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The fuel of modern industrialisation

  • Posted On: 11th June 2013
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In the 21st Century, the widespread availability of broadband access will be a determining factor in a nation’s economic prosperity as the Digital Revolution picks up where the Industrial Revolution left off, says Ashar H. Zaidi, Country Manager, Intel Pakistan Corporation.

History has shown that the prosperity of nations is rarely the direct result of the monetary and fiscal policy of the reigning government, but rather, the outcome of strategic economic declarations to invest and innovate for the future made generations before. It was out of the Industrial Revolution, one of the most significant events in history, in the late 18th and early 19th Centuries that the different economic powerhouses in Europe emerged. During this era, major changes and investments were made in agriculture, manufacturing, transportation and logistics infrastructure. Out of this emerged a period of economic growth in capitalist economies including the United States and Britain.

The cornerstone of success was the ability for countries to gain access to information or “know-how” during that period – whether it was in farming practices, textile manufacturing, or locomotive transportation. Prior to the explosive emergence of the Internet, or information superhighway, the common method for information exchange was getting involved in travelling study tours such as the Japanese Iwakura mission in 1871 that took two years to complete. The information exchanged, however, maintained the momentum of industrialisation and is responsible for making Japan the economic powerhouse it is today.

Likewise, the digital revolution is fast-moving into its next phase, creating the ‘knowledge society’ or ‘information economy’, where knowledge – as opposed to machines and equipment – is both commodity and capital. At a time where a single idea can spur an innovation worth billions of dollars, how quickly that idea is developed and monetised – before the competition beats them to it – broadband Internet access becomes the present-day determinant of today’s successful economies.

Thus far, developed nations have forged ahead with heavy investments in this new sector, while many of the developing countries fall short in investing enough to keep them competitive as the 21st Century gets underway.

The Asia Pacific region contains some of the most diverse, and potentially powerful, emerging markets in the world, including China, India, Indonesia, Pakistan, Philippines, South Korea and Vietnam. Goldman Sachs reported it had identified several of these markets that may eclipse the current richest countries by 2050 to become the great economies of the world. These emerging markets have built much of their economic wealth on the agriculture and manufacturing sectors to date but these industries, alone, may not be enough to sustain their growing populations 10, 20 or 100 years from now.

Governments and private enterprises in Asia Pacific would be prudent to prioritise more investment in broadband infrastructure in order to fuel their Information Economy, and benefit from its significant influence on national productivity, economic growth, international competitiveness and social cohesion.

This fundamental reality has not gone without notice amongst Asian leaders. In 1997 and 1998, a decade from our current financial ails, the Asian Economic Crisis forced the region’s leaders to rethink their strategies to steer their countries into the next millennium. This was certainly the context in Malaysia. In 2002, the Malaysian government – realising the importance of the information age – legislated for the further development of broadband by creating the National Broadband Plan with the vision to “enable Malaysia to be economically competitive overseas as broadband becomes an increasingly important tool for business”.

Malaysia is not alone. The Australian government has allocated AUD$4.7 billion dollars towards the deployment of the country’s National Broadband Network, mandated to reach 98 percent of the population. These actions indicate that the future of these economies will be heavily linked to their access to broadband infrastructure.

In emerging markets, broadband can also address indirect factors of GDP such as health and education. Broadband access will enable significant advancements in both telemedicine and distance education that is simply not possible now. The Australian government’s research division, CSIRO, developed ECHONET, a mobile broadband telemedicine system built to virtually bring a remote specialist to help intensive care units operate without a specialist on site. Technology like this is critical in developing nation where there is a severe shortage of medical specialists and the existing workforce is stretched beyond its means.

The prevailing economic drivers of many larger Asia Pacific nations are sectors, such as agriculture, manufacturing and services, where business is geographically dispersed across rural and urban areas and is predominantly being conducted in remote locations and in-land regions. In such cases, it is not enough for broadband internet to be ‘fast’, but it must also be ‘mobile’ so critical information is available at the site of where work is being conducted, and not just where a wire runs.

Fixed broadband installations exhibit geographic limitations for countries with rural populations, and because of this, there is growing demand towards mobile broadband services. For emerging markets, there is a matter of practical reality to rule against a fibre or ADSL broadband network because it is financially unviable to fund a wired network that spans across an entire country to reach a billion people such as in India.

Next-generation technology such as WiMAX can be the more cost-effective, back-haul solution to help build out this infrastructure to help drive growth in the Information Economy in these countries. To date, WiMAX is the only 4G wireless technology that is commercially available in Asia Pacific with active deployments in both Malaysia (Packet One) and Singapore (QMAX).

Broadband and knowledge-based advancements are a powerful catalyst for growth. In fact, a direct correlation has been drawn between broadband and economic growth that was modelled on the ‘teledensity’ used by the ITU. Comparison of the GDP and broadband statistics support this.

Pakistan had an estimated population of 172,800,000 as of July 2008, making it the world’s sixth most-populous country, behind Brazil and ahead of Russia. Pakistan is a rapidly developing country and a major emerging market, with an economic growth rate of 7 percent per annum for four consecutive years up to 2007. Pakistan’s service sector accounts for about 53.3% of GDP. Transport, storage, communications, finance, and insurance account for 24% of this sector, and wholesale and retail trade about 30%. Pakistan is trying to promote the information industry and other modern service industries through incentives such as long-term tax holidays.

The government is acutely conscious of the immense job growth opportunities in service sector and has launched aggressive privatisation of telecommunications, utilities and banking despite union unrest. Pakistan’s IT industry has been rising steadily since the last three years. A marked increase in software export figures are an indication of this booming industry’s potential. Total number of IT companies increased to 1306 and the total estimated size of the IT industry is $2.8 billion.

This is good news for the region as long as the momentum continues. Most Asian leaders recognise the importance of the Knowledge Economy and, to date, have been diligent to invest. The infrastructure being built now helps businesses, school children and the government of the day have access to a worldwide body of knowledge that builds the foundation for wealth tomorrow. It is probable that 100 years from now the hub of Internet innovation will come not from Silicon Valley but from the Klang Valley or the shores of the mighty Mekong.

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