International Business Management
I. Organization for Economic Cooperation and Development
II. The Digital Divide
I. Organization for Economic Cooperation and Development
The Organization for Economic Cooperation and Development (OECD) is an international body that harnesses dialogue and research as tools for its ultimate goal of helping countries make progress in an increasingly globalized economy. The OECD is committed to promoting democracy in government and greater proficiency in the market economy, goals that are shared by its member countries and drive the efforts of its many participating organizations. This paper will discuss the organization’s history and structure, its goals, and its many valuable publications.
History and Structure of the Organization
The OECD has evolved from its original focus, Europe, and it is now comprised of thirty member countries and various other bodies. The three major organisms, the Secretariat in Paris, the Council, and some two hundred committees are involved in this international system that applies analytical expertise to global economic matters.
Formed after World War II, the predecessor Organization for European Economic Cooperation was set up to manage the Marshall Plan and its reconstruction aid. In the following years, it continued to focus on economic growth and was taken over by the OECD in 1961. Focusing on efficiency and trade, it initially paid specific attention to market development in its own member countries. Recently, however, the OECD has redirected its focus to investigating emerging market economies and seeking solutions to their economic challenges.
Not surprisingly, most member states are from North America, Europe, and parts of Asia but other countries can participate in various ways and have their voices heard. Also, approximately seventy non-members are engaged in a working relationship with its activities, with the participants ranging from major economic powers to small, underdeveloped states. There are also plans for enlargement, and among the requirements for entrance is that candidate states to commit to “a market economy and a pluralistic democracy.” As is evidenced by the breadth of its research efforts, the OECD has evolved from a regional development organization to an influential international one.
There are over two thousand members of the secretariat in Paris, responsible for research and analysis of topics ranging from economic and trade to social cohesion and the environment. They perform think-tank analysis with experts doing extensive research on various topics including technology, development, and the environment. Their findings are then discussed in the numerous committees and working groups dedicated to the task. While there is a yearly meeting of ministerial-level representatives in the Council, the most substantive analyses are performed by the forty thousand working group experts that convene to “request, review and contribute to work undertaken by the OECD secretariat.” Specific analysis are done at the request of the OECD member states and they provide an important forum for discussion and implementation of policies.
As its name suggests, the OECD is principally concerned with development in emerging countries and concentrates its efforts in analyzing economic factors and policy considerations. By anticipating future changes based on trends and lessons learned, the organization makes recommendations and works to codify basic principles of behavior. Multilateral is important for individual countries to progress and the OECD seeks to provide the standardization that is required for effective cooperation.
Fostering good governance by studying policy issues as well as corporate behavior, it places priority in “deciphering emerging issues and identifying policies” that would be effective for growth. In a world economy that continues to evolve at an impressive rate, the organization’s efforts make a legitimate impact on decisions made throughout world governments and business. For example, certain exchanges have resulted in formal agreements such “legally binding agreements to crack down on bribery, or codes for free flow of capital and services”
The organization provides access to an extensive range of documents, available in a variety of formats: online publications, magazines, and books. I am personally excited to have explored this organization and its depth of research because I now understand the amount of quality information that is available to the public.
The web site is particularly useful, as it has an effective tool for document searches, allowing the user to download quality data and studies for free. This source is comprised of research papers, speeches, and presentations that are produced by various sources around the world. Individual country reviews and surveys are the most recognizable of its publications and they offer detailed information, statistics, and analysis on topics of specific importance to various countries. Searches can be conducted for specific topics, countries, and departments that sponsored the study.
The user can also access the organization’s research in other formats, such as the “OECD Observer” magazine, “Policy Brief” summaries, and the “OECD Direct” e-mail alerting service. The OECD web site also offers purchases from an “award-winning online library of e-books, e-periodicals and interactive statistical databases.” The statistics are particularly useful for research as the organization plays the pivotal role of standardizing measurement criteria and normalizes world economic figures for comparison.
In conclusion, the OECD makes a significant contribution to world economic development, promoting “sustainable economic growth and employment and rising standards of living in member countries while maintaining financial stability, so contributing to the development of the world economy.“ Furthermore, it is a valuable source of information for policy-makers, researchers, and international businesses because of the extensive availability of its publications.
II. The Digital Divide
While telecommunications and the widespread expansion of internet use are significant factors in Western economic development, a vast majority of the world’s nations are lagging far behind. The Digital Divide is the term used to describe the remarkable technological disparity that exists between the have’s and the have-not’s. The Organization for Economic Cooperation and Development (OECD) has analyzed this situation extensively and based on their research, this paper discusses the extent of the divide, some challenges of bridging the gap, and some possible solutions that are particularly interesting.
While many perceive that the whole world is shrinking by technological advances like the internet, the reality is that most countries do not even approach the level of technological sophistication and interconnectivity that most of the OECD countries enjoy. In fact, “half the world’s population has never made a telephone call, much less accessed the internet.” Meanwhile, the consensus of international bodies like the OECD is to promote efforts to bridge this gap as it is a major constraint to development in the New Economy.
Measuring the Extent of the Divide
Various indicators are used to determine the extent of the digital divide but its existence is universally acknowledged. Because the OECD is principally concerned with promoting sustainable economic development, it has dedicated much effort to analyzing this technological disparity and working to bridge the gap. It has defined many indicators of the divide, such as infrastructure, internet connectivity, and e-commerce.
Perhaps the most startling statistic illustrating the extent of the divide is the extreme disproportion in the number of internet hosts per region. In North America in 2000, for example, there were one hundred sixty-eight hosts per one thousand inhabitants, compared to an astonishingly low one-third of a host per one thousand people in Africa. It is easy to see that while penetration of these hosts is growing worldwide, the disparity is such that many developing regions have a long way to go.
Meanwhile, there are disparities among OECD countries in various other indicators, suggesting the importance of many other factors, such as total amount of time people stay online and number of PCs per household. In countries where access is unlimited like the United States, people naturally spend more time online than in countries like Portugal and France, where internet connections are metered and charged accordingly. Also, certain OECD countries like the Netherlands and Australia have many more PCs per household (roughly 60%) than other member states like Italy and France (roughly 25%). The difference in internet access is therefore great among OECD countries, but the drop-off is significantly greater with the non-member states, further complicating development efforts in these countries.
Why is the divide so great? While limited infrastructure and development progress are the clear culprits, the OECD has also outlined some other indicators. Within member states, for example, larger families tend to have more PCs, more educated individuals tend to use ICTs, and of course, those with a higher income access the internet more than others. Language, ethnicity, and gender also play a role. Presumably, these determinants help to explain the relatively low level of ICT use in Lesser Developed Countries (LDCs), where equality of education, income and social status are typically far from meeting Western standards.
Benefits of ICTs for Development
It is important to recognize what the benefits of ICT really are. Do they necessarily improve standard of living? Should each country of the world necessarily seek internet access for everyone? While there have been discussions in various forums regarding the potential drawbacks of this phenomenon of globalization, such as a society ‘losing its culture’ or an economy getting a smaller piece of the pie than it deserves, most policy-makers agree on the need to extend ICT technology to everyone.
One particularly important element of the efficiencies of increased ICT access is the potential for growth in e-commerce. However, e-commerce requires not only internet connectivity but also consumer trust in the security of online transactions. The data for the number of secure sights worldwide is revealing in this regard. In October 2000, there were 110,000 secure servers worldwide but ninety-five percent of them were in the OECD area. In order to benefit from the efficiencies of shopping online, people must not only have access to the internet, but they must develop trust in the systems they are using.
As articulated by the Emerging Market Economy Forum in its meeting in Dubai, improved access to ICT offers not only the increased exchange of useful information, but it also empowers individuals, firms, and societies. The benefits reach both enterprises and consumers, as increased access to the global marketplace offers greater opportunities for efficiency. Meanwhile, challenges include infrastructure limitations, high cost of connectivity, poor education regarding available opportunities, and insufficient trust in the safety of electronic commerce.
Who is responsible for ameliorating these problems? There is an emerging awareness of the need for governments to provide infrastructure, establish national development goals for improving ICT access. Similarly, private business and competition also play their role and it is worthwhile to discuss where each participant can make a difference.
Cost of local communication is generally the most significant hindrance to conducting e-commerce. One important evolution sparked by government officials in Western countries in this regard is the liberalization of telecommunications service in the OECD countries. This process resulted in lowered access prices for residential phones, business lines, and more recently, bandwidth prices. This general trend has been paralleled by a similarly important price reduction in internet access prices. In fact, according to the OECD, Internet prices have dropped by more than half since 1995 largely due to opportunities for unlimited access, something offered in ten OECD countries by 2000.
There are numerous opportunities for private businesses to play a role in bridging the gap. Educational programs, technological advances, and expanded competition all play a role in providing greater access to LDCs. The OECDs study, “Exploiting the Digital Opportunities for Poverty Reduction,” demonstrates some of the opportunities for businesses to profit while benefiting the process of increased ICT access. Also, OECD conducted a study that articulates the importance of educating individuals to use the internet, “E-learning – The Partnership Challenge.” It illustrates the lack of good quality educational software aimed at developing skills in effective e-commerce. It is not only necessary to provide computers, but to also educate people on how to use them.
The case of Mexico’s “Telesecundaria Programme,” which has succeeded in bringing computers to the classroom in even the smallest villages, helps to illustrate this point. Not only do these programs help to educate the use of computers, but access to the Internet also brings a much broader source of educational information to the children. Many South American countries have adopted his plan and have achieved similarly profound success. There is a need to empower people with the tools and skills to access information effectively and wisely, something that I consider to be low-hanging fruit relative to more complex development and infrastructure challenges. Education has also proven to be a powerful tool even in the most advanced countries. “Schemes in which well-qualified tutors use ICT for unemployed adult learners in the United States have not only imparted significant ICT skills, but have given a new confidence and self respect to the learners, as they realise that they have mastered what many who are better educated have not yet begun to grasp.” In order to achieve the desired expansion of ICT access, such best practices must be implemented in parallel with increased availability of technology.
Finally, the growth of Digital Television presents another opportunity for popularizing internet connectivity around the world. “Because the television is a familiar and relatively cheap household appliance, internet television services could potentially bring the Internet to poor, less well-educated, elderly and other low-access groups and thus help bridge the digital divide.”
Perspective of Emerging Markets
Finally, the most important problem with this extreme technological disparity is the negative impact it will likely have on development. As fully industrialized states become increasingly involved in the interconnected web of the internet and other tools for efficient communication and commerce, the LDC’s will be at an even greater disadvantage in their efforts to improve the standard of living of their inhabitants. “The digital divide between most developed countries and the emerging market countries is real. In fact, it is part of a wider, more general development divide.
A crucial element of e-commerce development, from the perspective of emerging markets, is that the process of ICT development empowers relatively less connected countries, rather than widening the digital divide. As global commerce becomes increasingly dependent on internet connectivity, the benefits of this more prominent role of technology could exclude the less developed countries. It is crucial to overcome the obstacles to increased ICT access as this connectivity is widely believed to be a pivotal area of opportunity for “economic growth, jobs, expansion of world trade, and improved social conditions.”
As stated by the Secretary-General of the OECD, “Investments in information and communications technologies (ICTs), connectivity and the growth of electronic commerce have been key elements of the expansion of e-business and the ‘digital economy.’ These developments, along with policies to develop human capital, innovation and entrepreneurship make up the key platform for the New Economy.” The OECD is working to promote trade and development in LDCs and these efforts, along with coordinated government support and private initiatives are crucial factors for limiting the further expansion of the technological divide.
James, Edwyn. Centre for Educational Research and Innovation (CERI). 2001.
Johnston, Donald. “The Digital Economy and the Digital Divide.” Keynote address by the Secretary-General of the OECD. 2001.
Mansell, Robin. “OECD Emerging Market Economy Forum on Electronic Commerce.” OECD Dubai, 2001.
Overview of Organization for Economic Development. www.oecd.org.
OECD. “Electronic Commerce.” July, 2001
OECD. “Understanding the Digital Divide.” Paris, France. 2001.
| Contact Mike Dorsey by email ||Mike Dorsey Home Mike Dorsey in Egypt Middle East Studies Education|