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VII. CONCLUSION - E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES



What have we learned about the potential that ICT and e-commerce hold for poor
countries? While the danger of hyperbole looms large, e-commerce does present real
opportunities to small entrepreneurs in developing countries. The paper has first sought to
identify the main channels through which these can be realised. At present, the evidence
of real benefits is scattered and anecdotal, and the obstacles to affordable access are still
formidable. The past, however, is not an especially reliable guide to the future in this
domain: as a matter of fact, even in OECD countries the profitable e-commerce businesses
are still few and far between. The benefits of the Internet are subject to network externalities,
but with a strong local bias. As the local user community grows, the incentive to develop
local content and support services grows correspondingly, and this should in turn induce
still greater local use. Thus, even if current usage rates in many developing countries are
orders of magnitude lower than in OECD countries, the picture could change quite rapidly.
What facilitating conditions — physical infrastructure, legal and regulatory
frameworks — are required to promote e-commerce and how easily can they be put in
place? On the one hand stands the need to overcome infrastructural constraints, taking
advantage of the latest technological advances and lessons of regulatory reform to extend
low-cost reliable telecom and Internet access over the widest possible area. For this,
public-private partnerships, possibly involving development assistance, may provide a
means of leveraging assets, e.g. by making available spare bandwidth capacity to lowincome
countries. Also, telecommunications infrastructure complements not substitutes
for transport and logistics infrastructure when physical merchandise needs to be shipped
to complete an e-transaction. On the other hand stand the governance aspects of
e-commerce, including consumer protection, security of transactions, privacy of records,
and intellectual property. If the essential challenge is to create an environment of trust for
conducting e-commerce, one possible solution would involve the adoption of self-regulated
codes of conduct by groups of like-minded e-ntrepreneurs. Another would be to foster
SME participation in internationally accredited Web-based online rating schemes.
What role is there for development assistance in promoting e-commerce? As noted
above, as far as possible the extension of the telecom and Internet infrastructure in
developing countries should be left to private investors, though international development
institutions may be able to leverage private investments — e.g. by making available excess
satellite capacity to extend service to remote rural areas of the developing world. Another
sort of leverage comes from investments in small-scale demonstration projects — like
telecentres — though this raises the question of whether the benefits of such investments
are inherently limited by their stand-alone nature in places where network densities are
still low. Also, realising benefits from e-commerce may depend crucially on complementary
investments in other infrastructure — electricity, roads, ports — suggesting that ICT-related
initiatives should not be viewed as an alternative to other ODA initiatives. This applies also
to education and skills, where learning to walk precedes learning to run and so general
education remains of paramount importance. At the same time, the Internet offers new
opportunities for distance learning to poor, isolated communities, though radio and TV will
continue to perform valuable educational functions.

With respect to legal and regulatory issues, approaches vary widely at present even
within the OECD. There are few tested “best practices” to share, but it is important that
developing countries have a voice from early on in negotiations and discussions that are
shaping global rules and protocols governing e-commerce. Capacity building via ODA can
be helpful in this regard, though it is perhaps best provided through regional or other
groupings of countries with common interests to avoid excessive burdens on the small
cadres of qualified personnel in poor countries. Also, co-ordination among development
co-operation agencies is crucial to avoid costly duplication of effort, and ICT can itself
facilitate that co-ordination54. Finally, thinking “outside the envelope” is needed with ODA,
just as it is with private ventures in this age of e-novation. There may, for example, be
scope for initiatives targeted specifically at small e-ntrepreneurs in poor countries, as with
support for their individual or collective participation in Web-based online rating schemes
or with publicly-sponsored portals for small producers’ wares to overcome barriers to trust.

OECD DEVELOPMENT CENTRE
Working Paper No. 164
E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES
by
Andrea Goldstein and David O’Connor


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