IT and Economic Development

1. Debre Berhan University
Department of Information Technology
IT and Economic Development
Summer Tutorial

2. Unit I
INTRODUCTION TO IT
Basic Concepts
o Data, Information, Knowledge, Wisdom
o Spectrum of knowledge
o Information Communication Technology (ICT)
o Information Marketplace
o Information Overload
o Causes of Information Overload
o Effects of information overload
o Solutions to Information Overload

3. Data, Information, Knowledge, Wisdom
• Data:
– A collection of facts and figures
– It may be text, numbers, images or combination used to represent
events.
– Data are raw facts that people gather based on their observation and
experiences.
– simple records of facts or observations
• Information:
– The cognitive state of awareness given representation in physical
form.
– more factual and reliable as they are backed by research and
gathered from experts
– A processed data that gives value for specified user
– Useful for decision making
• Data is simply a collection of raw facts which doesn’t
have any meaning but information is a processed data
which has some meaning and can be used for further
decision making.

4. Distinctions between Data and Information
Data Information
It is a stored fact. It is a presented facts
It is inactive It is active
It is technology based It is business based
It is gathered from various sources It is generated from data
It is unprocessed It is processed
It is in crude form It is in refined form
Not useful for decision making Useful for decision making

5. • Knowledge:
– The cognitive state beyond awareness
– An active involvement and understanding to meet life’s contingencies
– The organized record of human experience given physical representation
(books, reports)
– The process of creating knowledge is time taking
– The technology has greatly reduced the cost involved in
• Assembling and storing data
• Transferring and storing information.
Creating knowledge still takes human brain, human thoughts and time
knowledge experts are expected to provide honest, valid and reliable
knowledge
Knowledge is a collection of information that has an active involvement i
solving problems which requires human brain, thoughts and time.

6. Types of knowledge
• Formal knowledge:
– which is in the form of written information
– It is consciously known and communicable as a set
of procedures.
• Informal/Tacit knowledge
– is usually acquired through experience
– is often unconscious, and is difficult to put in to
words.

7. • Wisdom:
– Implies the application of knowledge’s as contained in
human judgment centered on certain criteria or values that
are generally accepted by the culture or society.
– The ability to synthesize various streams of knowledge to
make informed judgments
An individual with Wisdom normally has enough
experience and perspective to identify patterns and trends
so that various bodies of knowledge can be put in context,
combined and applied appropriately.
Q: Do you think that the one who has knowledge may
necessarily have the capacity to process wisdom?
A: not necessarily ,since there are people that lack knowledge
but through long experience built wisdom and decide wise
judgment

8. Information Hierarchy ,Spectrum of knowledge
• hj

9. Information Technology
– “The study, design, development, implementation, support
or management of CBIS, particularly software applications
and computer hardware” (ITAA)
– IT is the broad subject that deals with all aspects of
creating, processing, and exchanging electronic information
especially within a large organization.
– it is often used to describe all electronic system within an
organization; from the physical hardware to the operating
system, applications, databases, storage, servers and
telecommunication technologies including internet and
business phones.
– The use of electronic computers and computer software to
convert, store, protect, process, transmit and retrieve
information securely

10. Information Communication Technology
(ICT)
• Includes any communication device encompassing
– (radio, television, cellular phones, computer and network
hardware and software, satellite systems)
– The various services and applications associated with them

11. Cost and value of Information
• The cost of information depends upon the following:
– Data Capturing Cost
– Data Storing Cost
– Data Processing Cost
• The value of any information depends upon the following
characteristics:-
– Accuracy, Timeliness, Relevance, Completeness,
Subjectivity,
– Format of Information, Consistency, Reliability,
Availability,
– Reduce Uncertainty, Frequency, Origin

12. Information Marketplace
• It refers to the commercial sphere of the buying and selling of
information itself for having access to information.
• The most common marketplaces that produce the majority of
information used by the public at large includes:
– Books, Broadcasts, Libraries, and
– Electronic communications(E-mail, List-Server, WWW,
and Electronic Publishing (Bulletin Board).

13. Information Overload
• Represents a state of affairs where individuals efficiency in
using information in their work is hampered by the amount of
relevant and potentially useful information available to them.
• Our proficiency to generate information has exceeded our
ability to read, review and understand it.
• Different meanings are given to the term information overload
– loss of control over information
– an information pollution
– a cause for information anxiety

14. Causes of Information Overload
• Too Much Information :
– Overabundance of data ,publications and an automated access to
them.
– Difficult to find useful and relevant information.
• Information & Communication Technologies:
– Provides rapid and convenient access to information.
– Caused by technologies related to information sharing by
 E-mail :- use the major information transfer tools like internet, intranet,
extranet to provide large amount of information
 Group ware:-it is a Soft Ware that supports collaborative work like
document sharing, collective authoring exchange of large amount of
information, discussion forums, electronic meetings
 Push technology:- It provides for automatic transmission of
potentially useful information to users without request.

15. • Changing Nature of work:
– Includes Interdisciplinary work, collaborative work, trends
in working environment, that includes: increased
globalization and increased competition
• Disintermediation:
– A greater proportion of information searching is done by
end-users rather than information professional
intermediaries
– As a result, users feel more overloaded since they are
unable to identify core of valuable material.

16. Effects of information overload
• Cost:
– substantial amount of money, time, and resource
will be wasted due to unmanageable way for
information.
• Delayed decision:
– Too much information adversely affected to
delayed in decision making

17. • Health Problem: -
– e.g. mental stress
• Loss of job satisfaction:
– due to the stress
• Information anxiety:-
– Resulted from gap between what we understand and what
we think ,we should understand discrepancy between what
is available and what is needed.
• Dependence on others: -
– peoples cannot feel confidence to take an action

18. Solutions to Information Overload
Two major categories with respect to the solutions
• I) Managerial:
– Includes the process of planning, organizing,
controlling and evaluating the method of access
and use of information in an effective way to
perform the task.
– Can be practice
• At the individual level
• At Organizational Level

19. At the individual level
• Time management:
– Prioritization of information seeking related to work goals and
objectives
• Information Literacy
– Developing information handling skills that include the ability to
access, evaluate, organize and use of information from a variety of
sources.
• Knowledge Organization:
– Providing relevant information
• Information Design:
– Making information products more usable

20. At Organizational Level
• promulgation of sensible rules for e- mail etiquette
/rules/.
– not forwarding or copying material without careful
thought.
– ‘Blanket’ mail should be used with great care
perhaps under central control.
– Informative titles for all messages.
– Attachments used need to be with clear labels.

21. II) The Technical Side
• New ICT is responsible for a large part of
information overload.
– Through intelligent search agents
– Intelligent interfaces.

22. Chapter II:
Introduction to Economic Development
• Economics is the study of choice under conditions of scarcity
• Economics can be defined as the social science that analyzes the
production, distribution, and consumption of goods and services
• Scarcity is a situation in which the amount of something available is
insufficient to satisfy the desire for it
• Efficiency denotes the most effective use of a society’s resources in
satisfying people’s wants and needs
• Economics is the study of how societies use scarce resources to
produce valuable commodities and distribute them among different
people.

23. Cont’d
 Economists classify resources into three categories:
 Labor is the time human beings spend producing goods and services.
 Capital consists of the long-lasting tools people use to produce goods and
services. This includes physical capital, such as buildings, machinery, and
equipment, as well as human capital the skills and training that worker
possesses.
 Land refers to the physical space on which production takes place, as well as the
physical space on which natural resources found under it or on it, such as oil,
iron, coal, and lumber.

24. Classification of Economics
 Based on the level of details we want to consider
 Microeconomics: - It is the branch of economics which deals with the behavior
of individual actors on the economic scene such as markets, business firms, and
households
It takes a close-up view of the economy, as if looking through a microscope
 Macroeconomics:
– Addresses issues affecting an entire economy, including unemployment,
inflation, economic growth, and monetary and fiscal policy.
– which is concerned with the overall performance of the economy
– It examines a wide variety of areas, such as how total investment and
consumption are determined, how central banks manage money and interest
rates, what causes international financial crises, and why some nations grow
rapidly while others stagnate.

25. Classification of Economics
 Based on techniques of problem analysis
 Positive economics
• deals with what is—with how the economy works, plain and simple
• Describing "what is “/the facts of an economy
• E.g. Why do doctors earn more than janitors?
 Normative economics
– Support “what ought to be”, what should be
– It is used to make judgments about the economy, identify problems, and
prescribe solutions.
– involves ethical principles and norms of fairness
– E.g. Should unemployment be raised to ensure that price inflation does not
become too rapid?
NB: While positive economics is concerned with just the facts, normative
economics requires us to make value judgments

26. Economic Development Vs. Economic Growth
 Economic Development: -
 It is the increase in the standard of living in a nation's population with sustained
growth from a simple, low-income economy to a modern, high-income economy
 refers to social and technological progress
 Typically it involves improvements in a variety of indicators such as literacy
rates, life expectancy, and poverty rates
 Economic growth
 Implies only an increase in quantitative output; it may or may not involve
development. Economic growth is often measured by rate of change of gross
domestic product.

27. Intensive vs. Extensive Economic Growth
 Extensive growth
 Refers to the increase of overall
wealth
 It is a traditional measure of
economy
 Comes from the expansion of
ordinary inputs of labor,
reproducible capital (i.e.,
machines and livestock) and
natural resources
 Intensive growth
 Refers to the increase of per
capital wealth
 It is mainly driven by
productivity growth and
technological progress
 It is a relatively recent
phenomenon that came with
modern economic growth
 Involves increased
effectiveness, quality, or
efficiency of these inputs
 Usually measured as a growth
of total factor productivity.

28. Does Economic Growth create Development?
Generally, economic development can be achieved through the following
three approaches:
 Capability Expansion through Economic Growth: the increase in
average income lead for improvement in health and nutrition
 Capability Expansion through Poverty Reduction: the act of
improving social outcomes by reducing income scarcity or by
increasing individual incomes.
 Capability Expansion through Social Services: the improvement of
social outcomes with essential services such as education, health care,
and clean drinking water

29. Determinants of Economic Development
 It is mainly determined by innovation, increased
productivity, and the efficiency with which goods and
services are produced
 The three main categories of determinants of economic &
productivity growth:
Input variables in the production process of a firm
The business environment of a firm
Firm and industry dynamics underlying aggregate
growth

30. Economic Transformation stages
Due to economic development of countries, the social system transforms
from one stage to the other; these are:
 Agrarian Society
– The most active population, production, and capital in agriculture and extraction
from nature.
I . Hunting, Fishing, and Gathering Societies
– subsistence economies
– Social organizations were the household and local clan.
– The division of labor was simply based on age and sex.
• Men … hunting, deep-sea fishing
• Women …. Gathering, shore fishing and preserving
II. Horticultural Societies:
– began to plant and cultivate crops
– economic surplus

31. Cont’d
 Industrial Society (IS)
– Production focuses primarily on finished goods with the aid of
machinery.
– It gives concentration on most active population, production, and capital
in Industry and manufacturing.
– Growth of formal education, science and knowledge, Mass media,
Culture of democracy.
– Freedom of information became one of the corner stone of democracy
in industrial society.
 Some effects of IS over Agrarian Society are:
 Dominance of the modern factory in the economy
 Labor transformation due to industrialization
 Shift of production from home to factory, from rural to urban
 Explosive growth in productivity and surplus production
 Drastic Transformation of the agricultural societies within few decades because of
Large scale energy production

32. Cont’d
 Information Society:
– The economy is highly dependent on gathering, Processing and
transmission of information.
– characterized by high degree of computerization, large volume of
electronic data transmission.
– Consists of two major processes:
Production:- it includes production of hardware, software and information
itself.
Consumption:- High level of consumption of information that is justified
by wide adoption of information and telecommunications technologies like
PCs, Telephones, TVs, etc
 Information Society is advanced stage of development and also stated as
Post-Industrial Society.

33. Causes for the Existence of Information Revolution
• Information revolution
– the result of numerous developments in electronics and
information needs of institutions such as business enterprises,
industries, individuals and others.
 We can identify four general developments that are in large part
responsible for the information revolution and thereby the existence of
an information society. These are:-
 Introduction of Marketplace
 Information Explosion
 High Technology Revolution
 Microcomputer Contribution

34. Information adoption
- Adoption the new coming information and technologies based on the
culture of the society.
- Is the process of using relevant information to deal with and solve your
own problem

35. Rogers’ stages of the adoption process
• Awareness: -
– Individual is aware of the innovation but is not really interested in it at this point.
– The individual is exposed to the innovation but lacks complete information about it.
• Interest: -
– The individual becomes interested in the innovation and seeks additional
information about it
• Evaluation: -
– The individual is weighing the information and deciding whether or not to invest in
the innovation.
– The individual mentally applies the innovation to his present and anticipated future
situation, and then decides whether or not to try it.
• Trial: -
– The individual tests the innovation by actually using it and evaluating the benefits
received from its use. The individual makes full use of the innovation.
• Adoption: -
• The individual decides in favor of the innovation and adopts it for full use. In this stage
the individual decides to continue the full use of the innovation.

36. Categories of users in information adoption
 Users can be categorized in to five based on how quickly they adopt an
innovation i.e. Innovators, Early adopters, Early majority, Late majority,
and Laggards
 Innovators (Eager Beavers) (.5%)
 Requires a shorter adoption period than any other category
 Desire for the rash and the risky
 Highly capable of understanding and applying complex technical
knowledge
 Cope with a high degree of uncertainty about an innovation.
 Early adopters or the first consumers (5%)
 Are not too far behind the innovators
 Serve as role model for other members or society

37. Cont’d
 Early majority: The First Big wave (30-35%)
 Are not self-sufficient pioneers or risk takers
 They have willing to use technology but need some help to make it
happen
 Those people make or break introduction of new technology and
interact frequently with peers
 Late majority: The Technology Skeptics (40-50%)
 Cover more percent
 Not afraid of technology, but they do have serious concerns about
risks and costs
 Concerned about wasting time and money
 They have pressure from peers, Economic necessity, Skeptical, and
Cautious

38. Cont’d
 Laggards: Technically Averse (10-15%)
• Those users resist technology e.g. not currently doing anything about
the wireless Internet or Web Services.
• Concerns about loss of privacy, security, control, and possible
exposure to competition
• “Not On My Time You Don’t”

39. Chapter 3:
ICT for Economic Development
 ICT has direct Correlation with positive macroeconomic growth
 ICT helping us to solve some of our greatest economic, social and
environmental challenges.
 ICT assists governmental or non-governmental organizations to
improve general socio-economic conditions
 A good example of the impact of ICTs on development is farmers
getting better market price information and thus boosting their
income
 In our country for example, this is done by ECX (Ethiopian
commodity Exchange) to promote its local products worldwide.
 Another example includes mobile telecommunications and radio
broadcasting to show the good image of the country

40. Cont’d
 The ICT ecosystem is a complex and interdependent series of
technical, social and business relationships
 There are challenges ahead in the evolution of the ICT ecosystem. As
business paradigms change, the issues of privacy, security and quality
of service are becoming increasingly important

41. Key pillars of the ICT ecosystem
 The system (i.e. ICT ecosystem) functions when multiple underlying
factors align to reinforce one another. These key pillars that determine
the economic influence of ICT are:
 Infrastructure investment: investment in the ICT infrastructure is vital for the
health of the overall ecosystem
 Applications and content:ICT sector consists of fluid structures with clusters of
localized content and applications,
 Markets and competition
 Policies and regulations
 Government budgets
 Skills and education for IT

42. Multiplied Benefits of ICT
 Some of the vertical industry sectors where the impact of ICT is felt
most significantly.
 Eco-sustainability
 Education
 E-government
 Finance
 Healthcare

43. Emerging ICT business models
 Though, there exist many ICT driven business models today, the
business models that are going to be explored in this course are: smart
electrical grids, cloud computing and collaborative business model

44. Smart electric grids
• Comprised of wireless and wire-line technologies, complex
and cooperative relationships are emerging among energy
meter developers, network service providers, software
developers and energy companies
• It is vital to bring 21st century information technologies to
electrical networks to allow consumers to track their energy
usage

45. Cloud computing
 Cloud computing is a computing paradigm, where a large pool of
systems are connected in private or public networks, to provide
dynamically scalable infrastructure for application, data and file
storage. With the advent of this technology, the cost of computation,
application hosting, content storage and delivery is reduced
significantly

46. Conceptual view of Cloud computing

47. Cloud computing (cont’d)
 Categories of services offered by cloud Providers:
Software as a Service (SaaS): A single instance of the service
runs on the cloud & multiple end users are serviced.
It is offered by companies such as Google, Salesforce, Microsoft,
Zoho, etc.
Platform as a Service (Paas): The customer has the freedom to
build his own applications, which run on the provider’s
infrastructure.
Infrastructure as a Service (IaaS): IaaS provides basic storage
and computing

48. Cloud computing (cont’d)

49. Cloud computing (cont’d)
 Benefits of Cloud Computing
Reduced cost
Increased storage
Flexibility
 Challenges in Cloud Computing
Data Protection | Data Security
Data Recovery and Availability
Management Capabilities
Regulatory and Compliance Restrictions: In some of the
European countries, Government regulations do not allow
customer's personal information and other sensitive
information to be physically located outside the state or
country

50. Collaborative Business Models
Is a community based business model that uniting
people with common interests and purpose to
work together.
Key examples include:
Software development
Open Innovation”
Social-networking services
Open framework development -

51. Chapter 4:Digital Divide
 It refers to the gap between people with effective access to digital and
information technology and those with very limited or no access at all
 The term global digital divide refers to differences in access between
countries
 Initially referring to the gap in ownership of computers between
certain ethnic groups the term came into usage in the mid-1990s,
appearing in several news articles and political speeches.

52. Origins of the term
• Until the High Performance Computing Act of
1991, which funded a high-speed fiber optic
network.
• 1991-1996, the number of personal computers
(300,000 to over ten million)
• By the mid-1990s the development of Internet
browsers was leading more adventurous users out
into a new realm called cyberspace
• Email becoming increasingly useful application
52

53. Current usage
• “Troubling gap between those who use computers and the
Internet and those who do not”. Bharat Mehra
• Recently, it refer to gaps in broadband network access.
– unequal access to computer hardware
– inequalities to use IT.
• “a symptom of a larger and more complex problem -- that of
persistent poverty and inequality” Lisa Servon (2002)
• “identifies socioeconomic status, income, educational level,
and race among other factors associated with technological
attainment, or the potential of the Internet to improve everyday
life for those on the margins of society and to achieve greater
social equity and empowerment”. Mehra (2004),
53

54. All kinds of studies and approaches can be categorized
• WHO (level of analysis):
– individuals vs. organizations/communities, vs.
societies/countries/ world regions
• with WHICH characteristics (attributes of nodes and
ties):
– income, education, geography, age, gender, or type of
ownership, size, profitability, sector, etc.;
• connects HOW (level of digital sophistication):
– access , usage , impact;
• to WHAT (type of technology):
– phone, Internet, computer, digital TV
54

55. Divide and Education
• Focus was school computer access
• In the 1990s, better resourced schools provide their students
with regular computer access ~ more likely to have internet
• Technology has the potential to greatly contribute to the
prosperity of developing areas (still a great need for
technological education)
55

56. The Global Digital Divide
• Describes the Info tech disparities between
different regions of the world in relation to
generalized rates of social and technological
development
• As the internet becomes progressively more
sophisticated, the digital divide is growing
• Countries with a wide availability of Internet
access can advance the economics of that
country on a local and global scale.
56

57. E-Democracy and E-Governance
• Many scholars agree that blogs (web logs),
wikis and mailing lists may have significant
effects in broadening the way democracy
operates.
• The main problems associated with the digital
divide as applied to democracy
– is the ability to participate in the new public space,
cyberspace ,deliberation forums, online voting
– No access meant no vote,democracy.
57

58. Commercial Impacts
• resist digital Divide
– E.g. Japanese publishing companies
• Some companies have been making an effort to close
the digital divide at the same time
– providing citizens with new job opportunities
– Making a profit for their business
– E.g. Village phone
• Affects the travel industry
58

59. Overcoming the digital divide
Depends on the chosen definition
• The first step consists in providing access.
• Projects like One Laptop per Child
• To better understand the lifestyle of the minority or
marginalized community
• Transfer goal-setting, decision making, and choice-
determining processes into the hands of the disadvantaged
users.
• International cooperation between governments is
increasing, aimed at reducing the divide
• deliver access to the Internet without an Internet
connection
59

60. Measures of Inequality
Lorenz Curve
• A tool used to represent income distributions
• Tells us which proportion of total income is in the hands of a
given percentage of population
• Relates the cumulative proportion of income to the cumulative
proportion of individuals(rather than income share)
60

61. Lorenz curve is obtained by
61

62. Bench mark Lorenz Curves against the equidistribution
62

63. 63

64. • income distribution,
Individual Income
1 2417
2 7,800
3 8,489
4 10,072
5 12,957
64

65. 65

66. 66