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Emerging Trends


Why knowledge investments are
vital in times of crisis



"In stormy times, some people build shelters; others build windmills."
(old Chinese proverb)

"For every situation in life, and for every presentation or article, there is an old Chinese proverb just waiting to be quoted, or invented."

Whether or not the proverb is authentic, it fully applies to today's reality and concerns: as financial markets shrink, and whole sectors of the real economy start being affected, decision makers, investors and politicians seem to find themselves on either side of an attitude divide : those who rush to downsizing ambitions and plans, and cutting costs wherever savings can be made (the shelter seekers) and those who consider either that the crisis makes action even more urgent, or that it calls for timely decisions, that will determine who 'hits the road running' when activity and growth eventually resume (the windmill builders).

Clearly, an ambition is of little use to those who do not survive. However, the power of an ambition (of looking beyond the crisis) to enhance a patient's change to overcome a disease or a shock cannot be underestimated.

At the time of the World Summit on Information Society (2003-2005), much attention was called to the urgency of deploying global information infrastructure, and fighting the Digital Divide worldwide. Based on the idea initially launched by President Wade of Senegal, a Digital Solidarity Fund was established, for example, to help bridge the gap between the haves and have-nots of information technologies. In parallel, and often with less publicity, public and private investors were financing information infrastructure, in Africa and elsewhere. Even more importantly, the advent of Web 2.0, the growth of giants like Google, and the spreading of 'long tail' business models were radically (and silently) transforming the ways in which the world uses information to create wealth, jobs and innovation, and to transform itself.

Faced with the most serious crisis it has known in decades, will the world choose to 'put the revolution on hold' or to ride out the current turbulence? Nowhere is this question being raised more clearly than in the field of telecommunications, information infrastructure and knowledge-based strategies.

Knowledge as a tool for growth and development: a look back

When looking back at the effects of knowledge-based investment on economic growth and improvement in peoples' quality of life, one should not consider information technologies and information infrastructure as the sole domain in which financial resources can be invested productively. However, it is clear that the rapid development of information network has been a formidable accelerator of the so-called knowledge revolution.

The often-quoted comparison between Ghana and the Republic of Korea (see Figure 1 below) is but one of the most striking examples of how investment in knowledge (including education, adequately combined with information equipment and infrastructure) can radically change the course of development of a national economy.

Source : World Bank (2007)

Clearly, the divergence between those two countries (which went from similar income per capita in the 1950s to a ratio of 1-to-17 forty years later) has accelerated markedly in the 1980s. This however was not due solely to the fact that Korea was an early investor in information technology, but largely to that country's decision to do so when (in the aftermath of the second oil shock) most other countries were cutting on costs, retrenching behind protectionist barriers, and trying to 'lay low' in terms of crisis. Korea's example shows how much impact a decision to invest in knowledge and information infrastructure can have, in terms of economic growth.

Three Issues and Four Possible Ways not to Lose the Momentum of the Information Revolution

Issue #1 - Without proper investments in information infrastructure, the crisis will hit poorer countries even harder

One of the most detrimental effects of a persistent digital divide between rich and poor countries would be to limit the world's ability to encourage the growth of its own talents (especially among the young), as well as its capability to benefit from the combination of such talents with those from other cultures and geographical horizons. In the case of poorer countries, such a divide would contribute to the resilience of the negative effects of physical migrations (brain drain).

Possible response #1 - Deploy broadband globally, starting with Africa

Developing broadband infrastructure worldwide (and especially in developing countries and regions such as Africa) should be considered a priority of the coming decade. By allowing more virtual mobility of talents, it will benefit developing countries in at least two ways, namely (1) better integrating them in global production processes while offering a productive outlet to local talents, and (2) counterbalance the negative effects (brain drain) of physical mobility. For advanced and fast growing economies, fighting the digital divide is key to benefiting from the innovative ideas, designs and services which still lie underused across the global talent pool .

Deploying broadband infrastructure in emerging economies is an objective that should be shared by public decision makers and private investors.

Issue #2 - If the experience of the 1930s carries any lesson it is that inward looking reactions, trade protectionism and hesitations to invest can make an economic crisis deeper and more widespread.

Efforts to re-launch the Doha Round of Multilateral Trade Negotiations are becoming vital for the world economy. Similarly, coordinating initiatives to stimulate growth at the national level is a central priority to give stimulus packages the critical mass and global impact they need.

However, whatever the speed and energy with which such avenues will be pursued, one thing is clear: the current crisis does not diminish in any way the high potential impact of investments in telecommunications on economic growth and competitiveness. As available data amply shows, the growth of the more advanced economies over the last two decades has resulted significantly from the productivity gains allowed by information technologies. Any failure to maintain the momentum of the information revolution will hence greatly diminish our collective ability to avoid a longer, deeper and wider recession.

Possible response #2 - Steer available capital towards information-intensive investments as a matter of priority

When trying to re-ignite the engine of global growth, asset-rich countries, firms and capital providers (e.g. sovereign funds) should provide priority attention to information technologies, networking infrastructure and information processing equipment. Whether or not they hold enough cash (or borrowing capacity) to participate in such investments, governments have a critical role to play in providing the proper fiscal environment and incentives to support or encourage such steering.

Issue #3 - National governments are not necessarily the best sources of counter-cyclical energy

One of the dangers of the current crisis is that - at least among democratically elected governments - pressures from voters and lobbies might shift priorities from fighting the roots of the crisis (e.g. inadequate allocations of available resources and sub-efficient use of available production factors) to fighting its symptoms (e.g. unemployment).

As a former Latin American head of state was fond of saying: "It is when we are too busy with doing what is urgent that we forget to do what is important." 16

Possible response #3 - Find and support energy and initiatives wherever they are, especially at local level and across civil society

Over the last decade or so, sub-national entities (cities in particular) have seen a higher proportion of information-intensive innovations than national economies: WiFi/WiMax networks, for example, but also e-government services have been deployed more rapidly (and often more imaginatively) at the local level. A higher degree of proximity to citizens has also helped such improvements to be more tightly customized to their needs and expectations.

Despite some excess in the way they have been portrayed as ‘the next revolution', social networks have generated new behaviours and new ways of sharing and using information across networks. Whereas, until recently, most attention about Web 2.0 has been focused on individual usage, recent research is pointing at a potentially massive impact of social networking on governments 17 and business 18. One of the effects of this trend can be seen in the radically new way in which innovation is taking place: as the process of innovation becomes increasingly collaborative, open and cross sectoral, innovation ceases to be product-centric. More and more often, new ideas emerge not through the production of a new good or service, but as new business models, or new social usages. Since emerging from the current crisis will undoubtedly involve, in one way or another, the invention of a new world, tapping such innovation at the source is also an opportunity that must not be missed.

Possible response #4 - (to all of the above) - openness and education

None of the three issues described above (broadband deployment, investment steering, innovation tapping) will yield its full potential benefit unless two fundamental principles are shared, promoted and supported at the global level, namely: (1) open minds and open economies will be our best medicine to steer away from the current crisis, and (2) education (formal, informal, vocational, life-long, book-based, radio-based, TV-based or Web-based) is the only way to enhance equity across societies and populations, and to provide mankind with the knowledge it needs to share in order to innovate its way out of the crisis.


Investing in knowledge and knowledge infrastructure tends to become strategically and politically even more important when the crisis starts generating additional exclusion mechanisms. When jobs are lost in banking, finance, and then progressively in industrial sectors such as automobile, white goods and textile, e-inclusion becomes a priority mechanism to help the unemployed to acquire the skills and knowledge which will enhance their chances to re-join the ranks of active labour as rapidly as possible.

Exceptional times call for innovative thinking and outstanding leadership. Because today's world is more inter-connected, and more multi-polar, than it has ever been, it has more opportunities to learn from its crises, and design better ways to manage itself. Political and business leaders, as well as every one of us, as global citizens, have a duty to think beyond the crisis. By making appropriate use of its catharsis effects, we can probably rid our societies and economies from some of their worst practices and behaviors. By trying to identify ways to prevent similar situations, we can design new ways to build bridges for less inequity, and open doors to more opportunities.

In this effort, ambition, innovation, openness and education will be keywords, and telecommunications and information networks will remain both a tool and a symbol. Losing sight of their importance would be an assured way to turn our back to our future.


For additional information on knowledge economy issues, skills for the information age, and leadership in networked economies, visit the following websites:;

Fraser, M. and Dutta, S. (2008), "Throwing Sheep in the Boardroom", John Wiley and Sons, Chichester

Ivaturi, V., Lanvin, B. and Mohan, H. (2009) "Global Mobility of Talents - What will make people move, stay or leave in 2015 and beyond ?", in 'Global Information Technology Report, 2008-2009', World Economic Forum, upcoming.

Tapscott, D. (2008), "Grown Up Digital - How the Net Generation is changing your world", McGraw Hill, New-York.

World Bank (2007), 'Building Knowledge Economies - Advanced Strategies for Development', World Bank Institute Development Studies, Washington D.C.


16 "De hacer lo urgente, no hacemos lo importante", Jose-Maria Figueres-Ohlsen, former president of Costa Rica.

17 See for example, Don Tapscott (2008)

18 See for example M. Fraser and S. Dutta (2008).

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Are Arab Telecom markets immune from the global credit crunch? Jawad Jalal Abbassi,
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Updated : 2009-06-17