Digital divide hurting economic development – UN report

Africa and other non-industrialized regions –which already face numerous obstacles in the areas of commerce and trade – are at a competitive disadvantage as businesses around the world increasingly use the Internet, according to a new report launched by the United Nations trade agency today.

The Information Economy Report 2005 by the United Nations Conference on Trade and Development (UNCTAD) shows that while in some poor regions the number of Internet users has grown substantially, overall the gap between developed and developing countries remains wide.

For example while 89 per cent of enterprises in European Union nations are connected to the Internet, the same is true of only 5 per cent of firms in Mauritius and 9 per cent in Thailand.

UNCTAD points to an urgent need to explore policies and best practices to help enterprises in developing countries use information and communication technologies (ICT) to enhance their competitiveness.

Developing nations must, for example, find ways to greatly expand Internet access, reduce online costs, and modernize banking, credit and accounting systems so that domestic companies can conduct the kind of online financial transfers and quick deal-making that are typical of e-businesses.

Tourism is one example where developing countries could benefit from the Internet economically, the report notes. Developing countries now attract some 35 per cent of international travellers each year, but most have been unable to increase tourism profits because most trips are planned, booked and financed through firms based in richer nations.

The Internet offers a chance to change that pattern because many travellers are now shopping for their vacations online. By setting up well-linked websites, domestically owned hotels, banks and travel firms can provide a full package of services necessary for tourists to arrange their trips – reservations, plane flights, currency exchange and payments. That way the profits can stay at home and contribute to job growth and economic development.

The problem is, however, that setting up Internet systems that allow planning, booking and payments is a stiff challenge for many poorer nations, the reports says.

Produced annually, the Information Economy Report examines recent events, trends and processes in the area of information and communication technologies and identifies their major implications for the economic and social prospects of developing countries.