E-business Means Much to Less Developed Countries (LDCs)
E-business Means Much to Less Developed Countries (LDCs)
Industrial development options for less developed countries (LDCs)
hinge increasingly on leveraging e-business as a means of promoting upgrading
within global value chains. E-business represents a major opportunity for third
world companies (TWCs) that can access and use it effectively and a threat to
those companies that cannot. E-business holds great promise for TWCs in four
key areas: leveraging the potential productivity gains from internet-based B2B
e-commerce; max missing operating synergies; exploiting systemic efficiencies
and connecting and deepening links, to global production and trade networks.
By not making the transition to e-business, TWCs may be placing themselves
at risk of becoming less competitive in the globally interconnected market,
impacting on both their current market positions and long-term viability. The
concordant effects of marginalisation and exclusion are likely to be a
combination of: deepening poverty; high unemployment; widening inequality;
a weak and rapidly eroding export base and low and even negative growth
rates.
Issues centred around the prospects for knowledge-based industrial development, the
diffusion of information and communication technologies (ICTs), the potentials for
spreading the gains of globalisation and global value chain analysis in the third world
54 S. Moodley
have recently come under intense academic scrutiny in the interdisciplinary field of
development studies [1-3]. Concurrently, influential international development agencies
(most notably the World Bank, UNDP, UNCTAD and the IDRC) are also beginning to
recognise the power and valence that the internet potentially holds for third world
industrial development [4]. This spate of interest has been sparked by the internet, which
is believed to be a necessary tool for manufacturing competitiveness. Proponents of the
internet claim that the impact of e-business is likely to be profound because of the
potential scale of value that it adds to business.
The rapid growth of internet connectivity in the north seems to be a consequence of
the economic benefits that internet use offers to connected firms. Yet, little seems to be
known about the use of the internet among third world companies (TWCs). It is believed
that the internet holds out the promise of enhanced access to the global market-place for
TWCs. The evidence of real benefits of e-business in less developed countries (LDCs) is,
however, scattered and anecdotal, or based on speculation and theoretical arguments. In
other words, the benefits of the internet for business in the third world is more potential
than real. Moreover, the current debate on the prospects and challenges of e-business is
heavily skewed towards the highly industrialised countries of the north. There is,
therefore, an urgent need for empirical research in the south which tackles the following
key questions: what are the potential benefits of the internet for TWCs and what
challenges does e-business pose for third world industrial development? Will the internet
marginalise third world manufacturers or will it facilitate their access to world markets?
E-business is a new terrain for academic inquiry in development studies. This is
clearly evidenced by the dearth of literature on e-business in the third world [5]. The ebusiness
construct is still quite ‘sticky’ and requires greater analytic precision before it
can become integrated into mainstream development. Furthermore, some social scientists
have been quick to dismiss e-business as hype without fully understanding what e-business
actually entails. Their opinions have no doubt been colored by the overblown
claims of an ‘internet revolution’ found in the popular business media and the unfounded
triumphalism, couched in techno-speak, of the IT sector. The time is now ripe for cutting
through the hype and fruitfully debating the development potential of e-business.
The objective of this exploratory paper is to provide a preliminary analytical
foundation to help focus the policy debate. The paper is structured as follows. Section 2
attempts to conceptualise what e-business actually means. Section 3 briefly reviews the
prospects and challenges of e-business for LDCs. Section 4 highlights the policy
challenge facing TWCs in the new ICT-dominated information economy. Section 5
concludes the study.
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Keywords: E-business; developing countries; internet; B2B e-commerce; geminideal; Christmas gifts gadgets.
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