The Diffusion of Information and Communication Technologies

Ewa Lechman

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781315474632
• Edition: 1
• Topic: Business
• Subtopic: Gestione dell'informazione
• Index: Business

In recent decades, the world has witnessed, unprecedented in terms of speed and geographic coverage, diffusion of new information and communication technologies (ICT). The on-going digital revolution pervasively impacts and reshapes societies and economies and therefore deserves special attention and interest.

This book provides extensive evidence on information and communication technologies development patterns and dynamics of this process across developed economies over the period 1980 to the present day. It adopts newly developed methodology to identification of the 'critical mass' and isolation of technological takeoff intervals, which are intimately related to the process of technology diffusion. The statistically robust analysis of country-specific data demonstrates the key economic, social and institutional prerequisites of ICT diffusion across examined countries, indicating what factors significantly foster or – reversely – hinder the process.

1
Introduction

The Context

Technology is opportunity; it empowers people and makes things possible. Technological change is beautiful because it is irreversible; although it does not follow a linear pattern, its trajectory is rather marked by abrupt shifts and sometimes long-run stagnation. Technologies are often revolutionary, and in that sense, they enforce the emergence of some turning points in history, generating deep structural changes. David Landes in his influential work The Unbound Prometheus writes that ‘not everyone likes changes, but those who want the world to be different often yearn for it’ (Landes, 1969, p. X). This provokes thinking that technological progress, to be well understood, needs to be contextualized. To rephrase the latter—technology does not exist in isolation, but it constitutes an essential part of a much larger and complex socio-economic system, which is ‘reciprocally influenced by the rate and course of technological development’ (Landes, 1969, p. 5). Understanding the process of technological development allows accounting for the diversity of economic performance of countries, both in the past and in the present time. Purely technical perception of technology is always a huge limitation; it reflects exclusively narrow-minded thinking and does not bring cutting-edge changes to our perception of the outside reality. Technological development has a long history, but regardless of the circumstances, it has always been acknowledged as the prime fundament of change and wealth creation. This is mainly because, in the heart of technological revolutions, there is always global diffusion of knowledge, which substantially underlines radical and profound transformations of social and economic spheres of life, such as movements of labour force from agriculture to industry or services. The importance of technology must not be underestimated. Looking back, one may observe the enormous power and complexity of this phenomenon, and by its profound and detailed analysis, we get better understanding of its changing nature and the role it plays in development over time.

Throughout history, there existed wide gaps among countries in respect to technological development. For ages, the process of inventing things and assimilation of technological novelties have been painfully slow. Knowledge on technology and on how technological advancements could be put to work was not widespread, and these have generated enormous cross-country disparities. Some regions started forging ahead, while the others lagged behind. To some extent, these cross-national inequalities in technological advancement are persistent over time, and looking at the world map, we see heavily backward regions suffering from permanent technological underdevelopment. Before the onset of the Industrial Revolution in the 18th century, technology was diffusing spasmodically, economies were zero-sum systems and economic growth was easily reversible. Hence the pre-industrial societies were virtually locked in a Malthusian trap and unable to escape it. Now, looking briefly at the history of technological change from a purely economic point of few, the aspect of the rate at which different technologies were diffusing worldwide is of seminal importance. The speed of the spread of technological knowledge is far more important than, for instance, asking the question when the new technology emerged (although the latter from the historical point of few is of primary importance). The speed of diffusion of new technologies is crucial for two major reasons. First, it allows finding how fast new technological solutions are being acquired by individuals across the globe, and second, how fast new technologies are embodied in production process, which, in effect, would lead to shifts in productivity and overall welfare. From the economic perspective, the pace of technological change is critical.

Comin et al. (2006) in their exhaustive study on historical technology diffusion¹ covering 115 different technologies in over 150 economies during the last 200 years present arguments in support of the hypothesis that technology is the critical factor, which differentiates economic performance of countries. Interestingly, they demonstrate that speed of convergence in levels of technology adoption observed before the year 1925 was crucially different from that reported after 1925. Before 1925, the average rate of convergence was at about 2.4% annually, while after 1925, it increases almost threefold to 6.7% per annum. When discriminating between technologies developed between 1900 and 1925, 1925 and 1950, 1950 and 1975, the average speed of convergence was 1.5%, 5.8% and 7.8%, respectively, which inevitably leads to the general conclusion that the tempo of convergence for new technologies is faster than for old ones. Rapidly proceeding technology convergence suggests that new technologies diffuse at incomparably higher rates compared to old ones.

The rate of technological change we have witnessed since the early ‘70s of 20th century onwards is the fastest the world has ever experienced. New information and communication technologies (ICT) are rapidly expanding worldwide. The process of diffusion of ICT is overwhelming; it is dynamic, disruptive and distinctive. ICT are shrinking the world. ICT have changed the concept of economy; it connects the unconnected. Today, the technological progress, in terms of its speed and geographic coverage, seems to be an unprecedented phenomenon throughout world history. Never before have so many people had access to such an enormous number of sophisticated technological solutions, which offer to these people unbounded flows of information and knowledge. The ICT Revolution—the Fifth Technological Revolution—gave birth to the remarkable invention; it provided a solid background for the emergence of new complex and numerous linkages within society. Gains that it has generated are not even possible to encapsulate in a brief account.

Tom Standage in his book The Victorian Internet: The Remarkable Story of the Telegraph and the Nineteenth Century’ s On-Line Pioneers (1998) traces back to the second half of the 19th century and claims that the development of the telegraph was the first technology that enabled worldwide communication, thus freeing people from the burden of geographic distance. Interestingly, Standage argues that the development of Internet networks—to a large extent—mirrors the spread of the telegraph network. He also notes that the diffusion of telegraph network was the Internet of Victorian times and enforced the first significant qualitative shifts that the world experienced in terms of ways of communication, while the spread of the Internet network mainly gave way to the huge impulse to quantitative shifts. To some degree, we may agree with this point of view; however, it is important to note that the ‘carrying capacity’ of the modern Internet network significantly exceeds the power of the telegraph, and thus its impact on social and economic life has farther reaching implications.

Yet you do not need to be enthusiastic to benefit from ICT. Frances Cairn-cross writes,

The advance of the past few decades are now converging. (…) technologies such as Internet, mobile telephone (…) refine and rearrange (…) the coming century, but their broad shape if clear to us.

(Cairncross, 1997, p. vii)

Next, in the same work, she claims,

This is revolution about opportunity and about increasing human contact. It will be easier than ever before for people with initiative and ideas to turn them into business ventures. It will be easier to discover information, to learn new things, to acquire new skills.

(Cairncross, 1997, p. 26)

It enables fast and low-cost transactions at the same time in different, often geographically isolated, places. It is fast and cheap to distribute among society members, and thus people can easily assimilate ICT. ICT have potential to level the inequalities between those who ‘have’ and those who ‘have-not’. The prospective is promising. Christine Zhen-Wei Qiang, the World Bank economist, writes, ‘The mobile platform is emerging as the single most powerful way to extend economic opportunities and key services to millions of people’ (World Bank, 2009). However, above all, ICT create social and economic networks, giving positive impulses for intensification of economic activity. It brings market information, financial, educational and health services to remote, underserved regions suffering from infrastructural shortages. New technologies change the ways of doing business, enforce institutional transformation and allow for unbounded and almost costless flows of knowledge and all types of information. Today, economy has no boundaries in time and space. In that sense, new technologies allow challenging information asymmetries—one of the most sever market imperfections and failures disabling its perfect functioning. It is needless to emphasize that it takes time to embody technological change in economic welfare. Even path-breaking inventions do not enforce rapid and abrupt shifts in productivity and an aggregate level of economic outputs. Technology needs time to diffuse across societies and countries, and after to be adopted and effectively used. Undoubtedly, technology matters. Technology matters because it generates extensive structural transformations, enhances productivity shifts and hence changes global economic and social landscapes. For ages, societies made huge efforts to escape their economic and technological backwardness. But connecting people and countries through the ICT network is just the beginning of the long journey towards social and economic wealth. The Industrial Revolution caused global (great) divergence—as noted in Maddison (2007) and then repeated in Comin and Ferrer (2013)—at the beginning of 19th century, when the average per capita income in ‘Western countries’ was at about 1.9 times higher compared to ‘non-Western economies’. Then for the next 200 years, the ‘Western countries’ were economically growing much faster, so that in at the beginning of 21st century, their average per capita income was 7.2 times higher than in the rest of the World. Angus Deaton, in his book The Great Escape. Wealth, Health and the Origins of Inequality (2013), writes,

The Industrial Revolution (…) initiated the economic growth that has been responsible for hundreds of millions of people escaping from material deprivation. The other side of the same Industrial Revolution is what historians call the ‘Great Divergence’ (…) creating the enormous gulf between the West and the rest that has not closed to this day. Today’s global inequality was, to a large extent, create by the success of modern economic growth.

(Deaton, 2013, p. 4)

This huge gap in economic wealth was undeniably generated by the uneven spread of achievements during the Industrial Revolution.

However, as claimed by many, the ICT Revolution induced the emergence of Global Convergence and the weakening of core and the strengthening of peripheries; the ICT Revolution allowed for the rise of the rest—the technological rise of economically backward economies.

Getting Value of This Book

What follows is an attempt to contribute to our understanding of the process of the diffusion of new ICT and the paths that it follows as its determinants. In this context, I find several aspects that make me think that this book is important. First, because it empirically confirms what we intuitively know: new ICT are diffusing worldwide at a historically unprecedented pace. It contributes significantly to our understanding of how new technologies are expanding worldwide; it unveils the unique characteristics of this process in extremely heterogeneous countries, and it shows how fast ICT have transformed the world we live in and created totally new forms of networks—networks which do not exclusively matter for inter-personal communication, but also—and maybe above all—for the economy, institutions and many others. This study indents to show that the Fifth ICT Revolution has totally reshaped our thinking about the technological differences existing among world countries. Past technological revolutions, although they neither have brought enormous changes to social and economic spheres of life nor offered technological solutions which could be quickly distributed across all societies, regardless of their physical location, and they did not offer technologies which would be easily accessed and used by all regardless of their skills or material status. Additionally, it allows comparing countries and indicates how well countries are doing compared with others in terms of assimilation and development of ICT. It allows recognizing which countries are forging ahead and which are stagnating or falling behind. Moreover, this book offers the reader a newly developed methodological approach to identify the value of the critical mass that gives rise to the emergence of technological take-off that boosts ICT deployment. This research discusses whether ICT diffusion paths are incremental or abrupt, whether technological change occurs randomly or maybe it is driven by, for instance, technology-oriented state policies.

The central focus of attention of our research is both theoretical conceptualization and empirical investigations. More specifically, we define our research goals as follows:

• explaining the new conceptualization of the critical mass and technological take-off;
• identifying major long-term trends in ICT development;
• development of country-specific ICT diffusion trajectories in respect to four selected core ICT indicators;
• detecting the process of switching from old technologies to new technological solutions offered by the ICT Revolution;
• identifying the critical mass and the emergence of the technological take-off along country-specific ICT diffusion trajectories; and
• examining the seminal factors determining the process of ICT diffusion.

The major empirical goals of this book are very ambitious, not only because it deals with very complex problems of interrelatedness between technology, economy and society but also because we focus on country-specific analysis. Such an approach is time-consuming labour, but it allows the reader to benefit from it and recognize it as the source of new knowledge on the process of spreading new technologies, its dynamics and prerequisites. Additionally, we affirm that the group of high-income and upper-middle-income economies is extremely heterogeneous; those countries vary significantly, not only in terms of their economic performance but also in respect to the market size, legal frameworks or, for instance, the state of development of backbone infrastructure. Our attempt was also to show that if we took the trouble to look more deeply into the problem, we could gain a totally different perspective and ideas of the entire landscape. Henceforth, we are deeply convinced that treating each country as an individual case significantly contributed to our understanding of this complex phenomenon, and this will allow the reader to find the information as satisfactory, and, above all, it is an astonishingly simply way of explaining complicated issues.

Chapter-by-Chapter Outline

The first chapter is the introduction itself. In this part, we provide motivation for this research. We additionally contextualize the problem, define major aims and scopes of our study and explain the consecutive chapters’ contents.

Chapter 2 sets out fundamental ideas standing behind technology, innovation and technological progress. In this chapter, intentionally, we locate our consideration on technological development in a broad, historical perspective. We contextualize technological progress, and to this aim, we explain why technology constitutes a fundamental element of complex socio-economic system. In Chapter 2, we also explain the prominent role that technological change plays in long-run economic development and show that the interrelatedness of technology, society and economy is a complex matter involving numerous qualitative and quantitative factors. It briefly pictures how technological progress and uneven diffusion rates have contributed to structural shifts in the world economy, thus determining the changing economic power of nations. It explains why technological breakthroughs have enforced radical transformations of world economic systems and reshaped its economic contours. Next in this chapter, we define the idea of techno-economic paradigm as the concept that captures multidimensionality and interrelatedness of technology, society and economy. In the final part of Chapter 2, we take a brief look at the past five technological surges—technological revolutions the world has experienced for ages. We explain how and why these five technological revolutions have been deeply transforming societies and economies, becoming turning points in human’s history. Chapter 2 ends by introducing the Fifth Technological Revolution—the ICT Revolution—and places it in the wider context of the study of past technological surges.

Chapter 3 is entirely devoted to discussing the theoretical framework of technology diffusion, and it presents the process of technology spread as spatial and temporal phenomenon. It begins by defining the process of technology diffusion itself and traces its intellectual foundations. Next, it identifies factors, which potentially precondition the speed of technology diffusion, and it discriminates between driving forces and impediment...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of Figures
• List of Tables
• Foreword
• Acknowledgements
• 1 Introduction
• 2 Technology and Economic Development: Historical Perspective
• 3 Technology Diffusion: Conceptual Aspects
• 4 Identifying ICT Diffusion Patterns: Linking Models to Data for Technology
• 5 Technological Take-Offs: Country Perspective
• 6 What Have We Learned From This Book?
• Appendices
• Index