From the Global Digital Divide to the Global Digital Opportunity

CIAO DATE: 11/00

From the Global Digital Divide to the Global Digital Opportunity
Statement of the World Economic Forum Task Force to the G-8 Kyushu-Okinawa Summit

William J. Drake

Carnegie Endowment for International Peace
July 2000

The world economy is in the midst of a profound transformation. Spurred on by the Internet in particular, the global information revolution is redefining the ways companies do business in every economic sector, and it is vastly expanding the range of opportunities for entrepreneurs to create innovative products and pioneer new markets. In parallel, the cumulative effect of these micro-level changes in firms and their markets has been a macro-level shift to an increasingly information-based global digital economy. But inevitably, not all countries around the world have benefited equally in the transition to the new global economy. On every relevant measure – from the size and penetration of telecommunications markets or the extent of Internet diffusion to the level of global electronic commerce and so on – the vast majority of economic activity related to information and communications technologies is concentrated in the industrialized world. Conversely, developing countries – and especially, the least developed countries – account for a small fraction of the global digital economy. Concerns about these disparities between industrialized and developing countries, especially with respect to Internet access and use, have touched off a worldwide debate about the existence of a global digital divide.

In the domestic political environments of industrialized countries like the United States, the term, "digital divide" has proven to have powerful symbolic weight, and hence to be a useful tool with which to mobilize political support for government programmes designed to bridge the gaps between so-called "information haves" and "information have-nots." But when carried to the international level, the term arguably misconstrues the issue and is unduly pessimistic. For example, the term directs our attention to relative inequalities in the distribution of information age resources, when what really matters to the quality of life in a given country is its absolute level of resources. And in fact, these absolute levels – whether measured by teledensity, the number of Internet hosts or Web pages, personal computer ownership, or anything else – are moving up in many developing countries, in some cases at strikingly healthy rates. Given variations in wealth and related factors, the digital divide between wealthy and less wealthy nations will undoubtedly persist, but this does not mean that conditions are not improving in the latter.

Instead of fixating on the existence of a divide, it would be far better to focus our attention on the "global digital opportunity," because that is what really confronts us today – an unprecedented opportunity to move swiftly up the path towards global digital development. Technological progress, policy reform and increasing competition in the information and communications technology environment have combined to create conditions in which all nations can participate in and benefit from the information revolution as never before. The technology's speed, power and flexibility are increasing at staggering rates while its cost is falling in tandem. Capabilities that in the past were possessed only by large and powerful organizations can now be obtained by individuals and small organizations in all walks of life, and they can be configured and used in pursuit of an infinite range of socially constructive objectives. With the Internet, personal computing, wireless telecommunications and a host of related systems and services becoming widespread throughout societies, we are witnessing the democratization of the information revolution.

The globalization of this process presents developing countries with an unparalleled opportunity to significantly accelerate and spread the benefits of economic development. For example, the Internet and related technologies and services can greatly contribute to economic growth by increasing the productivity and competitiveness of companies across the agricultural, manufacturing and services sectors. In tandem, these technologies and services can generate many new and rewarding employment opportunities for every nation's citizens; experience around the world demonstrates beyond any doubt that over time new information and communications technologies increase the overall level and quality of employment. And indeed, there are already hundreds of examples of people in developing countries using the technology in ways that have unlocked previously unattainable opportunities for economic growth and wealth creation. These range from large manufacturers improving their products, production processes and relationships with suppliers and customers, to small communities and individual entrepreneurs using the Internet to sell local agricultural produce or light manufactured goods at home and abroad. Similarly, there are a great many examples, again both large and small, of people in developing countries using the technology to successfully tackle social challenges in fields such as education, public health, transportation, environmental and natural resource management. The same is true for the production and distribution of locally appropriate content that contributes to the promotion of vibrant national cultures. In principle, there is no reason such success stories cannot be widely replicated across the developing world in ways that will advance economic growth, cultural enrichment and the empowerment of citizens.

That is, in principle. In practice, the digital opportunity will not be realized fully, and indeed could be squandered, unless developing country governments take decisive and enlightened action. Above all, new national strategies and budgetary priorities are needed on multiple fronts, from education and financial policies to the governance of telecommunications and electronic commerce and beyond. At the same time, the international community has a critically important supporting role to play. Governments in the industrialized world, multilateral institutions, the international business community, and civil societal and philanthropic organizations all can help to accelerate developing countries' transition into the information age. Whether through individual actions or by working together, these stakeholders can provide technology, capital, business expertise, trade benefits, technical assistance and a host of related contributions that will make a difference. Equally important, they can offer developing countries an expanded vision of not only what could be, but also of how to make it happen.

The Task Force for the Global Digital Divide Initiative of the World Economic Forum is comprised of approximately 100 leading companies in the information technology and media, communications and entertainment sectors. The Global Digital Divide Initiative was launched at the Annual Meeting 2000 in Davos with the purpose of developing and propagating creative public-private sector initiatives to bridge the global digital divide. This Policy Statement reflects and elaborates on the views expressed in earlier Task Force meetings in Geneva, Rio de Janeiro and Washington DC. It includes proposals and recommendations that we hope the G-8 member governments will consider pursuing along with the other stakeholders. This Policy Statement, submitted to the Government of Japan, presidency of this year's G-8 Summit, is part of the ongoing Global Digital Divide Initiative of the World Economic Forum.

Institutionalization and Coordination of Global Digital Opportunity Initiatives

1. The G-8 should take a leadership role by advancing, together with developing countries, a positive vision of the global digital opportunity and by organizing a coordinated effort, backed by high-level support, to assist developing countries in its realization.

While many industrialized countries maintain bilateral programmes to aid developing countries with particular technology-related issues, these often lack the sort of high-level political engagement needed to give real momentum and public visibility to the digital opportunity as a broad-scale initiative. Moreover, efforts to address digital development issues in a positive manner within multilateral institutions have not always been successful. With these dual considerations in mind, it would be desirable for the G-8 to take a leadership role in pushing the matter up the international political agenda, establishing contexts for high-level and productive global dialogue, and articulating a positive vision that expands the sense of the possible and inspires action around the world.

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. At the Kyushu-Okinawa Summit, the G-8 governments could adopt a declaration of principles and a set of pragmatic initiatives that would powerfully underscore the G-8's shared commitment to work with developing countries to enhance their participation in the global digital opportunity. The declaration could also underscore the leading roles to be played by the other international stakeholders in development efforts.

b. At the Kyushu-Okinawa Summit, the G-8 governments could establish a high-level working group on the global digital economy that would operate for three years, to be renewed thereafter if advisable. Among other things, the group could:

serve as the focal point for the high-level coordination of selected technical assistance programmes undertaken by member governments (such as those discussed below), and of any relevant G-8 policy discussions;
coordinate and share information with the other international stakeholders as appropriate, perhaps through advisory groups comprising multilateral institutions, the international business community and civil societal organizations;
monitor both the various international initiatives under way and progress towards the realization of the global digital opportunity;
manage the publication of information on that progress, both on the Web and perhaps in annual reports; and
manage an annual global digital economy session, discussed next.

c. Beginning in 2001, the G-8 could organize half-day sessions on the global digital opportunity that would be linked to its summits. It could invite heads of state and other high-level officials from each region who have adopted forward-looking policies and have made progress in adapting their countries to the information age. Similarly, it could invite leading entrepreneurs and civil societal organizations that have creatively employed information and communications technologies to launch noteworthy businesses or overcome social problems in the developing world. Ideally, the other international stakeholders would be actively engaged in such events. The goals of the meetings would be to showcase success stories, identify challenges and take stock of progress in the developing world; and to project a positive, high-level message that would attract attention in the press, academia and other environments that affect public opinion worldwide.

d.As a central part of any digital economy work programme, the G-8 governments and multilateral institutions should consider establishing a special initiative for the least developed countries. While in general the main focus of G-8 efforts probably will be on technical and policy assistance, knowledge transfer and loans where appropriate, in the case of the poorest countries it would seem necessary to contemplate the provision of additional forms of support as well. Such an initiative could give particular emphasis to infrastructure deployment, as well as to creative applications of technology in fields such as education, public health, community development, cultural enrichment and so on. In this connection, it also may be advisable to consider expanding the resources available to multilateral institutions for such activities.

2.While much can be achieved through individual efforts, in many cases it also would be helpful to coordinate the digital opportunity programmes of multilateral institutions, the international business community, and civil societal and philanthropic organizations.

There are numerous international initiatives, some of them long-standing, which are making praiseworthy contributions to increasing the global digital opportunity. However, often there is a lack of coordination among such programmes. This can mean missed opportunities for organizations to optimally leverage their scarce resources, learn from each other, and provide developing countries and other parties with well structured and usable information about the range of projects under way and the lessons to be learned from experiences around the world. Given the centrality to the digital opportunity of knowledge sharing and the capabilities provided by the Internet, there could be much to be gained through enhanced coordination both within sectors (e.g. between business organizations) and across sectors (e.g. between business and civil societal organizations).

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. At the Kyushu-Okinawa Summit, the G-8 governments could call on the relevant multilateral institutions to establish a coordinating committee on the global digital opportunity. Leaders of these organizations could designate high-level representatives responsible for coordinating with their peers in other bodies and making use of the Internet to share information and improve programme management. The committee also could oversee information gathering efforts to track and cross-evaluate a) the range of projects under way in multilateral institutions, and b) the progress being made by developing countries in achieving the digital opportunity. Annual reports on these items as well as other inputs could be provided to the G-8 working group, for which the committee could serve as a key interface with the wider international community.

b. The committee also could ensure that where appropriate, there is inter-organizational coordination of the various conferences and specialized meetings held by multilateral institutions, so as to promote efficiency and cumulative learning and avoid the persistent recreating of the wheel. Moreover, the committee could ensure that such forums reach beyond government delegations to include key participants from all relevant sectors in both the industrialized and developed worlds. The World Bank's Global Knowledge Partnership initiative is a useful model in this regard.

c. Multilateral institutions could establish Web portals providing "one-stop shopping" access to information about the range of programmes, opportunities and experiences in the respective sectors, and could coordinate with the other international stakeholders to continuously add new and richer information about their activities.

d. More generally, multilateral institutions should establish mechanisms to enhance the participation of the private sector and civil societal organizations in intergovernmental forums and programmes. It has become clear in recent years that transparent and participatory approaches are needed to manage global issues successfully and with broad-based legitimacy. This may prove to be especially true in the case of digital technologies, an arena in which the international business community and civil societal organizations will be taking on leadership roles. It therefore would make sense for multilateral institutions to formalize procedures to facilitate partnerships with these stakeholders.

e. For their parts, the international business community and civil societal organizations may wish to consider the utility of establishing international coordination mechanisms for some of their various digital opportunity initiatives. Such mechanisms might range from enhanced networked coordination to a more formal virtual body to even an international non-governmental organization that would serve as a peak association of interested parties. Even a minimalist virtual body could help to improve information sharing and programme management as well as the interface with multilateral institutions and governments.

3. Governments could increase their ability to contribute to the realization of the global digital opportunity by establishing mechanisms – subject to high-level oversight and leadership – for the internal coordination of forward-looking national strategies and policies.

If enhanced coordination among G-8 governments, multilateral institutions, international business and civil societal and philanthropic organizations is important, so too is enhanced coordination among the ministries or agencies of national governments. This is true for both industrialized and developing countries, although the need is probably more pressing for the latter. The widespread deployment of information infrastructure is a necessary but not a sufficient condition for seizing the digital opportunity; simultaneous movement on many other fronts (e.g. macroeconomic, trade, finance, education, public health and social policies) also is required. Absent coordination in pursuit of shared national objectives, the various ministries or agencies with responsibility for these policy arenas may miss opportunities to leverage their programmes for maximum benefit, and at times may even work at cross purposes. Moreover, in many countries the leading role of telecommunications ministries in policy planning has meant that incumbent national carriers have exerted undue influence on the diffusion and utilization of information and communications technologies. Coordination could help to ensure that a broader range of policy considerations and perspectives are taken into account in the formulation of strategies and policies. Further, the bureaucratic fragmentation of responsibilities may reduce the effectiveness of governments' interfaces with other domestic and international stakeholders.

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. Governments could establish new policy mechanisms to coordinate digital opportunity activities at the domestic level. One alternative is to establish a cabinet-level coordinating committee that would link ministries together via an Intranet and off-line consultations. Alternatively, or in addition, in some cases it might be effective to establish a new ministry with lead responsibility for coordinating digital opportunity initiatives. Either way, such efforts should receive clear guidance and support from heads of state in order to ensure that they result in coherent, multidimensional and forward-looking national strategies that transcend the vested interests and perspectives of any one ministry. The design and implementation of these strategies should be as transparent, participatory and measurable as possible.

b. In addition, governments should "lead by example" by effectively employing information and communications technologies in their organizational management. Establishing transparent electronic procurement practices, reforming decision-making and work procedures to become networked learning organizations, expanding information interfaces with the general public, and using information and communications technologies in such policy arenas as public health, education, employment, transportation, and energy and resource management would simultaneously increase their own efficiency and demonstrate to local businesses and civil society the gains that can be realized through technology.

c. Governments should establish more effective and transparent institutional arrangements for cooperation with other stakeholders on the design, implementation and evaluation of their strategies. At present it is often difficult for the international business community and other stakeholders to achieve productive working relations with the relevant ministries due to opaque decision-making procedures. This limits the benefits that would otherwise accrue to developing countries from the international community's efforts.

d. Governments should ensure that all digital opportunity initiatives include specific measures addressing the problems faced by the most disadvantaged segments of society, e.g. rural populations, women, ethnic minorities and people with disabilities. Too often policies and programmes unduly give preference to the interests of elite groupings, rather than spreading the benefits throughout society. The new technology environment makes possible the low-cost, widespread diffusion and utilization of informational resources and capabilities, which could help invigorate broad-based economic and social development.

e. Governments of developing countries would benefit by working more closely with multilateral institutions to design capacity building strategies and sustainable mechanisms for their implementation and evaluation. Such strategies could include analytical frameworks for the periodic measurement and assessment of progress, perhaps similar to the Organization for Economic Cooperation and Development's (OECD) annual reports. Multilateral institutions could also fund appropriate elements of such efforts, such as the technical training of government staff.

Education, Entrepreneurship and Empowerment

4.Universal access to education and technology training is a fundamental prerequisite for the transition to knowledge societies.

It is axiomatic that without well educated workers, nations cannot thrive in a globalized, knowledge-based economy, and the payoffs to digital opportunity initiatives will be limited. Nevertheless, in many developing countries access to quality education in general and technology training in particular is restricted to a minority of the population. While there are many reasons for this state of affairs, the fact remains that it is untenable in the current environment. In the years ahead, technical skills increasingly will be required for competitiveness not only in high-tech industries, but in more traditional ones as well. Moreover, a central feature of the Internet age is that many of the key innovations and new markets have been generated not by the historically dominant players in technology industries, but rather by individual entrepreneurs and small and medium-sized enterprises. Only with mass access to education and technical training can developing countries take full advantage of the possibilities presented by the distributed information revolution.

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. Developing countries urgently need to realign their budgetary priorities and make universal access to quality education a top national objective. This realignment also should be reflected in the priorities of bilateral and multilateral aid programmes. Technological knowledge and skills should be centrally integrated into every stage of the educational process, e.g. primary and secondary school, higher education and vocational training. In addition, programmes could be established to facilitate the transition from school to employment, taking advantage of the opportunities for creative public-private partnerships.

b. At the Kyushu-Okinawa Summit, the G-8 governments could undertake a commitment to fund the wiring of schools and public libraries in the developing world for Internet access. This commitment also could include concrete numerical targets to be achieved per annum for at least the next three years, giving first priority to both secondary and higher educational institutions and to libraries and extending later to primary schools. For their part, developing country governments could establish plans, including special incentives, to promote the commercial provision of low-cost Internet access to such institutions once the infrastructure is in place.

c. At the Kyushu-Okinawa Summit, the G-8 governments could undertake a commitment to fund the training of teachers and librarians in the developing world in the use of technology and related issues. This commitment could include concrete numerical targets to be achieved per annum for at least the next three years. It could also include support for "help desk" facilities that would provide continuing technical assistance to educators after their initial training.

d. Independent of, but complementary to these commitments to connect schools and communities, the G-8 and other governments could establish a volunteer "Global Digital Opportunity Corps." The Corps could comprise skilled personnel who would visit developing countries to carry out fixed-term instructional projects geared towards teachers and librarians. Governments could offer tax, educational and other incentives to participants, and/or seek financial and technical support from the international community. Web-based distance education could serve as a useful complement to such activities. If advisable, the Corps could expand its focus over time to take on additional missions beyond training teachers and librarians, e.g. by assisting with local business development. The experiences of programmes like the US State Department's Global Technology Corps and the Organization of American States' Net Corps Americas may be instructive in this regard. United Nations Secretary General Kofi Annan has proposed something similar to be operated under the UN aegis.

e. The international community, especially the international business community, could establish voluntary programmes to fund access to technology tools for education in the developing world, such as new and recycled computers, specialized software applications, books and other instructional materials, etc. In addition, the private sector could establish or expand existing programmes providing affordable certification training in networking and related technologies.

f. The international community, especially multilateral institutions and philanthropic organizations, could establish programmes to bring to the developing world independent analyses of the global digital economy. Beyond technical training for teachers, developing countries would benefit from greatly expanded access to knowledge and ideas about the social, political, economic and technological aspects of the information revolution and their implications for development. Physical and virtual visits by scholars and analysts, teacher exchanges, sustained transnational electronic dialogues, subsidized access to relevant publications and other inputs would help government officials, teachers and others in the developing world to better understand and respond to the worldwide transformation under way.

5.To create a dynamic climate in which entrepreneurship can flourish, macroeconomic stability and new sources of commercial financing are essential.

Digital opportunity initiatives are unlikely to succeed fully unless the wider economic environment is healthy and conducive to private enterprise. Fiscal restraint, monetary stability, open markets, appropriate policies on taxation and investment, and other hallmarks of good governance take on additional importance in a global economic transition driven by rapid private sector innovation. At the same time, the ability to promptly secure funding is imperative for individual entrepreneurs and small and medium-sized enterprises. However, many developing countries' capital markets are weak and may need to be supplemented through innovative mechanisms.

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. Developing countries would benefit from reforming their financial sectors in order to increase the local availability of capital and consumer credit. In many countries, industry structures and practices and regulatory policies alike limit the ability of businesses and consumers to access the financial resources needed for digital markets to thrive. In this context, liberalization and enhanced foreign investment would be very much in developing countries' interests. Moreover, developing countries that currently tax philanthropic donations may wish to reconsider such disincentives to charitable giving.

b. The international community, especially multilateral institutions and the international business community, could establish or expand existing facilities providing seed monies (including micro-lending) for local research and the commercial development of low-cost technologies and applications. At times, inexpensive or small-scale innovations that would meet local needs are unable to attract capital because the potential returns on such investments seem less attractive than other opportunities. Specialized lending facilities can play a constructive role in overcoming such cases of market failure. Existing programmes along these lines operated by multilateral institutions should be expanded significantly. In parallel, there is room for partnerships that would involve the international business community in the evaluation and support of potential projects.

c. The international community, especially the international business community, could work with developing countries to establish "business incubators" and entrepreneurial networks. Incubators combining physical facilities, technical and managerial training, software and hardware tools, and other assets would provide fertile ground for the creation of new business models and innovative technology-oriented companies geared towards local and international markets. Such incubators can also serve as organizational focal points for the regional development of networks of electronically linked firms which can share information and experiences, partner on product development and marketing, and so on. The private sector in the industrialized world has accumulated a good deal of experience with such synergy-rich collaborations which could be tapped and transferred at reasonably low cost. Country-specific projects could be complemented by Web portals that would allow entrepreneurs elsewhere to draw inspiration and information from these efforts.

d. The international community, especially the international business community, could work with counterparts in the developing world to establish e-chambers of commerce that would provide knowledge and support for technology-related businesses. Such groups ideally would include not only suppliers of systems and services, but also representation from a broad cross-section of organizational users of information and communications technologies in other industries.

e. The international community, especially multilateral institutions, could work with developing countries to establish "one stop shopping" Web portals where businesses, both domestic and international, could gain access to relevant legislative, regulatory and judicial information that would affect their planning. Such portals could also provide the means to expedite certain kinds of commercial transactions, including international trade. In this connection, the Trade Point Programme of the United Nations Conference on Trade and Development may provide one interesting model on which to build. In general, developing country governments should take advantage of the technology's capabilities and ensure transparency in their operations in order to facilitate more effective partnerships with the business community and civil society.

f. Industrialized countries and multilateral institutions should deepen their cooperation with developing countries to help them achieve the macroeconomic stability needed to attract investment and to facilitate business planning. While specific measures to improve the macroeconomic climate in developing countries go beyond the immediate concerns of this statement, multilateral lending institutions could be more effective partners in this arena and should focus in particular on the special needs of the least developed countries.

6.The digital empowerment of civil society is a key foundation of development in the information age.

The realization of the digital opportunity requires more than a thriving economy. A vibrant civil society is the second pillar of the information age (democracy and political pluralism being the third). As such, digital opportunity initiatives also should give attention to fostering social capital and cohesion, cultural enrichment, and the usability and usefulness of information resources in non-commercial settings. Moreover, the benefits of such an approach would extend beyond the social realm: experience in the industrialized world demonstrates irrefutably that there is a direct linkage between individual and civil societal empowerment, on the one hand, and business empowerment or entrepreneurship, on the other.

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. At the Kyushu-Okinawa Summit, the G-8 governments could undertake a commitment to fund the establishment of community tele-centres in the developing world. Such centres typically provide the general public with low-cost access to telecommunications, Internet and related technologies, and to training and support, and are especially useful in rural areas where access may otherwise be very limited. A commitment to fund them could include concrete numerical targets to be achieved per annum for at least the next three years. As other members of the international community already have tele-centre programmes in place, it might be best for governments to work through these organizations and provide them with the resources to significantly expand their operations. International stakeholders could cooperate with developing countries to devise plans to make the tele-centres commercially sustainable after a start-up period.

b. While striving to protect minors from inappropriate materials through the application of software tools, and to provide adequate protection for intellectual property, developing countries should ensure that individual citizens and non-commercial organizations can access, produce, distribute and use information without artificial restrictions. This is a prerequisite for the flourishing of empowerment and innovation in all sectors of society.

c. The international community, especially multilateral institutions and civil societal and philanthropic organizations, could work closely with developing countries to create programmes which promote their unique cultural heritages (e.g. networked museums, libraries, Webcasted audio-visual materials and so on) and to ensure the participation of local communities in identifying priorities and creating content. It should be emphasized to governments still prone to view the Internet through the lens of traditional media systems that, unlike broadcast television or movie theatres, there is no scarcity of distribution channels or nominally zero sum trade-off between the display of domestic and international materials. The Internet provides developing countries with a low-cost and infinitely expandable space within which to create and disseminate cultural products and tell their stories, both at home and abroad.

d. The international community, including the private sector, should work closely with developing countries to create locally-relevant and usable content, whether domestic or international in origin.

e. The international community, especially the international business community, could promote low cost access to multilingual interfaces and translation tools and adapt them to local conditions in developing countries, including by enhancing the access of persons experiencing literacy and related social barriers.

Policies for the Information and Communications Technology Sector to Promote Access and Use

7.Pro-competitive telecommunications policies are a prerequisite to realizing the global digital opportunity.

Telecommunications networks facilitate the provision of essential basic services like telephony and are the primary platforms for the provision of advanced services and the Internet. Moreover, in modern and modernizing economies alike, every company and industry across the agricultural, manufacturing and services sectors is increasingly dependent on these infrastructures. As such, how well a nation's telecommunications sector is organized and functioning has direct multiplier effects – positive or negative – on the performance of its economy as a whole, and on the extent to which it will participate in the global digital opportunity. But unfortunately, despite the progress that has been made around the world over the past decade in liberalizing the sector and thereby invigorating national economies, many developing countries continue to maintain self-defeating, anti-competitive industry structures and regulatory regimes. These practices arguably constitute a major barrier to realizing the digital opportunity, and ending them would be a critically important step countries could take to improve their own prospects. Despite the short-term difficulties entailed in overcoming entrenched interests and mindsets, developing countries that have yet to make significant progress on this score need to recognize that those among them that already have adopted strong market-oriented telecommunications reforms have reaped significant rewards in terms of increased penetration levels, service improvements and resulting economic development.

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. At the Kyushu-Okinawa Summit, the G-8 governments could urge developing countries to adopt and fully implement the pro-competitive reform principles embodied in the Reference Paper that many members of the World Trade Organization (WTO) have incorporated into their telecommunications commitments under the General Agreement on Trade in Services (GATS). Taken together, the six principles – on competitive safeguards, interconnection, universal service, public availability of licensing criteria, independent regulators, and allocation and use of scarce resources – provide an effective blueprint for moving towards a dynamic, development-enabling telecommunications sector.

b. An especially important first step on the road to competition is the establishment of national regulatory authorities, since these would play a lead role in implementing the Reference Paper principles. Hence, at the Kyushu-Okinawa Summit, the G-8 governments could announce their intention to expand and institutionalize technical assistance programmes supporting the new regulatory authorities in the developing world. Significant problems have arisen in many of the developing countries (and some of the industrialized countries) that have established regulatory authorities since the Reference Paper was agreed in 1997. Often the new agencies lack the statutory authority, independence from the ministries and dominant carriers, and technical expertise and resources needed to carry out their tasks effectively. These conditions not only stifle competition, but breed damaging public cynicism about the possibility of accountable and transparent governance in this key sector of the economy. To help address such problems, organizations like the US Federal Communications Commission, the US Telecommunications Training Institute and the World Bank have established technical assistance programmes, all of which could be significantly built out.

Alternatively, or in addition, the international community might consider a more coordinated approach and establish an international non-governmental organization that would both provide more substantial ongoing technical support, and monitor and publicly report, perhaps annually, on the regulatory authorities' progress in implementing reform. Either way, if feasible it would be ideal for the G-8 Summit at Kyushu-Okinawa to announce some means of enhanced support for the national regulatory authorities if participating governments opt to call on developing countries to accelerate telecommunications reform.

c. At the Kyushu-Okinawa Summit, the G-8 governments could urge developing countries to otherwise deepen their pro-competitive market access commitments on basic telecommunications under the terms of GATS, to accelerate the implementation of such commitments, or to undertake commitments if they have not yet done so. It is very encouraging that over fifty developing countries have made commitments on basic telecommunications in the WTO. However, many of these commitments include significant restrictions on competition and foreign investment and are to be phased in slowly over the years ahead. Moreover, many governments have proven reluctant to implement fully the market openings they have already agreed to, and a majority of developing country members of the WTO have yet to make any commitments at all. Such actions serve only to limit developing countries' ability to participate in the global digital opportunity.

d. At the Kyushu-Okinawa Summit, the G-8 governments could urge developing countries that have yet to do so to undertake the privatization of their national telecommunications operators once an effective framework promoting and safeguarding competition has been established. Too often developing countries have offered investors monopoly or near-monopoly concessions when privatizing their national carriers. The result has been to limit the potential benefits of reform. In addition, developing countries should ensure that monies accrued through privatization are well managed in a publicly accountable fashion.

e. Developing countries could establish special incentives to foster investment in the rapid deployment of capital intensive information infrastructures. This would be especially useful with respect to wireless telecommunications systems, which are cheaper to deploy than wireline systems and can help countries to "leapfrog" to higher stages of infrastructure development. Efficient, market-based radio spectrum management is a necessary component of any such initiative.

8.Pro-competitive policies for the Internet are essential to promote the deployment of infrastructure and the affordable use of services by organizations and the general public.

Beyond what can be achieved through telecommunications reform, special measures are required to accelerate the national and regional deployment of Internet infrastructure and services. For example, every region in the developing world lacks adequate bandwidth to optimally manage the routing of Internet traffic and grow network-based businesses and relationships. The net effect of this situation is that more than 90% of all traffic originates, terminates or transits in the United States. This in turn decreases local network performance, resulting in the infamous "World Wide Wait," and deters the flourishing of business and non-commercial usage. In short, developing countries urgently need to build out network capacity in order to move up the path of realizing the digital opportunity.

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. The international community, especially multilateral institutions and the international business community, could work with developing countries to establish mechanisms promoting the rapid deployment of intraregional backbones. A combination of tax or other investment incentives for the private sector, technical assistance, loans and even grants to the least developed countries may be necessary to tackle this problem. In addition, developing country governments could benefit by coordinating their efforts with counterparts in their regions.

b. Developing countries would be well served by creating a facilitative policy environment for Internet Service Providers (ISPs), both domestic and international. A major barrier to Internet deployment in many countries is the high rates charged to ISPs by the incumbent national telecommunications operators for leased circuits, which are required if firms are to rapidly extend connectivity to businesses, public institutions and homes. Also problematic in some countries are government policies concerning ISP licensing, and liability for the messages they convey. Once again, it is critically important to the digital opportunity that national policies not be dictated unilaterally by the financial interests of the incumbent national telecommunications operators.

c. Developing countries also should carefully consider the costs and benefits of existing telecommunications tariffs for Internet dial-up connections. In most countries, end-users are forced to pay the national telecommunications carriers per-minute charges for connections to their ISPs (including when the ISP is the carrier itself). Evidence collected by the ITU, the OECD and other organizations demonstrates beyond any doubt that per-minute tariffs have had a direct and significantly negative impact on Internet usage around the world, whereas the handful of countries with flat rate tariffs for local telephony have witnessed explosive growth in Internet use. Flat rate charging for local calls, special reduced tariffs for Internet dial-ups, reduced rates for second lines to the home and other innovative charging schemes could go a long way to stimulating Internet use and the development of creative applications in business and non-commercial settings.

d. In addition, developing countries would benefit by phasing out tariffs on the importation of information and communications technologies. While in the past these impediments generally affected large organizations like multinational corporations, in the current environment they are a hindrance to individual entrepreneurs, small and medium-sized companies, schools, libraries and the many other stakeholders that want to employ what would otherwise be relatively inexpensive systems. The WTO's Information Technology Agreements provide a useful framework in this regard. Similarly, the digital opportunity would be advanced by eliminating any non-tariff barriers in information and communications technology markets, such as technical standards or requirements that limit the employment of diverse kinds of customer premise equipment and end-user devices.

e. At the Kyushu-Okinawa Summit, the G-8 governments could announce a special programme to assist developing countries in combating computer-related crime. The recent "I Love You" virus cost the world economy billions of dollars and demonstrated that threats can arise anywhere on the open Internet. Most developing countries do not have in place the legal frameworks and institutional capacity to deal with what will undoubtedly be a growing problem in the future. Technical assistance and expanded cooperation with law enforcement agencies in the developing world are needed.

f. The international community, especially multilateral institutions and philanthropic organizations, could provide funds to ensure that diverse stakeholders from developing countries are able to participate in international forums where Internet technical and policy issues are addressed. Deliberations on the technology, organization and governance of Internet infrastructure and services are taking place in a wide variety of industry associations and intergovernmental organizations around the world. For developing country governments it is difficult to attend and effectively participate in many of these meetings, and for other keenly interested stakeholders from the developing world the problem is even worse. Decisions about this inherently global medium should be made on a broadly participatory and democratic basis.

9.Pro-competitive policies on global electronic commerce will greatly accelerate the transition to dynamic and self-sustaining information age economies.

At present, developing countries account for a small fraction of global electronic commerce. Nevertheless, Asia and Latin America are beginning to see rapid growth, and it is widely anticipated that this pattern will continue and spread to other regions in the years ahead. With electronic commerce taking off, it is critically important that developing countries adopt clear, enabling national policies on a host of technically complex issues. In parallel, because the Internet is a global medium that allows the direct connection of potentially millions of buyers and sellers across national frontiers, avoiding conflicts of law and related problems will require that many of these national policies be coordinated both with the private sector and in multilateral institutions. Absent such national and international policies, suppliers will not have the incentive to invest and formulate business plans, and customers will not have the confidence that buying in cyberspace is as safe and reliable as buying in physical space. Pro-competitive and consumer-friendly "rules of the game" therefore are needed on a host of issues involving both business-to-business (B2B) and business-to-consumer (B2C) electronic commerce. But unfortunately, most developing country governments have yet to begin establishing their national policies, or to engage their counterparts abroad in serious dialogue about multilateral rules. Worse, the initial positions some governments have staked out on issues like customs duties and intellectual property are markedly backward looking and likely to damage their ability to participate in and benefit from global electronic commerce. Urgent action is required to turn these situations around and to create conditions in which development-promoting electronic commerce can blossom.

Hence, the World Economic Forum Task Force proposes consideration of the following courses of action:

a. At the Kyushu-Okinawa Summit, the G-8 governments could call on developing countries to adopt enabling national policies on such issues as market access and foreign investment, intellectual property, taxation, encryption, digital signatures and contracts, network security and computer crime, liability, consumer protection and privacy protection. This would enhance the performance of each link in what the Global Business Dialogue on Electronic Commerce calls the "e-commerce value chain," i.e. the nexus of telecommunications and computer-related services, distribution services, advertising services and financial services required to create businesses and conclude transactions.

b. In parallel, at the Kyushu-Okinawa Summit, the G-8 governments also could call on developing countries to adopt forward-looking positions on the coverage of electronic commerce–related goods and services under the instruments of the WTO, and to consider carefully the implications of attempting to impose customs duties or other artificial limitations on cross-border electronic transactions. During the WTO's pre-negotiation work programme on global electronic commerce, a number of developing countries took positions that complicated or impeded efforts to establish a productive dialogue and create momentum for negotiations. Some of their objections appear to have been motivated more by a desire to acquire bargaining chips with respect to unrelated trade issues than by a well considered view of what is necessary to grow electronic commerce in their countries. In the WTO context, G-8 governments could encourage developing countries to pull back on such tactical linkage strategies by making clear their intention to liberalize access to their markets for developing countries' traditional products, e.g. textiles and food.

c. In tandem, at the Kyushu-Okinawa Summit, the G-8 governments could unilaterally declare their intention to eliminate any restrictions on developing country exports of electronic commerce–related goods and services. This would demonstrate at a politically important moment the leading countries' intention to fully incorporate the developing world into the international trading system, and would thereby send a powerful public signal that electronic trade is a two-way street that leads to digital development. In most cases such a move would be reasonably painless for the industrialized world, but there is one politically difficult issue that might require a qualification to the offer, namely market access restrictions on the movement of natural person service suppliers under the terms of the GATS agreement. Ideally these would be lifted as well by the end of the next multilateral trade round if more rapid progress is impossible at this time.

d. At the Kyushu-Okinawa Summit, the G-8 governments also could announce their intention to expand technical assistance programmes focusing on electronic commerce policy. With regard to the formulation of both national approaches and negotiating positions in multilateral institutions, developing countries urgently need help in understanding what electronic commerce is all about and the relative viability of alternative policy solutions to the complex problems it raises. While the relevant multilateral institutions have made some progress in assisting developing countries on these matters, in general they lack the staff and resources necessary to do the job on the scale that is needed. As such, providing the resources to expand such activities should be a high priority.

Conclusion

In sum, The World Economic Forum Task Force believes that the following principles should guide international efforts to promote the realization of the global digital opportunity:

1.The G-8 should take a leadership role by advancing, together with developing countries, a positive vision of the global digital opportunity and by organizing a coordinated effort, backed by high-level support, to assist developing countries in its realization.

3.Governments could increase their ability to contribute to the realization of the digital opportunity by establishing mechanisms – subject to high-level oversight and leadership – for the internal coordination of forward-looking national strategies and policies.

4.Universal access to education and technology training is a fundamental prerequisite for the transition to knowledge societies.

5.To create a dynamic climate in which entrepreneurship can flourish, macroeconomic stability and new sources of commercial financing are essential.

6.The digital empowerment of civil society is a key foundation of development in the information age.

7.Pro-competitive telecommunications policies are a prerequisite to realizing the global digital opportunity.

8.Pro-competitive policies for the Internet are essential to promote the deployment of infrastructure and the affordable use of services by organizations and the general public.

9.Pro-competitive policies on global electronic commerce will greatly accelerate the transition to dynamic and self-sustaining information age economies.

To implement these principles, this document has suggested a range of concrete actions that could be undertaken by governments in the industrialized and developing countries, multilateral institutions, the international business community, and civil societal and philanthropic organizations in the months and years ahead.

More immediately, to lay the groundwork for such efforts, the Task Force proposes that at the Kyushu-Okinawa Summit, the G-8 governments may wish to consider the following ten-point plan of action.

With respect to the institutionalization and coordination of global digital opportunity initiatives, the G-8 governments could:

a. Adopt a declaration of principles and a set of pragmatic initiatives that would powerfully underscore the G-8's shared commitment to work with developing countries to enhance their participation in the global digital opportunity.

b. Establish a high-level working group on the global digital economy that would operate for three years, to be renewed thereafter if advisable. Among other things, the group could:

serve as the focal point for the coordination and execution of selected technical assistance programmes undertaken by member governments (such as those discussed below), and of any relevant G-8 policy discussions;
coordinate and share information with the other international stakeholders as appropriate, perhaps through advisory groups comprising multilateral institutions, the international business community and civil societal organizations;
monitor both the various international initiatives under way and progress towards the realization of the global digital opportunity;
manage the publication of information on that progress, both on the Web and perhaps in annual reports; and
manage an annual global digital economy session, discussed next.

c. Agree that, beginning in 2001, the G-8 will organize half-day sessions on the global digital opportunity that would be linked to its summits. These sessions would showcase heads of state and other high-level officials from each region who have adopted forward-looking policies and have made progress in adapting their countries to the information age. Similarly, they would showcase leading entrepreneurs and civil societal organizations that have creatively employed information and communications technologies to launch noteworthy businesses or overcome social problems in the developing world.

d. Establish a special initiative for the least developed countries, to include financial assistance, that would give particular emphasis to infrastructure deployment, as well as to creative applications of technology in fields such as education, public health, community development, cultural enrichment and so on. In this connection, it also may be advisable to consider expanding the resources available to multilateral institutions for such activities.

e. Call on the relevant multilateral institutions to establish a coordinating committee on the global digital opportunity, comprising high-level representatives of each organization, to enhance coordination between their respective digital opportunity efforts and thus improve resource management and programme performance.

With respect to promoting education, entrepreneurship and empowerment, the G-8 governments could:

f. Undertake specific commitments, for at least the next three years, to fund the training of teachers and librarians, the wiring of schools and libraries, and the establishment of community tele-centres in the developing world. Independent of, but complementary to these commitments, the G-8 and other governments could establish a volunteer "Global Digital Opportunity Corps" comprising skilled personnel who would visit developing countries to carry out fixed-term instructional projects geared towards teachers and librarians.

With respect to governing the information and communications technology sector to promote access and use, the G-8 governments could:

g.Urge developing countries to pursue pro-competitive telecommunications reform, most notably by adopting and fully implementing the pro-competitive reform principles embodied in the Reference Paper that many members of the World Trade Organization (WTO) have incorporated into their telecommunications commitments under the General Agreement on Trade in Services (GATS) in 1997.

h. Announce their intention to expand and institutionalize technical assistance programmes supporting the new telecommunications regulatory authorities in the developing world.

i. Announce a special programme to assist developing countries in combating computer-related crime.

j. Urge developing countries to adopt pro-competitive policies with respect to global electronic commerce, and offer in return both to expand technical assistance on such matters and to eliminate any barriers to these countries' global electronic commerce-related exports.

The World Economic Forum Task Force is grateful for the opportunity to share the views of its members with the Government of Japan, presidency of this year's Summit, as well as with other governments participating in the Kyushu-Okinawa Summit.

We stand ready to provide any further assistance as governments move forward with their global digital opportunity initiatives in the months and years ahead.