ICTs and Economic Growth

Session 4
ICTs for Development course
 Life Expectancy vs. Income
90

85

80

75
Life Expectancy (years, 2014)

70
R = 0.6667
65

60

55

50

45

40
100 1000 10000 100000
Richard Heeks, GDI, University Gross National Income per capita (US$, 2015)
of Manchester, UK

Data source: WB 2017b

 Routes to Economic Growth
a) b) c)
Economy Efficiency Profitability

Inputs Process Outputs

d)
Upgrading e)
Restructuring
(New Sector)

Inputs New Outputs Inputs Process Outputs

Process
Value Value Value Value
Added Added

Richard Heeks, GDI, University

of Manchester, UK
 Typical Enterprise Value Chain

Administration

Purchasing Operations Sales

Richard Heeks, GDI, University

of Manchester, UK

Adapted from Laudon & Laudon 2016; itself developed from Porter 1985
CIPSODAR Model of Key Enterprise
Processes
Developing
Uncertainty of
Countries Knowledge
Information
Asymmetry of
Absence of Information
Information
Learning
Cost of
Poor Quality of Information
Information
Data Information Decision Action Results
(capture, (output) -Purchasing (economic
input, -Operations growth)
process, -Sales
store) -Admin.

Richard Heeks, GDI, University

of Manchester, UK
 Levels of ICT-Enabled Change
Transform
Structure

System
Processes
Reorganise
Content

Technology
Improve

Agency
(Motivation
and Capacity)
Digitise

Richard Heeks, GDI, University

of Manchester, UK
 Journey Substitution Savings
Farmers and rural entrepreneurs in
Niger would, an average, require a
three-hour round trip to the nearest
main market. Substituting that with a
phone call in order to gather
information would save around 300 Smallholder farmers in Malawi were
CFA (US$0.5) (Aker & Mbiti 2010). estimated to save an average of
US$1 per purchase/sales transaction
as a result of using ICTs (in this case,
an online trading platform, with
savings calculated in terms of both
time and transport) (Katengeza et al
Micro-entrepreneurs in Nigeria typically 2014).
spent up to N250 (US$1.25) on a phone
call but saved N1,000 (US$5) on the
typical cost of a taxi journey; a net
saving of US$3.75 (Jagun et al 2008).
Richard Heeks, GDI, University
of Manchester, UK
 Impact of Price Information
Systems
7-10% increase in price for maize and
groundnuts (Courtois & Subervie
2015).
Design-Reality Gaps Broader Impact
-Trust - Production mix
- Middlemen No difference in price for ICT-using

? and non-ICT using farmers

(Fafchamps & Minten 2012).

Impact of price information on income

and sales of potato farmers was
statistically indistinguishable from zero
(Mitra et al 2015).

Richard Heeks, GDI, University

of Manchester, UK
 Enterprise Reorganisation

Image sources: http://www.nationalgeographic.com/foodfeatures/land-grab/;

Richard Heeks, GDI, University http://www.heidiwoodman.com/goldfever/; http://www.heartforuganda.com/microfinance/;
of Manchester, UK https://www.wbginvestmentclimate.org/advisory-services/regulatory-simplification/trade-
logistics/learning-from-developing-country-experiences-to-implement-successful-agri-trade-
reforms.cfm
 Reflections on ICTs and Micro-
Economic Growth

- Limited Change

- Risk/Reward Ladder

- Drivers to Change

Richard Heeks, GDI, University

of Manchester, UK
 Impact of ICT on Price Dispersion
Variation in fish prices across different
markets in South Kerala fell from 65%
to 15% (Jensen 2007).

Price variations across grain markets

in Niger fell by 10% with introduction
of mobile phones (Aker 2010).

Use of the Reuters Mobile Light price

information app led price dispersion of
crops across different rural markets in
India to fall by 12% compared to just
presence of mobiles alone (Parker et al
2015).
Richard Heeks, GDI, University
of Manchester, UK
Mobiles and Cloth-Weaving Supply
Chain
INTEGRATED
Concentric rings of STRUCTURE
absolute
geographic space
Indirect link via
third-party

No access to mobile
Thread telephony communication
Dealer accomplished by physical
Access to mobile telephony Weaver movement between locations
certain types of
information communicated
by phone.

Weaver
Sub- Sub-
Weaver Weaver Inter- NON- INTEGRATED
mediary
STRUCTURE
Sub- Sub-
Weaver Weaver Buyers

Master- Inter-
Weaver Weaver
mediary

Weaver
Physical move
following call
Weaver/
Co-ord.

OUTSOURCED
STRUCTURE Thread
Dealer

COORDINATED
STRUCTURE
Richard Heeks, GDI, University
of Manchester, UK

Source: Jagun et al 2008

 Internet Usage vs. Gross National
Income
100

90

80
Internet Users as % of Population (2015)

70

60
R = 0.8267

50

40

30

20

10

0
100 1000 10000 100000
Richard Heeks, GDI, University Gross National Income per capita (US$, 2015)
of Manchester, UK

Data source: WB 2017b

 ICTs as a Cause of Economic
Growth

10 more mobile phones per 100

people would increase GDP per capita
growth by up to 0.6 percentage points
(Deloitte 2012:4).

an increase in the broadband

penetration rate by 10 percentage points
raised annual growth in per capita GDP
by 0.9-1.5 percentage points (Czernich
et al 2011:530).

Richard Heeks, GDI, University

of Manchester, UK
 Where is ICTs Economic Impact
Greater?

Richard Heeks, GDI, University

of Manchester, UK
Image source: http://www.campusministrytoolbox.org/journals/gobilizing-a-new-missions-
paradigm/
 Extensive Use of ICTs
ICT
Consumption/Application

Higher Productivity Millions Employed

Than Other Sectors
Content

Double Digit c.3% of GDP (mid-

Annual Growth
Services Retail
income)
c.1.5% of GDP (low-
income)
Goods Software Infra-
structure

Richard Heeks, GDI, University

of Manchester, UK

Source: Heeks 2008e