I have been invited by the Spanish Center of Judicial Documentation (Centro de Documentacion Judicial, CENDOJ) to impart a conference at the III Encuentro de Información y Documentación Judicial de la Red IberIUS [III Meeting about Judicial Information and Documentation of the IberIUS Network].
The idea was to give an overview of what the Network Society is and what are the concepts besides collective creation. Here come my slides (in Spanish):
Full reference and PDF downloadable here.
As in a pendulum movement, the reflections about the impact of ICTs in the Economy have swung from enthusiasm to realism and back to optimism, being each of these states really subjective and implying a wide range of shades within.
After a first period of cyberoptimism, people that “wanted to see” and people that thought “waiting to see” was a bad strategy because “it will then be too late”, followed a timespan where scientists — mainly economists — stuck to strict evidence from reality, being their main conclusion that the more you spend/invest in ICTs the more they affect both the share and the growth of the GDP — an obvious conclusion to many, I’d dare say, as it’ll happen with sweets if you spent half your national budget in candy.
In the last years, due to more data available and more and better analyses, we have been seeing new findings that, at last, seem to bring more light to the issue of the impact of ICTs on the Economy. In the following table I present a summary of a good bunch of such positive impacts. One caveat is due: as it is clarified in most of the documents listed below, evidence is not always subject to generalization. While sometimes it actually is, some findings apply only to specific contexts such as countries, economies, moments of time, constellations of conditions and so forth. I nevertheless believe that these impacts are worth listing because some were predicted — or expected — ten years or more before they could be measured. On the other hand, some caveats about the applicability of these findings are mainly based on (non) availability of data. Last, but not least, because even if some results only apply, as we have said, to specific economic setups, some of these setups could be reproduced in other contexts — e.g. in developing countries — in order to try to provide the same results.
Economic Benefits of ICTs |
Growth |
ICTs, in general, facilitate economic growth, having a positive impact in national GDP growth |
Specifically, the greater the size of the ICT sector (products and services), the larger the positive impact of ICT on growth. |
Enabling of larger markets coverage |
Increase of reach of businesses |
Reduction of economic downturns and dampens business cycles |
Boost of economic output thanks to employment creation |
Allowing of diversified growth strategies, especially due to changes in trade |
Market |
Promote integration of isolated communities into the global economy |
New information-based products, new business niches |
Scaling-up of international competition thanks to more transparency and trade |
Energizing of the market due to shortening of product life cycles and |
Investment |
Growth in global investment |
Positive impact on system development cost, risk and timescale effects |
Reduction of information asymmetries, especially in banking and finance, thus improving market behavior due to more transparency |
Positive confidence and risk assessment effects |
Impact of ICT-related capital investments on overall capital deepening |
Developmental gains from investing in ICT consumption |
Developmental gains from investing in ICT production (even greater than for investment in ICT consumption) |
High returns on investment in telecommunications equipment and, more generally, in the telecommunications sector |
Efficiency |
Facilitation of cost-effective public and private services |
Enabling of more efficient goods and services allocation |
Cost savings, in general, for industry |
Fostering of effective use of development resources: capital and natural resources |
Improvement of inventory management, better flow control, better integration between sales and production and, therefore, enhancing management of production |
Increased transport efficiency |
Reduction of transaction and search costs and information asymmetries in product, services and factor markets |
Improved performance in firms, increasing efficiency in combining capital and labor (multifactor productivity) |
Reduction of site dependency of data processing |
Enabling of higher quality products and services |
Improvement of quality monitoring |
Fostering of mass customization |
Enabling of dis-intermediation |
Creation of new intermediaries, new business niches |
Better access to knowledge and information by enabling of rich information flow |
Improved decision-making |
Greater flexibility on the part of firms in catering to a diversified customer base |
Network externality effects |
Innovation |
Lowering of technology cost |
Increase in the volume and innovation effects |
Benefits from international standardization |
Positive impact of rapid technological progress |
Impact on skills and organizational change |
Productivity |
Productivity in Firms |
Productivity in Industries |
Productivity in Economies |
Increase of labor productivity, especially in more skilled workers and/or after an initial period of adoption/training |
Increase of multifactor productivity |
Significant contribution to value-added by ICT skilled jobs |
Greater impact of broadband on productivity |
Contribution to the increase of capital input per worker (capital deepening) thus increasing efficiency and productivity |
Trade |
Growth in global trade |
Intensification of trade |
Growing trade in ICT goods and ICT-enabled services, increasing its share in total goods and services exports |
Emergence of a global information infrastructure |
Enabling of outsourcing, thus reducing costs – on one side – and creating business – on the other one. |
Increase of foreign investment |
Employment |
Positive effects on employment creation |
ICT-producing enable better paid ICT-related jobs |
Energizing of occupational structure and changing demand for competencies |
Positive impact on high-skilled workers’ wages |
Increased transparency and efficiency in labor markets, allowing better allocation of workers and skills |
Compensation of deficient growth of employment opportunities in manufacturing by significant increases in ICT business employment |
Creation of new kind of jobs |
Improved social development |
Demand |
Increase of user expectations |
Strengthening of ICT-products and -services demand |
Enabling of new forms of interaction between firms and other parties such as consumers thanks to networking |
Surprisingly — or not — there are few papers stating the negative impact of ICTs in the Economy. Some of them do not dare talking about negative impacts but of changes in the Economy: change of paradigm, organizational changes, turbulences in international markets, etc. and speak of them quite neutrally: they are neither positive nor negative on their own, but it will depend on a firm or a sector strength and position to benefit from them or to suffer them.
To be true, the only potential negative impact I have been able to find in economic papers — and also in sociological papers — is about employment. Again, a caveat: as I have shown before, most authors predict that the net effect on employment will be positive, and will be in the lines shown in the table. Nevertheless, some — among them Greenwood (1999) and Castells (2000) — picture some drawbacks of ICTs entering workers’ life. While the first one describes an impasse scenario where skilled workers will benefit while non-skilled will have to adapt to new technologies — losing productivity, competitiveness and earnings in the meanwhile — Castells is certainly more frightening, as he depicts the segmentation of workers in two axes: networked vs. switched-off labor, and self-programmable vs. generic labour. The conclusions are similar to Greenwood’s, but presumably to stay in the long run and with deeper consequences that spill from the labor market over the social and cultural arenas in a not really promising future for the switched-off and/or generic kind of workers.
References
Primo Braga, C. A., Kenny, C. J., Qiang, C., Crisafulli, D., Di Martino, D., Eskinazi, R., Schware, R. & Kerr-Smith, W. (2000).
The Networking Revolution. Opportunities and Challenges for Developing Countries. Washington, DC: infoDev. Retrieved October 26, 2007 from http://www.schoolnetafrica.net/fileadmin/resources/The_Networking_Revolution.pdf