1. 2 The Fundamental Role of ICTS in Modern Economic growth and Development 2. THE BUSINESS CASE FOR ENGAGEMENT 9
The past fifty years have witnessed a â€oerevolution†in global economic growth. Yet not everyone has participated in this revolution
1. 2 The Fundamental Role of ICTS in Modern Economic growth and Development Unbound from the strictures of the PTT days, ICT has become the foundation of every sector of every
economy, everywhere. The reasons for this are, by now, fairly well-known, but demand brief repetition here
number of critical obstacles to economic growth (see Box 1 BOX 1 ICTS HELP ADDRESS ECONOMIC OPPORTUNITY OBSTACLES
challenge is the fact that much economic activity among the poor goes unmeasured by surveys, meaning that
economy, as the salaried employees of others or as formal small business owner-operators. This will, inevitably
SMES are the backbone of all economies, large and small, developed and developing. While the precise causal
Economists and development experts have attributed much of this difference to excessive or otherwise unsupportive business environment regulation in developing countries,
which keeps much economic activity in the informal sector. 16 But positive business environment trends are taking place.
the Doing Business team found 200 reforms introduced in 98 economies. Eastern europe and Central asia South Asia, the Middle east and North africa,
So making †good investments†in businesses to build economies in emerging markets is one of the best
system and for the economy. †58 Because of the fundamental role ICTS play, sales strategies can have direct institutional capacity-building
the formal economy where they can grow, diversify, and begin to create jobs at more significant scales.
different stakeholders involved. SAP AG, the market leader in collaborative enterprise software, is leveraging its core competence to help build the capacity for good governance in resource-rich developing
they capitalize on the fact †that different stakeholders seek different kinds of â€oereturn on investment, †whether financial, social, environmental,
software economies through a network of 110 Innovation Centers in 60 countries †helping individuals and entrepreneurs
local economy. For every dollar Microsoft generates, its partners generate $9-18, depending on the country. 70
Local Software Economy Group supports the development of new partners by fostering the growth of healthy
near-term business strategy, the Local Software Economy (LSE) Group is part of a cluster of initiatives that helps
development of skilled, service-based economies. Universities use them to expand and upgrade academic offerings to meet labor market needs and to support research.
subsidiaries choose the ones that would most benefit their local economies. According to Carla Harting, manager of the Innovation Center program worldwide, this approach has been a critical success factor in achieving scale. 74
In mature countries, where local software economies already exist, MICS incubate start-ups and broker relationships between entrepreneurs and potential financial backers.
In these economies, the MICS might provide quality assistance help add services to commodity solutions,
or coach managers for export boards. Consultants might be on hand to help developers with proof-of-concept
Soviet republics, for example, development skills are generally quite strong and fledgling software economies exist, but Microsoft has little on-the-ground presence †so the company has organized developers into
or wanting to kick-start local software economies will often pay internship wages or first year salaries for graduates that obtain jobs.
opportunity cost to the pensioner of $2, 000. Online, the same process takes 15 minutes. The PTA response has
The opportunity cost savings represent such a compelling value proposition for seniors that up to 2, 000 PCS are now being sold each month through this program, with no
Drivers for international economic growth and development †offering equity investments, loans, and technical assistance for entrepreneurs and existing companies seeking to establish
Small-and medium-sized enterprises (SMES) are the growth engines of the world†s most productive economies
towards full integration into the world economy. †87 It is this social vision that led Cisco
â€oethe world economy is increasingly networked †as Tom Friedman would say, the world is flat â€
economies frequently forced graduates to relocate to find work. Fifty-nine percent, almost all of those that
precondition for converting large revenues from extractive industries into economic growth and poverty reduction When transparency and accountability are weak,
However, sign-on has not been as rapid as EITI †particularly its NGO stakeholders †had hoped, and several
other concerned stakeholders just as the company does every day as a matter of business. †105
-building among all the stakeholders, allowing perceptual barriers to begin to come down. Relationship-building and trust are often both initial hurdles and key success factors in public-private collaboration.
value and market potential in connecting disparate stakeholders around major social, economic, and environmental challenges
•Stakeholder Networks. GAID Stakeholder Networks build on the experience of the WSIS in building networks
around stakeholder categories. Stakeholder Networks must also be endorsed by the GAID Steering Committee to operate under its umbrella,
but beyond that are self-organizing and self-funding. As of September 2007, networks existed for civil society, youth, gender, persons with disabilities, parliamentarians
and local government and regional authorities •Communities of Expertise. Like the Regional and Stakeholder Networks, GAID Communities of Expertise
Coes) are initiated self, self-organizing, and self-funding, but because are formed around specific, concrete deliverables, they must be endorsed
Advocacy Initiatives, six Regional Networks and six Stakeholder Networks, and 17 Communities of Expertise are
United nations initiative, bringing together all key stakeholders around a single networking platform. †114 Formal
of Telecoms on Economic growth in Developing Countries. †In Vodafone 2005. Africa: The Impact of Mobile phones.
6. Microsoft. n d. Developing Knowledge Economies: A Microsoft Perspective on †ICT for Development. â€
of the Informal Economy in 110 Countries Around the World http://rru. worldbank. org/Documents/Paperslinks/informal economy. pdf
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Economy. Presentation to the Cutting edge Antitrust law Seminars International, February 17 http://www. ftc. gov/speeches/other/standardsetting. shtm (accessed
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Standard Setting in a Network Economy. Presentation to the Cutting edge Antitrust law Seminars International, February 17 http://www. ftc. gov/speeches/other/standardsetting. shtm (accessed
Economist Intelligence Unit. 2006. Latin america: IBM goes for growth Economist Intelligence Unit, Country Monitor, August 7
Extractive Industries Transparency Initiative (EITI. 2006. Report of the International Advisory Group http://www. eitransparency. org/files/document/eiti iag report english. pdf
cs, Edit. n d. The Economic Role of SMES in The World Economy Especially in Europe.
n d. Developing Knowledge Economies: A Microsoft Perspective on †ICT for Development. †n d. Local software economy case study:
Microsoft Innovation Centers http://download. microsoft. com/download/6/9/f/69f8c76b-198e-4114 -9c12-f0b13e4d7e4e/innovation center. pdf (accessed May 15, 2007
Size and Measurement of the Informal Economy in 110 Countries Around the World http://rru. worldbank. org/Documents/Paperslinks/informal economy. pdf
Phone are Connecting the World†s Poor to the Global economy. San Francisco: Jossey-Bass Telecentre. org. n d. Telecentre. org. http://www. telecentre. org (accessed
Telecoms on Economic growth in Developing Countries. †In Vodafone 2005. Africa: The Impact of Mobile phones.
Economies. Overview. http://www. doingbusiness. org/documents/DB -2008-overview. pdf (accessed September 26, 2007 Xinhua News agency. 2007.
Economic growth, and Reduce Poverty in Developing Countries Jane Nelson 2006 Tanzania: Lessons in Building Linkages for Competitive and Responsible Entrepreneurship
Books, for over 50 years the world†s leading bookstore for politics, economics, and area studies.
multi-disciplinary and multi-stakeholder program that seeks to study and enhance the public contributions of private enterprise.
b Department of City and Regional Development, University of Economics and Business Administration, Roã auer Laâ nde 23
-sponds approximately to the regional economy. As far as the industrial structure is concerned, the metal-and
of the regional economy are the reasons why the region is an important spatial level in innovation systems
scheme than in the Austrian economy. Accordingly more mature industries like metal products, textiles, fur
than the share of SMES in the Austrian economy. Fur -thermore, SMES received only half of the funds provided
Learning regions in a globalised world economy towards new competitive advantages of industrial districts? In:
The Globalising Learning Economy Implications for Innovation Policy. Report to the DG XII, TSER Brussels
The new flexible economy: shaping regional and local institutions for global competition. In: Bertuglia C.,Fischer, M.,Preto, G. Eds.
The resurgence of regional economies, ten years later: the region as a nexus of untraded interdependencies.
Global economy. Guilford Press, New york Toâ dtling, F.,1994. Regional networks of high-technology firms †the
-versity of Economics and Business Adminis -tration. He has been doing research on industrial change, innovation,
Creating a RTD Investment Policy for Regions in Emerging and Developed Economies Contract no: 029746-CRIPREDE
Baltic International Centre For Economic policy Studies (BICEPS), Latvia: Alf Varnags, Zane Ledusk -rasta Impressum Prof.
From Rural area to High-tech Economy...52 4. 2. 8. Prato: Flourishing Industrial District of Traditional Industry...
-stitutional thicknessâ€, cumulative causation, agglomeration economies, localisation economies, fungeability, labour market dynamics, quality of life and environmental amenity, and the role of regional and local governance
9 We have condensed these factors and processes into the following major categories namely knowledge and processes of learning (cf. chapter 2. 2. 1), the role of networks
-tions and interactions among stakeholders within a particular context, which has lead some authors to introduce the concept of the †learning region†as a region where external
Uzzi (1997) pointed out that strong ties contribute to †economies of time†as they add to an individual†s capability to quickly capitalize on market opportuni
specialised niches, sector-specific localisation economies and general effects of ag -glomeration, public support for training and technical initiatives,
economies. For example, this happened in Prato where the traditional textile industry was able to survive
-tional pressure on local economies as well as the post-industrial transition process. For industrial districts to successfully cope with at least some of these fundamental
clusters are external economies of scope and scale with industrial districts being one sub-category of this cluster form.
although those need to be integrated into the local society and economy (Camagni 1995, Ritsilã¤1999.
-cause of its SME-structured economy and vertically organised added value; the in -dustry in Oresund is younger.
and entertainment), health care services and environmental economics etc. The busi -ness start-up initiative †B. E g.
important impact on the local economy: In the 1960s, the repatriation of Algerian -French people †who were typically industrious and often possessed ressourcesâ€
The economy is dominated by SMES with a heterogeneous economic structure. There is still a fairly large share of low-tech indus
-operation climate between research and economy help fostering knowledge spillovers Boston Consulting Group 2002 The engagement of private actors (e g.,
From Rural area to High-tech Economy The county Oxfordshire, consisting of five districts, is located in the south east of Eng
†dramatic transformation in its economy in the last 40 years†from †being a rural county
This high-tech economy is rooted in its industrial past when motor car and compo -nent manufacturing, food industries and blankets were the leading sectors.
small but significant part of the high-tech economy in Oxfordshire (Lawton Smith 2004 The high-tech orientation shows itself also in the employment structure:
Knowledge and science is of great importance for Oxfordshire†s economy. The resi -dent workforce is amongst the most highly qualified in the country.
Today, Prato†s economy is still based mainly on the textile industry despite a marked reduction in terms of establish
Tuttlingen†s producers also benefit from economies of agglomeration in the cluster e g.,, economies of scale and scope, low transaction costs, good reputation in the
successfully in a globalised economy. Furthermore, the regional endeavours to foster cluster specific education and knowledge could be a good example for other regions
27 Path dependency is used a concept in evolutionary and institutional economics to explain a †lock-in†to a
Increasing returns and path dependence in the economy. Michigan: University Press Asheim, B. 1995: Industrial districts as †learning regionsâ€:
and the knowledge-based economy. Oxford. Oxford Univ Press, pp. 349†363 Bathelt, H. 1999:
technology economy. Entrepreneurship & Regional Development, 13 (4), 287†314 Bathelt, H. 2004: Toward a multidimensional conception of clusters:
Regional development in a modern European economy. The case of Tuscany London: Pinter, pp. 145-169
and the knowledge-based economy. Oxford: Ox -ford Univ. Press, pp. 459†484 Beyer, F. 2005:
Small Business Economics 10,213-225 Brusco, S. 1986: Small firms and industrial districts: The experience of Italy.
Small Business Economics 8, 159-171 Cooke, P. 1998: Introduction: origins of the concept. In:
Journal of Interdisciplinary Economics 13,401-427 Dei Ottati, G. 1991: The economic bases of diffuse industrialisation.
Regional development in a modern European economy. The case of Tuscany. London Pinter, pp. 116-144
Cambridge Journal of Economics 27,501-522 Dei Ottati, G. 2004: Trust and economic development in Italy.
Small Business Economics 21 (4), 409-422 Feldman, M. P. 1994: The Geography of Innovation.
Economics of Science, Technology and Innovation 2 Dordrecht et al.:Kluwer Academic Publishers Feldman, M. P.,J. Francis and J. Bercovitz (2005:
-ness Economics 5, 129-156 Freel, M. 1998: Evolution, innovation and learning: evidence from case studies. Entrepreneurship & Re
Qualified Labour Migration and Regional Knowledge Economies. In: R Hayter and R. Leheron (eds.:Knowledge, Territory and Industrial Space.
Local enterprises in the global economy. Issues of governance and up -grading. Cheltenham: Elgar, pp. 200-232
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Regional Economies as Knowledge Laboratories. Cheltenham: Edward Elgar, pp 77-92 Maillat, D. 1992: Milieux et dynamique territoriale de l'innovation.
Patterns of a Network Economy. Berlin et al.:Springer, pp. 33-52 Malecki, E. 1997: Entrepreneurs, Networks and Economic Development:
) Remaking the Global economy: Economic-Geographical Perspectives. London: Sage Publica -tions, pp. 145-162 Malmberg, A. and P. Maskell (2002:
The elusive concept of localization economies: towards a knowledge -based theory of spatial clustering. Environment and Planning A 34,429-449
of Economics 23,167-185 Maskell, P.,H. Eskelinen, I. Hannibalsson, A. Malmberg and E. Vatne (1998):
Specialisation and prosperity in small open economies. London & New york: Routledge Menzel, M.-P. and D. Fornahl (2005:
-Economies. In: Mothe, John de la; Paquet, Gilles (eds.:Local and regional systems of innovation
National Innovation Systems,'Real Economies'and Instituted Processes. Small Business Economics 11, 101†111 Moulaert, F. and F. Sekia (2003:
Territorial Innovation Models: A Critical Survey. Regional Studies 37 3 289-302 Moulaert, F. and J. Nussbaumer (2005:
Learning and Innovation in Organizations and Economies. New york: Oxford Uni -versity Press North, D. and D. Smallbone (2000:
learning economy. Paris: OECD O†Gorman, C. and M. Kautonen (2004: Policies to promote new knowledge-intensive industrial agglom
Journal of Industrial Economics 45,297-306 Pedersen, C. R. and B. Dalum (2004: Incremental versus radical change:
Economics,#0609. Troy, New york: RPI Piscitello, L. and F. Sgobbi (2004: Globalisation, E-business and SMES:
Small Business Economics 22 (5), 333-347 Porter, M. 1998: Clusters and the new Economics of Competition.
Harvard Business Review (11-12), 77 -90 Porter, M. 2000: Location, Competition and Economic Development:
Local Clusters in a Global economy Economic Development Quarterly 14 (1), 15-34 Pratt, A. 1997:
External Economies and Cooperation in Industrial Districts: A Comparison of Italy and Mexico. St. Martin†s Press
Economic policy Reforms and the Indian Economy. New delhi: Oxford university Press, pp. 169-210 Saxenian, A. 2004:
The Bangalore Boom. From Brain drain to Brain Circulation. In: K. Keniston and D Kumar (eds.:
Small Business Economics 21,115-34 Simmie J, J. Sennett, P. Wood and D. Hart (2003:
The resurgence of regional economics, ten years later. European Urban and Regional Studies 2, 191-221
Regional Economies as Knowledge Laboratories. Cheltenham: Edward Elgar pp. 117-141 Whyte, G. 1986: Escalating Commitment to a Course of Action:
economy in general across different sectors of the economy in the enlarged European union, EEA and Accession countries.
Industrial Classification of Economic activities within the European Communitiesâ€, known by the acronym NACE and originally published by
a successful economy: they play a major role in national economies and are significant contri -butors at both the national and local level
Transport and logistics underpin the economy enabling the movement of goods, services and people as efficiently as possible.
The transport sector in Europe plays a significant role in its economic development. It currently generates
growth, fuel economy, the reduction of emissions, safe and healthy lifestyles and social inclusion (see Section 2. 3
innovation and ICT-related policies and in sectoral economic policy) and representatives of the transport and logistics industry (notably firm managers, decision-makers in
This chapter has been developed mainly by economists from DIW Berlin, who used econometric statistical methods to explore how ICT capital and e
of electronic business practices in different sectors across the European economy. It represents the continued effort of the European commission, DG Enterprise and Industry
industries and the economy in general to highlight barriers for ICT uptake, i e. issues that are hindering a faster and/or
to engage in dialogue with stakeholders from industry and policy institutions providing a forum for debating relevant issues
one of the largest contributors to productivity and growth throughout the economy 4"eeurope 2005:
economy. Policy-makers in this area will require thorough analysis of ICT uptake based on accurate and detailed information on the most recent developments.
-business studies on about 25 sectors9 of the European economy, annual comprehensive synthesis reports about the state-of-play in e-business in the European union, statistical
economy'†started in 2001, the former internet hype was replaced suddenly by a widespread disappointment with e-business strategies.
economy, has been a strong driver for ICT adoption. Firms are constantly searching for opportunities to cut costs and ICT holds great promise in this respect as it increases the
current phase of development of European economies. Competing in mature markets requires not only optimised cost structures, maximal efficiency,
when the'new economy'bubble burst in 2001, it had the merit of pointing towards the role of ICT in cooperations between enterprises and the
regard to employment, competitiveness, economic growth, transport safety efficiency and possible cost reductions (distribution costs), technological innovation and for entering into new markets
Accounts include measures of economic growth, productivity, employment creation, capital formation and technological change at the industry level for 25 EU
paramount importance for growth and competitiveness of the European economy Strengthening the competitiveness of European transport companies is therefore a
leverage European and national policy makers could use to enhance the economy in general. While the transport industry services other sectors, ICT and e-business have a
â€oegeneral Industrial Classification of Economic activities within the European Communities†known by the acronym NACE and originally published by Eurostat in 1970.
Transport and logistics are key components of a successful economy, and governments worldwide seek to increase competitiveness through new or replacement infrastructure
The transport and logistics sector plays a major role in nationals†economy and is a significant contributor at both the national and local level.
It underpins the economy enabling the movement of goods, services and people as efficiently as possible.
was broadly in line with economic growth, which was 2. 3%on average in the same period. The fast growth of freight transport †driven to a large extent by economic
growth is mainly due to changes in the European economy and its system of production In the last 20 years, we have moved from a †stock†to a †flow†economy.
The abolition of frontiers within the Community has resulted in the establishment of a †justin-time†or
manufacturing scale economies, and rationalisation of production facilities have also increased freight movements The expected increase in road freight of 38%until 2010 will far outstrip the existing and
growth, fuel economy, the reduction of emissions, safe and healthy lifestyles and social inclusion 18 Although a major contributor to growth, transport also involves a cost to society.
and marginal costs for transport efficiency. Fifth framework †Transport RTD. November 2003 www. its. leeds. ac. uk/unite
4. 3 million people. 20 The whole economy and society depends heavily on efficient road
transport system and of the economy 2. 2. 2 Rail transport Rail is a contrast:
and projections of the sector are shown in Exhibit 2. 2-1. The rail stakeholders, who
for the competitiveness of the European economy. Co-modality32 and high efficiency in the transport system are also indispensable for Europe to manage the increasing flows of
Following consultation with stakeholders, the European commission has presented an Action Plan for Freight Logistics in 2007.
the economy and the daily lives of citizens, and because of its impacts on oil supply
influence on the transport sector and the economy as a whole Exhibit 3. 1. 1 EC activities towards ICT for Clean and Efficient Mobility
Cooperation of stakeholders Cooperative Vehicle based systems Engine control Eco-driving style ††â€
dynamic knowledge-based economy in the world, capable of sustainable economic growth, with more and better jobs and greater social cohesionâ€) 61 are to be achieved. 62
success for enterprises and individuals in a knowledge-based economy. The development of human capital, research and adaptation of new knowledge and skills is
the source of growth in the competitiveness of the economy, labour force and in the quality of life.
In a knowledge economy driven by rapid technical change, investments in high-skilled labour, training and skill-formation become more important than investments in ICT.
innovations in other sectors of the economy, in particular in the service sectors. 69 Although this asseveration is true in general,
69 Strohmeier R. Speech) ICT and innovation in a globalised economy, YES event, European Parliament, Brussels, 24 november 2006
economic growth. In the transport industry, RFID systems have the inherent capacity to assist in vehicle identification, tracking
the Internet economy to companies to more tightly integrate their processes, the next wave of business communication centres around cross-enterprise application integration
economy. Because every activity involves the creation, processing, and communication of information, ICT has a pervasive influence on the supply chain.
-gies and services among firms in the economy at large is a striking example of the
109 EU-KLEMS is a database on measures of economic growth, productivity, employment creation capital formation and technological change at the industry level for all European union member
it has been labelled by some economists as a measure of ignorance. It is a residual between growth of an output indicator like gross
was one of the first economists who pointed out the significance of disembodied technical change for economic growth opposite to the classical view that in particular capital
accumulation, i e. embodied technical change is the key driver of growth E-business in the transport & logistics industry
advanced economies; unskilled jobs have long been declining in absolute terms in Europe and growing only slowly in the US,
economy driven by rapid technical change, the ability to empower the work force is a necessary complementary measure to ICT adoption.
Hardware infrastructure, in contrast, is already a commodity that does not offer companies any potential to create a competitive advantage
organising economic activity (Coase 1937, and Williamson, 1985. Consequently, the expectations regarding the potential of ICT as technologies introducing innovative ways
economy The resource planning system has helped ALSA to reduce costs of â 4-5 million
Stakeholders of this project were the passenger railway company, the information technology company of CFR, CFR Infrastructurä,(managing the infrastructure on the
ownership of Trafikanten was changed slightly as 6 new shareholders entered the company representing Norwegian PT operators, PT branch organisations and two
The original 3 shareholders still have the majority of shares Trafikanten†s main objective is to promote public transport
stakeholders and project partners (including public transport authorities, the road authorities and operators) to agree on the organisation of the project and on the
project team included up to 20 persons, 7 stakeholders and 3 full time project officers from Trafikanten assisted by an external consultant.
all operators it needed a great involvement of all stakeholders and partners from the very
stakeholders contributed to the success of the project The question of operational cost management should also be addressed in the planning
and the shareholders, including the county council and the different municipalities IT solutions play an important role in supporting the company in achieving its objective of
interrelation with almost all other European economy sectors, any improvements to the competitiveness and effectiveness of European transport and logistics enterprises will
the European economy as a whole. Based on the results of the E-business Survey presented in Chapter 3,
knowledge economy driven by rapid technical change, the ability to empower the work force is a necessary complementary measure to ICT adoption.
the European economy The ebsn (European E-business Support Network for SMES) is an e-business policy coordination platform, bringing together decision-makers in the field of e
RFID Stakeholder Group to provide an open platform allowing a dialogue between consumer organisations, market actors,
e g. by promoting multi-stakeholder partnerships in ICT training programmes  Provide incentives for ICT training of employees
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