IT in local economy effect

1. IT DEPARTMENT
ASSIGNMENT OF IT AND ECONOMIC DEVELOPMENT
Submitted to: submitted by:
Aron Kumar 1. ayayu Geletaw TER/238/02
2. Gebremariam Negash TER/281/02
3. Muhammed Ali TER/373/02
4. Hadush Mesfin TER/301/02
5. Suleiman Mohammed TER/400/02
Date:28/11/2012 G.C
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2.  There is a bidirectional relationship between real
gross domestic product (GDP) and
telecommunications development (as measured by
teledensity) for high-income countries.
 However, when the impact of mobile
telecommunications development on economic
growth is measured separately, the bi-directional
relationship is no longer restricted to high-income
countries.
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3.  The countries in the upper-middle income group
have achieved a higher average total factor
productivity (TFP) growth than other countries.
 Countries with competition and privatization in
telecommunications have achieved a higher TFP
growth than those without competition and
privatization.
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4.  The diffusion of mobile telecommunications services
is found to be a significant factor that has improved
the TFP growth of the telecommunications sector in
developed countries.
 Telecommunications is an enabler for economic
development
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5.  The primary economic benefit of improved telecommunications is
improved efficiencies in other productive sectors.
reduced transport costs
reduced transaction costs
improved marketing information
increased efficiency of industrial production.
 A positive relationship exists between economic development and
infrastructure investment, including telecommunications in
particular.
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6.  Investment in telecommunications infrastructure can not only increase
general business efficiency but increase the impact of other
infrastructure investments.
 Investments in new types of telecommunications infrastructure can
result in greater benefits than marginal improvements to existing
infrastructure.
 Maintenance of the telecommunications infrastructure is necessary to
obtain the full economic development benefits.
 Even with a strong positive correlation between telecommunications
investment, it alone is not sufficient to ensure economic growth.
 However, lack of telecommunication investment can prohibit or
significantly constrain economic development .
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7. CONT…
 The Importance of Telecommunication In Economic
Growth Humans need communication, and from early
history, various means have been used to provide
communication at a distance, with radio, telephone,
television and computer links (Networks).
 Now an integrated part of the society, it now looks like
our need for information is almost as great as our need
for energy.
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8.  Information has been found to be one of the most important
elements for the efficient growth of an economy.
 The electronic transfer mode, which includes broadcasting
and telecommunication, plays a very important role in
information management.
 With telecommunication, some of the physical constraints
of an organization can be removed in all sectors of the
economy. This will allow increased productivity through
better management and administration.
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9.  In a system, the function of telecommunications may
be likened to that of the nervous system in a living
organism.
 We all know that without rapid and reliable exchange
of information between all parts, effective control and
co-ordination of such systems would not be possible.
Therefore, optimum use could not be made of the
resources available for the development of the system.
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10.  Telecommunication has greater role in different sectors:
Health
Agriculture
Education
Transportation
Administration
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11. Health
 Primary health care delivery is known all over the world
as a program that is community oriented but operated by
large number of semi skilled workers and supervised by
highly skilled personnel who, to be effective require
telecommunication facilities for monitoring the
performance on field.
 The term "Telecommunication medicine" which is the
use of electronic equipment to link physically separated
health facilities is now commonplace in developing
countries.
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12. Agriculture
 This is one of the most important sectors in the economy.
 Using mother tongue with the aid of telecommunication
(Radio, Television).
 Farmers in rural areas can be informed future events of
natural disasters like thunderstorms, possible earthquakes,
flood and destructive pests through the aid of simple
meteorological information.
 They can also be informed on how to avert the dangerous
consequences of such natural disasters in the shortest time
possible.
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13. Education
 There is hardly any other area in human endeavor in which
telecommunication can have an impact on its citizenry, than in
education.
 In addition to the program of formal education of the citizens
by television, radio, and computer networking (Distant
learning), they have now been made more effective both in
scope and in quality by use of telecommunication satellite.
 This is very relevant now that the country has started the
distant learning program.

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14. Transportation
 Telecommunication has always played a vital role in the
transport sector all over the world.
 It is being used in:
 Hotels/ Airline reservation tickets
and management of courier services.
 It is also used to land and Fly airplanes, it is also
effectively used in the management of fleet of vehicles
in freight and passenger transport.
 With telecommunication, it has become possible to
programmed the movement of human traffic including
that of business executives through mobile phones.
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15. Administration
 It is a known fact that all machinery of government depended
to a large extent, on information dissemination provided by
telecommunication infrastructure and system for greater
performance.
 For example, in these days of electronic welfare, the police
require telecommunication to be able to maintain, command
and control on land, air, and sea. We all know the great role
telecommunication played during the gulf war, which brought
general awareness of cable network used in the country.
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16.  Telecommunications must compete for budget
allocations from the state along with all other
bureaucracies.
1. the externalities associated with an expanded
telecommunications infrastructure are not
recognized;
2. the government may view the telephone as a "toy for
the rich,“ and believe that it has better things to do
with its money;

17. 3. the government, with more sinister purposes, believes
that better communications will undermine its own
position;
4. the government has many other social/political motives,
objectives or goals with little or no economic foundation.

18. • Helping businesses be more competitive
• Creating opportunities for new jobs
• Attracting telecommunications intensive businesses
• Enhancing excellence in education, government, and
health care
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19. Telecommunication From the Government
Perspective
 Provides enhanced & affordable digital telecom infrastructure for
crime prevention functions, emergency management, homeland
security operations & public information programs.
Provides enhanced & affordable digital telecom infrastructure
needed to deliver more services with less resources.
– Eliminates duplication of effort & increases responsiveness to
community needs.
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20.  Competition promotes economic efficiency,
assuring that costs are minimized and resources
are directed to their highest value uses.
 Firms are compelled to innovate to lower costs
and to improve quality and product choice in a
continuing quest to attract consumers and
improve efficiency.
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21.  the absence of competition, means that prices
exceed economic costs. These higher prices result in
a deadweight loss.
 Capacity and investment are limited because prices
are too high. Moreover, the absence of competition
reduces pressure on the firm to improve quality or
eliminate cost inefficiencies.
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22.  Competition will deliver benefits to consumers through
lower prices, increased consumer choice and service
quality, and improved incentives to invest and innovate.
 Prices will be lower because competition will eliminate
monopoly profits and because the "survival of the
fittest" law of competitive markets will force firms to
minimize costs.
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23.  The estimates the loss in GDP,
 consumer welfare, and
 economic efficiency because of the lack of effective
competition in telecommunications, a key
infrastructure industry.
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26. Conclusion:
 Information has shown that telecommunication is a vital
tool for economic growth in the society.
 the economic impact on mobile telecommunications across
the world and in particular the relevance for developing
countries.
 The contribution of mobile telecommunications
infrastructure to economic growth is significantly smaller
for low mobile penetration countries (or in fact low income
countries) than for high penetration countries.
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27.  A positive relationship exists between economic development and
infrastructure investment, including telecommunications in particular.
 Even with a strong positive correlation between telecommunications
investment, it alone is not sufficient to ensure economic growth. However,
lack of telecommunication investment can prohibit or significantly
constrain economic development .
 Investment in telecommunications infrastructure can not only increase
general business efficiency but increase the impact of other infrastructure
investments.
 Investments in new types of telecommunications infrastructure can result
in greater benefits than marginal improvements to existing infrastructure.
 Maintenance of the telecommunications infrastructure is necessary to
obtain the full economic development benefits. 27

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