October 2007

A developing country perspective

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This issue on emerging markets has stirred a lot of interest for the research team at i4d. The terminology, though coined as a purely economic term by the World Bank's IFC has evolved in its meaning and understanding to different peoples. We wanted to understand if the perspectives and definition mooted by the original term is the same or the meaning is more fluid. The upcoming conference at Global Knowledge Partnership's GK3 event of the future has the running theme: Emerging Markets, Emerging People, Emerging Technologies, and its close inter-linkages. The vision is to explore the relationships and opportunities that open up with multi-stakeholder partnerships, and recognise that gender mainstreaming, role of youth and equity issues are central to achieving sustainable growth.

Information and Communications Technologies play a key role in the knowledge gathering and sharing, building these new opportunities, and providing spaces for innovations to create new livelihoods opportunities. Where resources are scarce, and the desire to leapfrog the divide, it has been found that the creative potentials are the highest among the people. We posed the following questions to a number of specialists who are engaged in the domain of ICTs for Development, and in premier institutions promoting livelihoods opportunities and located in emerging markets.

  • What is emerging markets from a developing country point of view?
  • How do different organisations perceive emerging markets?
  • What is the role of IT industry in creating new markets for enterprises, farmers, etc.?
  • Is the definition different in developing countries and developed countries?

Typically the developed world identifies Brazil, Russia, China and India as the world's riskiest but most buzzing emerging markets for investments. But, what do the people in developing countries feel? The perspectives by the practitioners provide a fresh understanding of emerging markets.

Vijay Pratap Aditya, owner of the ekgaon technologies (www.ekgaon.com), feels that 'emerging market' is a theoretical construct, which while talking about markets mostly is being understood (by the developed world) as identifying markets in developing world. While to some extent this might be true to some sectors, it is the reverse for other sectors.  'Emerging markets' for companies located in several developing countries like India, China, Sri Lanka, etc. representing the component manufacturing, ITES services, BPO, industries, etc., are located in USA and the EU countries.

In developing countries, lack of infrastructure and means of communication were major hurdles in establishing business processes for industry to grow markets, ensure supply chain and increase access to financial services. Information Technology plays a very important role to enable access even if other infrastructure development is not in pace with all round development of the business environment in the underdeveloped areas.

Ekgaon's work in this area has been to enable this access using appropriate and open technology framework for cost effective delivery and equitable and healthy economies in developing world. Focusing on affordable and appropriate solutions, ekgaon designs and develops technologies and information systems to meet the needs of developing communities. Ekgaon is a strong believer in the ideals of community and collaboration. It seeks to use and develop free and open source software conforming to open standards whenever possible. Some current projects:

  • CAM Mobile Services Framework (promoting local innovations in technology)
  • Mahakalasm MIS (for the micro-credit self-help groups)
  • Medicinal Plant Portal (indigenous knowledge documentation and sharing)
  • Indic-Computing Consortium (addressing localisation issues)

The standard definition is definitely different and sometimes skewed towards the developed countries and their economic perspectives, while it should be actually looking at economics of business and opportunity thus created by it, e.g. services for India and manufacturing for China.

Santosh Tiwari, Solutions Architect with Telecordia Technology, UK says, “I think the definition of the emerging market is more from domain and services offered by the organisation rather developing or developed countries perspective.” He further identified the key factors at the baseline

  • Most basic demand
  • Ability of people to pay for the services (It is quite important from the perspective that people have the kind of money to purchase the services)
  • Cultural backgrounds
  • Suppliers, legal, financial and government frameworks
  • Infrastructures
  • Competition

For example, if the organisation is offering services for infrastructure development services, UK might not be an emerging market but India will be, irrespective of host country for the organisation.  Information Technology (IT) will not create a new market but it can provide services with respect to new market. IT industry is always dependent upon the different domains.

Priyanthi Daluwatte, an IT professional working with the National NGO Sarvodaya in Sri Lanka, (www.sarvodaya.org) perceives emerging markets differently for development organisations from the normal commercially oriented entities. For an entirely profit oriented organisation emerging market would be identified in terms of improving sales. For a development organisation with grassroots volunteers, emerging market would indicate more opportunities for employment for youth, women, etc. It is one that addresses the equity and opportunity questions.

The role of IT industry should be to create opportunities for more grassroots folk to engage in the use of Internet to generate income. If more portals are available in local languages that cater to local market, then the community youth from developing countries could engage in BPO type work, thus opening up livelihood opportunities. Additionally, youth from developing countries could directly link with any global organisation to carry out outsourced work.

Sastri Vadlamani, Technical Lead and software engineer with National Instruments, Bangalore, perceives emerging market from the availability of talent that can be quickly brought up to speed. Just when the Internet revolution was beginning and students could try their hands and immediately could see the results of their experiments. Hence they got excited about this and wanted to learn more. This created eagerness to study software and hence created talent too.

Emerging markets' success is decided by accessibility. Internet made the access easier and hence we see information technology as a service industry sector itself being an emerging market leading to the emergence of knowledge and creative talent service industry.

Whether a market is emerging or not is also decided based on when people start changing a product from luxury to a necessity. That is exactly what's happening with Cell Phones. When people have purchasing power, lots of markets can seem emerging but it always starts with when luxuries become necessities. The automobile sector can also be seen as an emerging market in developing countries now.

In India, healthcare is also an emerging market, as more and more specialist health care services are emerging, so also health tourism is emerging, creating new opportunities for servicing global clients. This simultaneously also opens up opportunities for the expertise to be accessed through telemedicine to rural and remote areas. Michael Gurstein, Centre for Community Informatics Research, Development and Training, Canada and Editor-in-chief of the Online Journal of Community Informatics (http://www.ci-journal.net) believes that emerging markets is the new way of seeing least developed countries (LDCs) as potential consumers/market participants rather than as those requiring external stimulation for 'development'.

However, seeing those in emerging markets only as consumers is itself limits the scope, as they are also producers and contributors to distributed but global responses to the eradication of poverty, environmental management, climate change management etc.

Satish Jha, an ICT4D activist based in US, feels that emerging markets need not have much to do with technology per se, but that they do. BRIC or Brazil, Russia, India and China are the largest segment of the emerging markets. It has a bit to do with lowering market risks, growth rate, and the hope of a reasonable size sometime soon. And technology has helped them move in that segment, which covers manufacturing and services sector. Agriculture is generally not associated with them. However, to the extent they start using state-of-the-art farming practices, boosting productivity and laying the foundation of galloping sectoral growth driving the rest of the economy, they may be included.

Information Technology has been critical in closing the gap between productivity levels across the globe for those who are ready, able and willing to embrace them. Without using it and getting better at it, the chances are that non-IT-engaged economies will experience a fall in their growth rates and may therefore slip back further relative to the rest of the world.

Tejesh Nandyala, Accenture, believes that the booming retailing industry, for example in India, valued at $350 billion, and run by small or family run enterprises has immense growth potential and is likely to quadruple in the next five years. He also recommends the following link to get a generic understanding of the concept. http://en.wikipedia.org/wiki/Emerging_markets

Jayanthi Chandrasekharan, Features Editor of the daily Indian business newspaper Financial Express, believes that emerging markets is a sort of equivalent to developing countries, except maybe Africa, from an economic standpoint where infrastructure, skills, etc. are not entirely in place. There still exist vast differences between regions and where ever the political scenario remains very fragile, it makes investments risky, thus cannot be classed as emerging markets. Different organisations perceive emerging markets positively due to 8-10 percent growth rate. Roughly 85 percent of the enterprises in India are Small and Medium Enterprises (SME) and IT plays a big role for them in evolving a cost-cutting for them as that makes it less labour intensive. IT industry itself has created several thousand new jobs, and the demand is on the rise. Educational institutions need to gear up to cater to the growing need of skilled workforce.

Jayanthi feels that farmers do not use IT to the extent that they could. And, that would need government support. The back end information gathering and making it available for farmers to use it in local languages and being locally relevant makes the system far more complex. IT can provide the most important market linkages, and thus create new market opportunities for farmers to sell their produce and gain from the potential of globalisation.

Conclusions

The developing country perspectives of emerging markets views globalisation and use of IT as a facilitating process to create new and equitable opportunities, to jumpstart the infrastructure divides that confront the rural economies to create livelihood opportunities, innovate, and deploy, local solutions for global or geographically removed markets. It is this developing country perspective that we would like to put forth. The most challenging areas are indeed improvement in human skills, efficiencies of SMEs, and market linkages for the farming sector.  

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