the third section,some key trends in the evolution of ICTdiffusion and usage are presented,based on the analysis of three key ICT indicators:the numbers of telephone main-lines,personal computers,and Internet users.An analysisof global and regional levels is then followed by an exami-nation of the trends in the seven most populous nations of the world.The authors then show how the NRI and itsconstituent indicators can be used to benchmark a country’sICT development with neighboring or comparablecountries,and discuss some of the main challenges inconducting the study.
The Infrastructure Challenge
Authors Scott Beardsley,Luis Enriquez,Mehmet Guvendi,Miguel Lucas,and Andreas Marschner,of McKinsey &Company Inc.,discuss the complex trade-off faced bytoday’s telecommunications industry.While,on the onehand,competition must be encouraged,the industry must,on the other,ensure that operators have sufficient economicincentives to build the next generation of access infra-structure.Major technology-driven trends,in particular the rise of mobile and Internet protocol,are alreadytransforming the revenue model and economics of infrastructure operators.The effects are being felt in fixednetworks,and could eventually spread to mobile.Althoughchange is taking place at different rates in differentcountries,it may not be long before it begins to hitexpected industry returns and hence investment.If industry stakeholders decide that the building of new infrastructure deserves their collective support,current approaches to policy will have to be rethought.Policymakers and regulators must understand thecumulative effect of the various levers they deploy,andshould start to experiment with new approaches.It maybe necessary for agencies involved in the regulation andoversight of the market to redefine their missions.Infrastructure providers must recognize the impact of these trends,adjust their business and revenue modelsaccordingly,and actively shape both the regulatory debateand the evolution of the market.
Innovation and Interactions: Wellspring of CompetitiveAdvantage
Guaranteed Low Prices! Everyday Low Prices! We SellFor Less! Has global business simply become a race to thebottom? Perhaps not,answers Douglas Frosst,of CiscoSystems,Inc.A recent survey of US business leaders indi-cates that their focus for increased competitiveness is onincreasing the pace of innovation.Only 14 percent listedlower wages.This chapter discusses a research project to identifyopportunities and barriers to corporate innovation,carriedout by Innovation and Competitiveness:United States,designed by Cisco Systems,Inc.and the MomentumResearch Group.The research team surveyed more than600 business and information technology executives fromthe United States.Participating executives from organiza-tions of different sizes,industries,and regions respondedwith their attitudes,aspirations,and concerns aboutinnovation.The study sought to identify the level of interest byindustry in specific technology innovations,the impact oninnovation of interactions between various stakeholders,and the opportunities and benefits of innovation in educa-tion and healthcare.Executives were asked to identifyindustry sectors,including their own,which they believedwould substantially benefit from additional technologyinnovation.A short series of questions exploring attitudestoward innovation in healthcare and education were includ-ed in the study design and are discussed in this report.The author argues that as markets and industriesevolve companies look for new sources of productivity,competitive advantage,and growth.In the current globalenvironment,innovation and creativity are seen as a criti-cal aspect of business success.
Information Technology and Productivity, or “It Ain’t What You Do, It’s the Way that You Do I.T.”
At the macro level,productivity growth in the UnitedStates accelerated after 1995,and much of this is account-ed for by sectors which used or produced IT intensively.Authors John Van Reenen and Raffaella Sadun,of theLondon School of Economics,see a contrast between theUnited States and Europe,where,despite the accelerationin productivity in sectors which produce IT (e.g.,semi-conductors,computers),there was no comparable acceler-ation in the sectors that used IT intensively (such as retail,wholesale,and finance).At the micro level,recent statisticalresearch on large samples of firms has shown that informa-tion technology significantly increases productivity,butthat there is wide variation in the size of this effect.Theorganizational structure of some American firms—greater decentralization or better management practices—enablesthem to obtain much higher returns from their IT invest-ments than other firms in the same sectors with similar levels of employment and capital investment.The authorsshow that the higher productivity of US multinationalslocated in Europe—as compared to other multinationals— appears to be linked to their better use of IT.They arguethat this is likely to be due to the superior internal organi-zation of the US firms,such as stronger worker incentives,smarter targets,leaner manufacturing,etc.This effect isparticularly strong in the ICT-using sectors,where theUnited States experienced a productivity burst,whereasEurope did not.This difference in the use of IT may
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