ROLES OF ICTs AND IMPACTS ON ENHANCING SOCIOECONOMIC PERFORMANCE IN THE ARAB REGION

Information and Communication Technology (ICTs) refers to series of technologies that allow communication along with the electronic acquisi­tion, processing and broadcasting of information.

This collaboration has to do with the way ICTs can be helpful in education, health, social and economic performances and how they are used to coordinate interdependencies within and between these sectors. This paper explains how ICTs and related technologies have been means to improve the lives of people and compares be­tween the era of limited ICTs access and the era of reduced digital divide and improved access to ICTs, including the enhancement of old functions and the creation of new ones such as e-commerce, e-health, e-education, e-tourism, e-finance and e-trade. Developed economies are assumed to benefit more from these ICTs than developing ones. It also seems that the MENA region has the potential of performing better.

Previous Contributions

Information and Communication Technology (ICT), through radio, television and print media, have been important in many developing countries.

However, disparities between countries still exist and poor and rural populations often do not have access to new ICTs. According to Postnote (2006), OECD countries have the highest ac­cess to new ICTs, followed by South Asian and some African countries, including South Africa. Manochehri, Rajab and Rafi (2012) stated that ICTs have an important impact on businesses in developed and developing countries in terms of productivity and economic growth. Burke (2010) reported the existence of important benefits from having Websites, including the introduction of new customers and additional sales for firms. Other studies found that Arab countries still fall behind developed ones both in ICT spending (Nour, 2008) and in the lack of means needed to succeed in projects made to promote growth through IT transformation (El-Shenawy, 2010). In addition, Richardsson and Kraemmergaard (2006) identified five main areas of ICT applications to support enterprises and rural development, which include the economic development of products, community development, research and education, small and medium enterprises development and media networks. The effect of ICTs also differs inside regions. The diffusion of ICT in OECD countries currently differs considerably since some of them have invested more or have began invest­ing in ICTs earlier than other countries (OECD, 2003). This investment refers to establishing the infrastructure or networks for the use of ICT and providing productive equipment and software to businesses (Richardsson and Kraemmergaard, 2006).

Piatkowski (2003) has already established the link between ICTs and company competitiveness. The author found that ICT platforms, including personal computers, mobiles and Internet, provide more visibility to businesses, offer more infor­mation to small enterprises, allow enterprises to overcome trade barriers and facilitate financial transactions. The private sector was encouraged to invest in an ICT infrastructure and use ICTs as a means of competitive advantage to conduct business. This can take the form of commercially driven connectivity, software, technology, e­commerce and online transactions (Clift, 2003).

Manochehri et al. (2012) established a positive link between ICT investments and labor productiv­ity. They stated that the most important benefits of ICTs come from their effective use, especially in enterprises that are structured to use these technologies. The ICT revolution in the US has stimulated enterprise restructuring and has modi­fied the terms of competition: US enterprises have become more efficient in getting value from their ICT activities, given that spending in the US has jumped to 5.4% in 2010 according to Pettey and Tudor (2011).

It has been reported that investment in basic telecommunications in Africa resulted in a positive impact on economic, political and institutional development. Shirazi (2008) has also established a link between ICTs (the Internet) and a rapid de­mocratization in regions such as the Middle East. A recent example of such view has been witnessed recently through events such as the “Arab Spring” in Egypt, Libya, Syria, Tunisia, Yemen and other Middle Eastern countries.

Adewoye and Akanbi (2012) pointed out to problems that delay the development of the SMEs sector in Nigeria, including obsolete technologies and machineries, lack of access to modern tech­nology, lack or limited access to information on raw materials, management support and technical advisory services, financial problems and poor economic condition.

Rallet and Torre (2000) found that there are factors affecting the diffusion of ICT. These factors include coordination mechanisms in innovative and research activities and the geographical prox­imity of economic agents to develop innovation activities. It has been reported that geographical proximity is beneficial if the nature of the activities is characterized by tacit knowledge. Thus, the less tacit knowledge is (later stages of the development process), the less the need for physical proximity. In addition, it is argued that ICTs can increase the possibilities of remote coordination since they are a means of turning tacit knowledge into codified knowledge.

Ssewanyana and Busler (2007) reported that the adoption and use of ICTs have an impact on business processes, even though disparities between developed and developing countries do exist. Internet usage in the developed world was 8 times that of developing countries in 2004 (ITU, 2011 and ITU, 2012). ICTs have transformed the way businesses are conducted by introducing the concept of “Networked economy” that links businesses with suppliers, internal manufactur­ing processes, shippers and customers in real­time. From a Ugandan case study, the adoption and usage of ICTs by enterprises in developing countries are said to follow the same pattern as the developed ones and only differ in the level of usage and adoption.

Methodology, Data, and Results

To assess the impacts of ICTs on economic and social performance data, some indicators were gathered especially from the World DataBank database (World B ank, 2012) and the International Telecommunications Union (ITU) database to try to link ICT variables with health, education and economic indicators.

Among the ICT indicators used, there is the number of Internet users who are people with ac­cess to the worldwide network and the investment in telecoms with private participation (current US$) which is the value of telecom projects that have reached financial closure and directly or indirectly serve the public, including operation and management contracts with major capital expenditure, green-field projects and divestitures. There are also the ICT goods imports and exports, which include telecommunications, audio and video, computer and related equipment; electronic components; and other ICT goods where software is excluded. In addition, ICT service exports include computer and communications services (telecommunications and postal and courier ser­vices) and information services (computer data and news-related service transactions).

The health, education and economic data was respectively represented by the total health expenditure, the total life expectancy at birth, the adult total literacy rate (as % of people ages 15 and above), GDP (current $US) and GDP per Capita (current $US). The total health expenditure is the sum of public and private health expenditure. It covers the provision of health services (preventive and curative), family planning activities, nutri­tion activities, and emergency aid designated for health but does not include provision of water and sanitation. Life expectancy at birth is the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life. The adult literacy rate is the percentage of people ages 15 and above who can, with understanding, read and write a short, simple statement on their everyday life.

The results of the regression analyses con­ducted are introduced in Tables 6 and 7. Details about the variables are in Tables 8 through 11. Tables 12 through 15, show the outcomes of the regressions that are summarized.

Discussion

It has been indicated in the literature that the share of ICT in investment is a core indicator of ICT diffusion. From the previous results, it is observed that an increase in the economic performance, measured by GDP per Capita in the MENA region can lead to an increase in investment in telecoms at a decreasing rate. Indeed, previous studies have shown that higher levels of ICT investments do not necessarily lead to better business performance than lower levels.

The results also show a positive relationship between economic performance (GDP) and the number of Internet users. An increase in GDP can lead to an increase in the number of Inter­net users but at a decreasing rate. However, an increase in health expenditures per capita by one point of percentage can trigger a decrease in the natural logarithm of the number of Internet users by 0.57 points.

Other indicators tested during the empirical analysis did not show any impact on the invest­ment in ICT, number of Internet users, ICT goods

Table 6. Internet users

Table 7. Investment in telecoms

Note: t-statistics are given under each estimated coefficient.

Table 8.

for import, ICT goods for export or ICT service exports. These include the total adult literacy of ages 15 and above and life expectancy at birth. In addition, health expenditures per capita, GDP, GDP per capita and total life expectancy at birth did not seem to affect the ICT goods imports, ICT goods exports and ICT service exports.