Information and communication technologies (ICTs)

A modern information infrastructure that facilitates effective communication, dissemination and processing of information is an essential tool to develop a knowledge economy strategy. Information and communication technology (ICT) infrastructure in an economy refers to the accessibility, reliability and efficiency of computers, phones and telecommunication networks that link knowledge creation, dissemination and usage together. The World Bank defines ICT as consisting of the hardware, software, networks and media for the collection, storage, processing, transmission and presentation of information in the form of voice, data, text and images (World Bank, 2004).

As mentioned earlier, new knowledge can only be generated by cognitive, mental processes. For knowledge to be available to the public and to be transformed into useful information and have wider impact, it must be encoded, transmitted to others and they must be capable of decoding this information flow and incorporating it with their own knowledge (Loasby, 1999). This is the role that modern ICT plays nowadays. Understanding grows through widening the process that involves all stakeholders and physical technologies which is reflected in the growing number of individuals and institutions who benefit from this process to create new or innovative knowledge (Hundey, 2003). This distribution of personal knowledge and socially contingent understandings feed off one another to generate a system necessary for their mutual development. Based on that, some authors (e.g., Lundvall and Foray, 1999) have suggested the concept of the knowledge worker as a ‘symbolic analyst’, a worker who manipulates symbols rather than machines. The concept of symbolic analysts includes professions such as scientists, engineers, architects, financial managers, bankers, fashion designers, pharmaceutical researchers, teachers, policy analysts, etc.

It is in this sense that ICTs have made major changes to our ability to handle and translate information into useful knowledge. It is important to emphasise here that data moved or analysed by ICT methods do not by themselves constitute knowledge, and that ICT do not necessarily create knowledge or even extend knowledge (Thurow, 1999). Consensus has been built around the fact that ICTs are primarily an essential information management and distribution resource that play a vital role in knowledge production and distribution as re-organisation of the technical and financial terms on which a resource such as information is available (Lee et al., 2002; APEC, 2003). Over the past decade, evidence has been mounting to back up the claims of proponents of ICT, who had been asserting that ICTs are responsible for significant increase in productivity and output growth. For example, the OECD economies having accepted the crucial contribution of ICTs to higher economic growth, had invested on average 7 per cent of their GDP in ICTs as of 1997 (OECD, 2001; Rodrigues, 2002). The experience of OECD countries shows that investment in technological advancement in ICT producing sectors has resulted in large gains in total factor productivity at all levels of OECD economies. Furthermore, investments

in ICT have also resulted in capital deepening and in consequential increases in labour productivity in the non-ICT producing sectors. Substantial productivity gains are reported by the OECD (1999) and the World Bank (2002) suggesting that ICT usage has resulted in overcoming geographical distance and boundaries for sharing information, reducing uncertainty, reducing transactions costs and increasing competitiveness across borders, all of which have given a competitive edge to industries in these economies.

Moreover, the European Commission Information Society reveals that ICTs are powerful drivers for growth and employment, with 25 percent of EU GDP growth and 40 percent of productivity growth related to ICT. More recent industry level studies in the United States and Canada also show that ICTs play an important role in raising labour productivity and in generating R&D spillovers across industries (Branscomb, 1992). Indeed, ICT services and skills are a growing part of the rapidly emerging knowledge based economy that has contributed to lowering unemployment rates. It is estimated that over 60 per cent of production in these countries is created by knowledge workers who utilize ICT as their main input (Rodrigues, 2002; Lim, 2002). This trend has been also supported by another study in the United States which shows that the ICT sector has a more powerful multiplier effect in the overall economy compared with manufacturing. A 1995 study of the effect of software producer Microsoft on the local economy revealed that each job at Microsoft created additional 6.7 new jobs in Washington State, whereas a job at Boeing created only 3.8 additional jobs (Mandel, 1997).Furthermore, the OECD (2001) estimates that 8 out of every 10 new jobs created in OECD countries were for knowledge workers. Thus, wealth generation is becoming more closely tied to a country’s capacity to add value by using ICT products and services.

The omnipresence of ICTs leads us to argue that ICT is an essential enabler of change in economic development which cannot be underestimated, as it contributes greatly to the essential transformations in any modern society. ICTs are best regarded as the facilitators of knowledge creation in innovative societies. Indeed, the literature on the knowledge economy views ICT not as the driver of change, but an essential tool for releasing the creative potential and the knowledge embodied in people. Studies at the OECD (2002) and the World Bank (2004) seem to suggest that the importation and

acquisition of ICTs should not be regarded as a goal in itself. Rather it should be a means to achieving higher productivity and economic growth. Studies at the firm level also reveal that introduction of ICT does not bear fruitful results unless structural reform in respect of human resources development, organisation management restructuring and legislative reforms also accompanies the introduction of ICT (Milgrom and Roberts, 1990; Black and Lynch, 2000; Black and Lynch, 2001)

In recent years, most developing countries have come to realize the economic importance of the ICT sector. Many developing countries such as Singapore, South Korea, Malaysia and the Arab Gulf States have increased their ICT investments significantly in 2005, which is about the same rate as that of the OECD. Nonetheless, while high growth Asian States have consolidated their ICT infrastructure across their economic activities, the Arab Gulf States including Oman are yet to reach that stage. The World Bank (2004) and Al-Shihi (2006), attribute poor ICT performance in the MENA countries mainly to ineffective public sector governance, lack of competition among communication companies which are mostly run by the governments, cultural and religious barriers which treat ICT products as a Western phenomenon, and the lack of strategic vision for utilizing ICT more effectively. These shortcomings in turn have resulted in poor management, poor services and high costs, creating more impediments to further development of ICT services. These weaknesses of the ICT sector are clearly visible in Oman where the penetration of ICT products and services is still very low. For example, for every 1000 inhabitants in Oman, there are only 76 internet users, 56 units of computers, 265 fixed telephone connections and 253 mobile connections. The usage of the first two of these services in Oman is far below the corresponding international levels of 201 internet users and 194 computers for every 1000 persons. Oman’s usage of telephony is higher than international standards of 227 fixed telephone connections and 215 mobile telephones per 1000 persons.

Despite these weaknesses in its ICT services, it is hoped that Oman’s keen desire for formulating the digital Oman strategy in 2002 (which aims at the extensive adoption and integration of ICT at home, work, education and recreation) could be regarded as the point of positive turn around in this regard. Thus, it is expected that the above rates of ICT penetration in Oman would double by 2010 due to the liberalization of

mobile phone and internet services in the country which started in 2004 (Gartner, 2002).

The upshot of the literature reviewed in this section is that the economic importance of the ICT products and services in today’s economic development should not be underestimated. Indeed, it is becoming increasingly evident that no country in today’s world can afford to be left out of the information technology revolution. To do so would mean returning to the old world of underdevelopment. This revolution will affect humanity in a way no other revolution has done before. It is in this context the literature urges the developing countries to make a choice between ignoring ICTs and facing an uncertain future, or marching with the rest of the world into the information age by embracing effective ICT policies that recognise the real needs of their economies and societies.