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For Developing Countries, Old Technology Has to Come First

By Philip Bowring - International Herald Tribune

MELBOURNE - It would be a dull world where new gadgets, concepts and horizons did not hog the headlines and the imagination. But are we going overboard in our estimation of the economic impact of the Internet and digital technology?

At the recent meeting here of the World Economic Forum, delegates headed by the likes of Bill Gates waxed eloquent about the new global technological revolution, e-commerce et al. Outside, unreason triumphed. A motley crowd of 2,000 protesters railed against globalization, capitalism, free markets and modernity. They won a spectacular victory over a weak state government and a fumbling police force that surrendered the streets to a violent hard core of demonstrators and failed to provide security to innocent citizens in broad daylight in the heart of this city.

But, ideologically confused as they were, the demonstrators at this mini-Seattle did address what is still most of the real economy for all of us, even in the most advanced countries. Their targets were not Microsoft, Sun or Cisco, they were not angry with Nokia or Vodafone. Their concerns were food and drink, shoes and cars, media empires, Nike, McDonald's, Ford, Murdoch, Monsanto, farm trade subsidies, the companies that employ, one way or another, so many of us and whose products we buy almost daily.

There has been a lot of talk - at the forum here, as at the recent Okinawa summit meeting - of helping the developing world ''bridge the digital divide'' to prevent the gap between rich and poor expanding further. This sounds fine. Some aspects of the digital age save money, such as mobile phones that enable communications improvements to be made at a fraction of the cost of fixed lines. There is no doubt that even limited Internet access can help education and commerce.

But it is doubtful whether these new communications tools are any more valuable to development than satellite television, which became a central feature of village life in India and Indonesia more than a decade ago. In any event, the poorest regions of the world need first to think about quantity and quality of food supply. They then need roads for commerce, housing for more comfortable living, clothes to wear, power to light their homes and irrigate their land.

They need capital to build factories to make soap and yarn, fertilizer, soft drinks, beer and trucks, aspirin and (analogue) radios. In many cases, the very idea of the digital age is impossible until they have these mundane objects, and in almost all cases these will remain the priorities of consumers and thus of the capitalists who cater to them. Low-tech Coca-Cola understands this, so do Ford, Unilever and Monsanto.

Developing nations have the ability to leapfrog some of the developed world - for example by going straight to optical communications. But first they must get to the point where more basic human requirements are satisfied. The advanced nations have most of their infrastructure in place, the developing world still needs to create it, even to acquire goods that have been the norm in the developed world for 50 to 100 years.

Even the rich countries, satiated with cars and televisions, may be misreading the economic impact of the digital revolution. Are we actually spending more money on these great new products? In many cases we are spending much less.

As a journalist I often use various types of information technology. My bills have been going down. International phone costs have plummeted, and low cost Internet use has taken the place of fax messaging. The bottom line: I have more money to spend on old economy activities - wine, travel, books, a new sail for my boat. Broadband will soon bring me television as well as Internet but there are still only 24 hours in the day. Some providers of television programs and equipment will lose, some will gain. I will benefit but am unlikely to watch any more television than I do now. Indeed, the more people surf the less they watch television.

The originators of new technology will deservedly flourish, and some of the deliverers will too. But the digital revolution is mostly an opportunity for consumers to save money and spend it in the old economy. It is changing societies and the economy at the micro level. But the priorities in the developing world should remind us that machinery is primarily an end to the satisfaction of other wants, and that the new means are just more efficient paths toward acquisition of other, mostly traditional, goods.