Infrastructure: The cause of the Digital Divide?

Angel Garbarino

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Introduction

• “Universal Service” Theodore Vail in 1907

• Expanded to mean the “Digital Divide”

• Majority research on rate of the Divide.

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Objective of this paper

• Defend position IT adoption Contingent on infrastructure

• Different economic infrastructures more conducive to IT.

• Biased efficiency growth rates

• Continues the growth of the Digital Divide

Outline

Section I: Necessity of Infrastructure and IT development.

Section II: Use of IT in economy improve efficiency.

Section III: Thus, the digital divide, and why it continues.

1. Infrastructure Concentration

• High fixed Cost

• Concentration towards those who can afford costs.

• Cost barrier

• Problem for Developing countries and rural areas

• $400 USD for cost of a typical telephone landline.

1.1 Infrastructure Concentration on IT Penetration

• Infrastructure bias, started after WWII

• IT development highly sensitive to Infrastructure

• Internet especially true

• Ex: Internet hosts gap between Africa and U.S. in 1997 multiple of 267

• In 2000 it was 540.

1.2 Role of Investment, Innovation and R&D on IT Penetration

• Once established, incentive to invest increases.

• Infrastructure not linked to Investment, Innovation and R&D.

• Infrastructure increases security

• Incentive to operate outside formal sector, less intellectual property right securities.

• Pirating

• EX: U.S. & China

1.3 Role of Human Capital on IT Penetration

• Human Capital development separate from Infrastructure.

• On the Job-learning, and knowledge spillovers

• Research shows need basic education foundations to gain IT relevant skills. Need infrastructure to practice.

• On the job learning limited.

• EX: Latin America vs. South Korea and Taiwan.

• Biased towards those who work in IT-related jobs.

1.4 Costs Affects IT Penetration

• Cost decreasing, and if economic disadvantage, will be willing to pay some amount.• Ex: Villages in Peru, spent 1.5% share of GDP for

telephone services, vs. a country as whole which spent 1.2% (Wellenius, 2000).

• Willing to pay does not indicate access available

• Supply will meet Demand

• IT more complex, due to high fixed costs

• Other priorities (i.e. food)

2. Improving Economic Efficiency

• Efficiency depends on IT employment.

• Increases access to information, streamline processes.

2.1 Access Affects Efficiency

• Access slowly rising for all countries

• Gap similar to VCRs and televisions in U.S.

• Rate of adoption for IT faster than TV or VCRs.

• Gap not closing

• Industries differ in IT adoption use

• Infrastructure dictating industry concentration

• Ex: Service Sector worked to advance IT developments

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2.2 Costs Affects Access

• Prices decreasing should decrease industry bias.

• Price decrease effect on consumer, regardless of industry concentration.

• Industry still must receive significant enough returns to invest.

• Frivolous for consumer to purchase if no infrastructure.

2.3 Geography Affects Access

• Geographical, historical and political influences responsible for industry concentration

• Responsibility doesn’t change persisting concentration.

• Use these factors to increase IT adoption

• Not malleable or stable to work with.

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3. Thus The Digital Divide

• Much easier to adopt when infrastructure encourages adoption

• Biased infrastructure development

• Urban

• Wealthier

• IT increases efficiency, and makes easier further IT adoption

• Furthering Digital Divide.

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