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Executive Summary
THE CHALLENGE
Despite strong worldwide economic growth at the turn of the century, poverty remains a pervasive problem in both developing and industrialized countries. Inequality across groups continues to expand, agitating regional, ethnic, and religious tensions. The broadening economic divide, in turn, translates into a digital divide, leaving entire communities bereft of any of the new economy’s technological benefits. Present circumstances call for the creation of new strategies to expand opportunities for the poor and excluded. Information technology (IT) – including the internet, cell phones, and any other electronic hardware or software that offers connectivity to ideas and people – is having remarkable effects in affluent communities worldwide. Distance learning and educational applications of IT are significantly lowering the costs of learning. On-line educational applications of IT are significantly lowering the costs of learning. On-line medical resources are changing doctor-patient interactions, making patients and their families better-informed, active partners in care. The Internet is expanding opportunities for grass roots organizations to make governments and international organizations more accountable. Direct retailing on the web is removing layers of intermediaries and lowering transactions cost for consumers and producers alike.
Can the tremendous power of IT to communicate and connect be harnessed to help the poor? This question has captured the imagination of key policymakers and leaders in economic development. Major IT-based economic development initiatives are underway at the United Nations, the World Bank, NGOs like Transparency International and the Grameen Bank, and the governments of many nations. And although there are relatively few academic studies on IT-based strategies of economic development, the academy clearly has a key role in evaluating past efforts and shaping the future policy agenda in this area. There is a compelling need for research into the relationship between economic development and information technology.
Based on existing strengths, Vanderbilt University is poised to pioneer the new field of IT-based economic development. Therefore, we have established a Center for Research in Economic Development and Information Technology (CREDIT), an interdisciplinary research institute whose main purpose is to discover how information technology can best be used to alleviate poverty, moderate inequalities, and enhance the development process.
NEW PERSPECTIVES
Nobel Prize winning economist Amartya Sen has recently called for a new perspective on economic development focused on creating life opportunities or ‘real freedoms’ for the world’s poor. Professor Sen’s vision departs from traditional indicators of economic growth (e.g. GDP) and focuses instead on measures of development that better reflect the extent to which real opportunity enters the lives of the poor, such as health and education levels. Similar concerns underwrite the United Nations development Programme’s move to measure more holistic “human development” as opposed to economic development, narrowly defined. These new approaches call for the formulation of development strategies that will at once augment individual freedoms while empowering people to become more proactive participants in economic and political processes.
Mohammad Yunus, the founder of the Grameen Bank of Bangladesh and a Vanderbilt alumnus, has spent much of his life formulating and implementing strategies aimed at affording more opportunities to people living in poverty-stricken regions. While he is best known for the success of the Bank’s microcredit program in Bangladesh, he is currently emphasizing the need to better harness the power of information technologies and channel it into the development sector. Dr. Yunus has begun integrating some of the world’s new communication systems to aid in reducing global poverty. GrameenPhone, is a remarkable program that creates a sustainable livelihood for one village family through the sales of cell phone time to others, thus offering villagers connectivity that was previously unavailable. In a recent presentation before the World Bank, Dr. Yunus observed that
‘The number of people now earning under one dollar per day in income is 1.5 billion. This number is going to double by 2040 if present trends continue…IT (information technology), if properly applied, will be able to stall and, eventually, reverse this trend. However, a coherent and global effort is needed to utilize IT most creatively to make this happen.’
Dr. Yunus has called for the establishment of new research centers to do just that—create and evaluate new development strategies that incorporate information technologies. He notes that ‘those who want to eliminate the curse of poverty from the face of the earth are witnessing an opportunity of a lifetime unfold before their very eyes. This is too precious an opportunity to miss.’ This proposal responds to that challenge.
THE VISION
The technological revolution of the last twenty years has had dramatic effects on many lives in the United States, where we benefit from a constant stream of new technologies. The productive and cultural impacts of cellular telephones, personal computers, fiber-optics, increasing bandwidth, home satellite systems, and the like elude traditional economic measures, and the future potential appears boundless—for those who are fortunate enough to participate. Is it possible that IT could have an even more fundamental transformative effect on the poor? Imagine a world in which: - Geographically isolated villages are connected to regional and global networks, allowing villagers to find their own solutions to common problems
- Quality education is made widely available by leveraging scarce human resources with satellite and internet educational tools
- Healthcare is facilitated by internet-based telemedicine networks that provide immediate information, services, and personalized care to the poor and underserved.
- Networks of empowered citizens create support systems for increased political participation and more transparent governance.
- Communication technologies give remote populations access to news and other current information otherwise unavailable to them due to poor roads and infrastructure, making knowledge a ‘public good’.
- Language barriers to health administration, news education, and commerce are broken with the help of speech recognition technologies.
The potential impact is tremendous. Even so, one might ask whether investments in IT are truly warranted, given that many people live without the basic infrastructure needs of the clean water, adequate housing, and a consistent food supply. The recent World Bank publication Voice of the Poor provides some insight into this question: “Poor people’s definitions of poverty do not only include economic well being, but also include vulnerability, powerlessness, the shame of dependency, and social isolation.” The key element of an IT-based development strategy is that it provides tools for creating connections between people, increasing the collective power of the poor to help themselves. Moreover, IT infrastructure investments are becoming dramatically less expensive while partnerships between the private and public sectors are allowing funds to be leveraged further. In many developing economies private industry is efficiently and rapidly setting up cellular phone networks with minimal government investment, thus leapfrogging the expensive traditional technology for telecommunications. And special programs, such as GrameenPhone in Bangladesh bring these benefits to the poorest populations. In the words of UN Secretary-General Kofi Annan: ‘Information technology is not a magic formula that is going to solve all our problems. But it is a powerful tool that can help liberate the poor and empower them: a farmer who has access to information about market prices is less likely to be abused by a middleman. The internet can even enable him to cut out that middleman altogether and deal directly with clients far away. And there are numerous other applications from which developing countries can benefit. Information technology can facilitate distant learning at low cost. Telemedicine can provide access to up-to-date health and medical information to even the most remote facilities throughout the world. Information technology can also empower civil society strengthen democratic institutions and make governments more transparent and accountable.' |
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