Labor Share of Income #1 37

citizens. In many cases, the interdependence and interactions between

1.5 Motivation: Need an Agenda for Action

sustainable development in all situations. Nevertheless, it is reasonable

Figure 7. ICT Ecosystem Representation

In subsequent chapters of this book, we will discuss specific actions that

and firms may restructure impacts all sectors in all countries.

bold and difficult challenges, and realizing the SDGs require

ICT-enabled innovation. The stakeholders include interests from

of telecommunication networks and data centers; the spill-over effect

Ahmad Reza Sharafat is Professor of Electrical and Computer