While development was also cognizant of the need to support agriculture, education, governance, and health activities, SD put a major focus on related environmental issues and social justice. (See Heeks) SD has been embraced by the United Nations (UN) that came out with seventeen Sustainable Development Goals (SDGs) that were adopted by all UN organizations in 2015.

In this post, I briefly introduce ICT4D and it’s connection to SD. Also, how it emerged and why it is beneficial. Of particular importance are the economic benefits of ICT and recognizing them in the renewable energies so crucial to sustainable development.

ICT was not well understood by development economists and largely ignored by funding agencies, except for telephone infrastructure. Literacy and education were early concerns. Book production, radio, and then television sets were monitored as crucial indicators of development progress. Telephones and telegraphs helped transact business over longer distances but were installed and managed by government agencies called Post, Telephone, and Telegraph (PTTs) entities. PTTs found funding difficult and were challenging to manage, given their technical complexity and enormous geographical scope. Satellites were used in some countries like India and Indonesia and facilitated better mass communications as well as distance education and disaster management.

Most of the economic focus in “developing countries” was on the extraction and growing of various commodities, utilizing low-cost labor for manufacturing, or adding to the production processes of global supply chains. It was only when television and films became important domestic industries that “information products” were recognized economically in the development process.

New dynamics to development and economic processes were introduced with computerization and ICTs. I began my career as an Intern on a National Computerization Policy program at the East-West Center in Honolulu, Hawaii. Inspired by the Nora-Minc Report in France, it was part of the overall emphasis on development at their Communications Institute. I had an office next to Wilbur Schramm, who was one of the most influential development pioneers with his Mass Media and National Development: The Role of Information in the Developing Countries (1964).[1]

With my mentor, Syed Rahim, I co-authored Computerization and Development in Southeast Asia (1987) that serves as a benchmark studies in understanding the role of ICT in development. One objective of the book was to study the mainframe computers that were implemented, starting in the mid-1960s, for development activities. These “large” computers some of them with RAM of merely 14K, were implemented in many government agencies dealing with development activities: agriculture, education, health, and some statistical organizations. We also looked at what narratives were being created to talk about computerization at that time. For example, the term “Information Society” was becoming popular. Also, with the rise of the “microcomputer” or personal computer (PC), the idea of computer technology empowering individuals was diffusing through advertisements and other media.

Information economics opened up some interesting avenues for ICT4D and sustainable development. Initially, it was concerned with measuring different industrial sectors and how many people were employed in each area, such as agriculture, manufacturing, information, and services. Fritz Machlup, wrote the The Production and Distribution of Knowledge in the United States in 1973 that showed that the information goods and services accounted for nearly 30 percent of the U.S. gross national product. A major contributor to information economics, he concluded the “knowledge industry” employed 43 percent of the civilian labor force.

Machlup was also a student of Ludwig von Mises, known today as the founder of the so-called “Austrian School of Economics.” But he was soon overshadowed by fellow “members” Friedrich von Hayek and Milton Friedman, and the resurgence of Von Mises himself. While this debate was primarily against mainstream Keynesian economics, it was also significant for development studies as these economists saw government activities as running counter to the dynamics of the market. The main nemesis of the Austrian school was socialism and government planning activities. While most developing countries were not communist countries, the Cold War was a significant issue that was playing out in countries worldwide.

The Austrian movement had a significant impact in the 1970s and 1980s. Transactions in the economy were seen as knowledge-producing activities and they focused on the use of prices as communication or signaling devices in the economy. It led to a new emphasis on markets and Hayek and Friedman both received Nobel Prizes for their work.

For context, President Nixon had taken the US off the gold standard in August 1971 and the value of the US dollar dropped sharply. But currency markets were free to operate on market principles. It was also a time when the microprocessor was invented and computers were becoming more prominent. In 1973, Reuters set up its Money Monitor Rates, the first virtual market for foreign exchange transactions. They used computer terminals to display news and currency prices and charged banks to both subscribe to the prices and to post them. With the help of the Group of 5 nations, it brought order to international financial markets, especially after the Arab-Israel War broke out in late 1973. The volatility of the war ensured the economic success of the Reuters technology and currency markets have been digitally linked ever since.

Many development theorists by that time were becoming frustrated by the slow progress of capitalism in the “Third World.” Although the Middle East war was short, it resulted in increasing prices for oil around the world. This was a major strain on developing countries that had bought into mechanized development and the “Green Revolution” of the 1960s that emphasized petroleum-based fertilizers and pesticides. The Arab-dominated Organization of Petroleum Exporting Countries (OPEC) began an embargo of western countries for their support of Israel that refused to withdraw from the occupied territories. Prices of oil increased by 70 percent and the US suffered additional setbacks as they ended the war in Vietnam and inflation raged.

A split occurred between traditional development studies and market fundamentalists. British Prime Minister Margaret Thatcher and US President Ronald Reagan were strong advocates of the Austrian School. Both had been taken by Hayek’s Road to Serfdom (1949) and stressed a pro-market approach to development economics. The IMF was mobilized to pressure countries to undergo “structural adjustment” towards more market-oriented approaches to economic development. The PTTs were a primary target and investment strategies were utilized to turn them into state-owned enterprises (SEOs) and parts sold off to domestic and international investors.

Researchers began to focus on the characteristics or “nature” of information. As the economies became more dependent on information, more scholarship was conducted. It became understood that information was not diminished by use or by sharing. Certainly the value of information varied, often by time. The ability to easily share information by email and FTP created interest in network effects and the viral diffusion of information.

These characteristics became particular important after the development of the Internet that quickly globalized. Vice-President Gore’s Global Information Infrastructure (GII) became the foundation for the World Trade Organization’s Information Technology Agreements (ITA) and the privatization of telecommunications services. Tariffs on information and communications technologies decreased significantly. Countries that had gotten into debt in the 1970s were pressured into selling off their telecommunications infrastructure to private interests and they quickly adopted TCP and Internet Protocols (IP).

Other studies focused on efficiencies of production brought on by science and technology, specifically reducing the marginal costs of producing additional units of a product. Marginal costs have been a major issue in media economics because electronic and then digital technologies have allowed the increasing efficiency of producing these types of products. Media products have historically had high production costs, but decreasing marginal costs on the “manufacture” or reproduction of each additional unit of that product.

If we start with books for example, we know it is time-consuming to write a book and the first physical copies of the book are likely to be expensive, especially if only a small number of them are actually printed. But as traditional economies of scale are applied, the cost of each additional book becomes cheaper. Electronic copies of books in particular have become very cheap to produce, and even distribute through the Internet. Although that hasn’t necessarily resulted in major price decreases.

Digital outputs are generally unique economic products. They have unusual characteristics that make it difficult to exclude people from using them, and they are also not used up in consumption. Microsoft faced this problem in the early days of the microcomputer when it was getting started. It criticized computer hobbyists for sharing cassette tapes of their computer programs. Later, their investment in the MS-DOS operating system and subsequently Windows paid off handsomely when they were able to sell it with enormous margins for IBM PCs and then “IBM Compatibles” such as Acer, Compaq, and Dell. That is how Bill Gates became the richest man in the world (or one of them).

The issue of marginal costs have resonated with me for a long time, due to my work on media economics and what economists call “public goods.” In some of my previous posts, I addressed the taxonomy of goods based on key economic characteristics. Public goods and such as digital and media products are misbehaving economic goods in that they are not used up in consumption and are difficult to exclude from use. These writings examined what kind of products are conducive to reduced marginal costs and what social systems are conducive to managing these different types of goods. Originally, the focus was more on media products like film, radio and television, but then digital products like games and operating systems. Will these efficiencies apply to sustainable development?

Can the economics of media products apply to other products. More recently sustainable technologies like solar and wind are being examined for their near-zero marginal costs. A major voice on this topic is Jeremy Rifkin, who is most noted for his book The Third Industrial Revolution (2011) that refers to the importance of concurrent communications, energy, and transportation transitions. We have moved from an integrated political economy based on telephone/telex communications, and carbon combustion energy and transportation to a digital, clean energy. Two books by Jeremy Rifkin, The Near Zero Marginal Cost Society and The Green New Deal are significant points of departure for sustainable development.

Sustainable development initiatives by definition look to economize and reduce costs for the future. It is important to analyze the characteristics of economic goods and their social implications. This level of understanding is important to understand the market structure and types of regulation.

ICT4D has struggled to claim a strong narrative and research stake in the trajectory of development. The Earth Institute’s ICTs for SDGs: Final Report: How Information and Communications Technology can Accelerate Action on the Sustainable Development Goals (2015) and the World Bank’s (2016) World Development Report were significant boosts for ICT4D, especially for economic development, and the move towards sustainable development.

Citation APA (7th Edition)

Pennings, A.J. (2021, Aug 21) ICT and Sustainable Development: Some Origins. apennings.com https://apennings.com/how-it-came-to-rule-the-world/digital-monetarism/ict-and-sustainable-development-marginal-costs/

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Notes

[1] Mass Media and National Development: The Role of Information in the Developing Countries. Stanford University Press. 1964.

[2] Sachs J et al (2016) ICT & SDGs: How Information and Communications Technology can Accelerate Action on the Sustainable Development Goals. The Earth Institute: Columbia University. Accessed at https://www.ericsson.com/assets/local/about-ericsson/sustainability-and-corporate-responsibility/documents/ict-sdg.pdf. 15 Jan 2019

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Anthony J. Pennings, PhD is Professor at the Department of Technology and Society, State University of New York, Korea. Originally from New York, he started his academic career Victoria University in Wellington, New Zealand before returning to New York to teach at Marist College and spending most of his career at New York University. He has also spent time at the East-West Center in Honolulu, Hawaii. When not in the Republic of Korea, he lives in Austin, Texas.

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Category: characteristics of digital media, digital monetarism, smart new deal, sustainable development, telecom policy and net neutrality, telegraphic political economy
Tags: computerization > marginal costs > Network effects > Nora-Minc Report > Wilbur Schramm

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