ICTs As Enablers of Development:
A Microsoft White Paper

December 2004

Executive Summary

Information and communications technologies (ICTs) are transforming societies and fueling the growth of the global economy. Yet despite the broad potential of ICTs, their benefits have not been spread evenly. Indeed, using ICTs effectively to foster social inclusion and economic growth is among the key challenges facing policymakers today.

As one of the world’s leading ICT firms, Microsoft brings a unique perspective to this issue, one informed by years of collaboration with the international development community. Microsoft firmly believes that ICTs hold tremendous promise as an enabler of social and economic development. ICTs can help underserved populations obtain, manage and disseminate knowledge and to tap into global networks of information and services. And rapid innovations in technology – the fruits of intensive R&D efforts by Microsoft and others – are making ICTs less expensive and easier to use, bringing the power of ICTs within the reach of ever more people.

ICTs promote development across many dimensions. At their most fundamental level, ICTs enable organizations to be more productive, thereby spurring economic growth and helping firms be more competitive. ICTs can also expand the reach and effectiveness of social development projects and have already yielded important benefits in such areas as healthcare, education, and environmental preservation. Public-sector uptake of ICTs is also making governments more efficient and their decision-making more transparent. Finally, many developing countries have achieved important economic gains in nurturing the development of domestic ICT industries.

It is not enough, however, to place ICTs onto the development agenda without also addressing other critical elements of the development equation. A nation’s regulatory environment in particular can have a profound impact on ICT utilization and ICT industry growth. Microsoft actively engages with policymakers on a range of ICT policy issues that affect users and the industry, including such issues as property rights, international trade and investment, competition, publicly funded research, online security and privacy, technology standards, e-Government, education and digital literacy, ICT skills development, affordable financing, incentives for private-sector ICT investment, and telecommunications infrastructure and access.

Microsoft also recognizes, however, that public-sector leadership must be combined with private-sector investment and commitment. For its part, Microsoft’s proposition for promoting social inclusion and economic growth is reflected not only in the company’s many development initiatives, but also in its fundamental goal as a company – to provide products and services that help people be more productive and to unlock their full potential. The final section of this paper describes Microsoft’s value proposition for development and explains our various initiatives and programs in this area in more detail.

Microsoft hopes that this paper will help readers obtain a greater appreciation for the potential that ICTs hold for social and economic development, and of the important benefits that can accrue to developing nations that fully exploit these benefits. We also look forward to engaging in a broader dialogue with policymakers and thought leaders on how governments, industry, and users can work most effectively to unlock the full potential of ICTs for the developing world.

I. Introduction

Over the past several years, a broad international consensus has emerged that information and communications technologies (ICTs) offer a potentially powerful mechanism for promoting social and economic growth. Several recent studies have described remarkable success in using ICTs to help underserved communities and to create new opportunities in developing countries. Yet these same studies often also cite other examples of squandered resources and unfulfilled expectations, of costly ICT investments that did little to improve the lives of the target community.

As a result, the early, unbridled enthusiasm for ICTs in developing countries and the international development community is being replaced by a more pragmatic realism, one that seeks to look beyond the hype and to analyze how ICTs can be used sensibly and cost-effectively to promote development. While debate on these issues continues, several analyses have concluded that the social, economic, and regulatory environment in which an ICT-based development project takes place can be as important as the ICTs themselves to the project’s ultimate success.

This Microsoft paper seeks to contribute to this discussion. Microsoft is active in more than 90 countries around the world, each of which is at a different stage of development and has adopted unique strategies in applying ICTs to its own development goals. Through these experiences, Microsoft has gathered important insights into the types of policies that are more or less effective in promoting ICT-based development.

Although the challenges facing developing countries are many, Microsoft firmly believes that computing technologies and other ICTs hold tremendous potential to help overcome these challenges. Microsoft also recognizes that unlocking this potential requires not only public-sector leadership, but also private-sector commitment. Microsoft, for its part, is dedicated to working closely with underserved peoples, developing countries, and the broader international development community to realize the full potential of ICTs for human development.

Microsoft understands that there is no technological silver bullet that can “solve” illiteracy, eradicate extreme poverty and hunger, or eliminate high child mortality rates or poor maternal health. Microsoft does believe, however, that as new ICTs continue to drive rapid globalization, developing countries have a unique opportunity to harness the power of ICTs to address these and other urgent development challenges more effectively.

Part II of this paper examines those characteristics of ICTs that lend themselves to development challenges, while Part III describes the role of the ICT industry as a potential driver of economic growth in the developing world. Part IV sketches the key elements of a regulatory framework that is conducive to ICT-based development and ICT industrial growth. Part V concludes with a review of areas in which ICTs have been applied to advance development goals and briefly describes Microsoft’s contributions to these efforts.

II. ICT as an Enabler

In one sense, ICTs are simply tools. Like any tools, they can be either well-suited or not to the task at hand. Just as a hammer is ideal for pounding a nail, but less useful in changing a light bulb, the value of a specific ICT to development cannot be answered in the abstract, but depends on whether it is suited to the project at hand, whether the project provides sustainable incentives for those involved, and whether the people implementing the project have the skills necessary to exploit the ICT effectively.

In another sense, however, ICTs are tools unlike any the world has ever seen. Because ICTs can be applied to a tremendously diverse range of human experience, they are transforming virtually every sector of society and the economy. Digital breakthroughs are creating new possibilities for improving health and nutrition, expanding knowledge, stimulating economic growth and empowering people to participate in their communities.

ICTs are also multifunctional and increasingly interoperable, which allows users to combine and implement them in almost infinite ways. Also, rapid innovations in technology are making ICTs both less expensive and easier to use, thereby bringing the power of ICTs within the reach of a greater number of people. Finally, today’s technological transformations are intertwined with globalization, and together they are creating the new realities of the global economy

These qualities make ICTs highly relevant to the developing world. As many developing nations have recognized, ICTs have the potential to spur local economic growth and to expand the reach and effectiveness of development initiatives. Upon closer analysis, other key attributes of ICTs also make them of critical importance to the development agenda:

➢ Knowledge management. The defining feature of ICTs is their ability to help people collect, manage, store, retrieve, and distribute knowledge. Knowledge management is critical in the global economy, where success often depends on the ability to acquire knowledge quickly, use it effectively, and disperse it to the right people rapidly and inexpensively. ICTs can help level the playing field in this regard between firms in the developing and developed world, thereby enabling developing nations to compete more effectively in the global economy. Furthermore, because many non-economic development challenges have their roots in barriers to information, ICTs can help overcome these barriers.

➢ Efficiency. ICTs enable public administration and private enterprises in developing countries to operate more efficiently and productively at reduced cost. Tapping into these efficiency gains can make enterprises in developing countries more competitive and also increase the viability of development projects by making them more cost-effective. ICT-driven efficiency likewise opens opportunities to small and medium enterprises (SMEs) in developing countries to exploit their competitive strengths – e.g., by leveraging lower labor costs to provide cost-effective online services to distant markets, or by supplying goods directly to customers, rather than through intermediaries, and thereby retaining a greater share of profits.

➢ Networks. People increasingly use ICTs to tap into networks of people and information. The Internet is perhaps the quintessential global ICT network, which itself runs on a multitude of physical networks (e.g., the traditional telecommunications network, satellite- and cable-based networks, etc). ICT networks are an indispensable element of the development equation, as they can provide users in developing countries with effectively equivalent access to information, resources, distribution mechanisms, and potential customers as users and firms in developed countries. Providing the infrastructure necessary to access ICT networks can, however, be expensive and complex. One of the challenges for developing countries is to select the technology that is most appropriate to their needs and that local populations have the capacity to use effectively.

➢ Multipurpose. Many firms (Microsoft prominent among them) are increasingly focused on ensuring that their ICT products are easy to use and can be adapted to an almost infinite variety of uses. These efforts mean that ICTs are accessible to more users and that users can tailor even sophisticated ICTs more easily to their own needs. And the rapid pace of ICT innovation means that the time between invention and commercial application is typically measured in months or even weeks, rather than years. Thus, in contrast to many products and services, ICTs used in the developed world will often be equally effective when applied to developing-world problems.

These attributes make ICTs an essential enabler of development. ICTs play this role in several respects: As enablers of cross-sectoral productivity and economic growth; as enablers of specific social development goals; and as enablers of political participation and good governance. The following sections explore these issues in greater detail.

A. ICTs as Drivers of Economic and Productivity Growth

An economy’s ability to increase productivity is a powerful measure of its economic well-being. Gains in productivity allow firms to raise wages without raising prices, thereby creating real, non-inflationary income growth (wage increases funded solely by higher prices, by contrast, provide no net gain in consumer purchasing power and no real economic growth). Thus, the surest path to sustainable economic growth is for organizations to invest in assets that increase productivity.

Although economists have long debated the relationship between ICTs and productivity, a growing body of data suggests that ICT investments – particularly when linked to fundamental organizational change – can have a substantial, positive impact on productivity. This impact goes beyond a direct return on investment. A recent study by the U.S. Department of Commerce, for instance, concluded that information technology investments by U.S. firms in recent years had a widespread and lasting impact on the revival of U.S. productivity growth,[1] suggesting that ICTs, when used effectively, can help organizations use resources more efficiently and become more competitive.

A recent OECD study likewise concluded that while there are good grounds for believing that the use of ICTs are positively correlated to productivity growth, acquiring ICTs is not enough for countries to derive economic benefits.[2] Other factors, such as the regulatory environment, the availability of appropriate skills, and the ability to spur organizational change, often have a substantial influence on the ability of firms to exploit the benefits of ICT.

While most economic studies to date on the linkage between ICT and productivity have focused on developed economies, there are good reasons to believe that ICTs are equally vital to economic growth in developing countries. Information and knowledge are the bedrock of the Knowledge Economy – the “currency” of modern societies, to paraphrase a recent leading development paper.[3] In today’s increasingly integrated global economy, firms across the economic landscape, including those in developing countries, will need to learn how to acquire and use information effectively if they hope to succeed.

While the utilization of ICTs in developing countries remains below expectations, case study evidence suggests that ICTs are beginning to provide a basis for productivity and economic growth in developing nations. For instance, ICTs are being used in Africa, India, and other nations to create rural trading networks that connect local craftspeople directly with their customers. For instance, the PEOPLink project links over 100,000 artisans from various developing nations to potential customers through its online trading portal, FairTradeDirect.com. At a business-to-business level, Utilities Afrique Exchange provides an e-trading platform for utilities companies in Africa to simplify procurement and reduce costs.

B. ICTs as Enablers of Social Development

Perhaps the most impressive examples of ICT’s potential to promote development have occurred in the context of development projects targeting social inclusion and cohesion – projects that provide excluded communities with greater opportunities to participate in community life. Because many of the challenges facing traditionally underserved communities result at least in part from inadequate access to knowledge and information, ICTs can help surmount these challenges by making it easier and less expensive to collect, analyze, and disseminate information to the people who need it. The Internet in particular is creating nearly endless opportunities for individuals and communities in developing countries to obtain knowledge and communicate with others.

At the same time, it is particularly in the area of ICT-based social development that a healthy dose of pragmatic realism is critical. Particularly when dealing with cutting-edge or novel ICT products, there is always a risk that the choice of technology will drive the proposed solution, rather than the sought-after solution determining the choice of technology. Selecting a “suitable” ICT solution – including, critically, not only one that is affordable, but one with regard to which the surrounding social, economic, and legal context provides sustainable incentives for use on an ongoing basis – must be a principal factor in judging a project’s viability. Failure to do so will undermine not only the project’s own goals, but may leave the targeted community disillusioned with ICTs generally and less likely to embrace ICTs in the future.

With that cautionary note in mind, ICTs nevertheless have tremendous potential as enablers of social development. Although the multifunctional, flexible nature of ICTs means that they can be applied to virtually any development goal, areas in which ICT has already proven effective include the following:

▪ Healthcare. ICTs are increasingly being used to deliver health care services in the developing world, especially to patients in remote areas where healthcare services are scarce. Examples include using ICTs for remote consultations between patients and physicians as well as remote diagnosis and even treatment; data collection for both research and diagnostic purposes; “real-time” collaboration between physicians and health researchers in different parts of the world; improving the speed and effectiveness with which nations and organizations respond to epidemics; and streamlining and improving health care services generally. ICTs are also being used to deliver healthcare services to in remote rural areas where more traditional healthcare services are scarce. ICTs are playing a central role in programmes to combat HIV/AIDS, tuberculosis, malaria and other diseases.

▪ Education. Although ICTs cannot replace the vital teacher-student relationship or supplant in-person instruction, ICTs are increasingly being used as a tool to supplement traditional curricula and teaching methods and to open new opportunities for skills training. For instance, ICTs are being used to provide low-cost access to online curricula and other resources; enable distance education for students in remote areas or who for various reasons cannot physically attend school; support research networks; provide technical and vocational training, including “lifelong” training opportunities; and improve and streamline education administration.

▪ Environment / sustainable development. Many environmental challenges in the developing world are the result of failures to alert policymakers of risks and the inability to quantify the seriousness of environmental hazards until it is too late. ICTs allow researchers and environmental agencies in developing countries to tap into global data networks and information resources, which enables policymakers in these countries to make better and more informed choices. ICTs are being used to monitor environmental conditions and collect and analyze data; coordinate responses to ecological threats; identify polluters who might otherwise go undetected; and help policymakers understand threats and formulate less intrusive agricultural and industrial processes.

Concrete examples of how ICTs are being used to address these and other social development goals are described in greater detail in Part V.

C. ICTs as Enablers of Good Governance

Like other organizations, governments increasingly are leveraging the power of ICTs to operate more efficiently and effectively. For instance, many governments in both developed and developing countries are working to migrate paper-based documents and records into digital format, and are even beginning to “link up” databases of these records for use between various departments. These efforts are making governments more responsive and making it easier for citizens to access public records, information, and services through the Internet.

The use of ICTs to drive “e-Government” efforts can also provide an important “democratizing” function by giving people a new and powerful way to participate in government and interact with public officials. While these efforts can at times raise important civil liberties issues, particularly to the extent they share personal information without the individual’s knowledge or consent, ICTs can also make government processes more open and transparent to citizens. ICTs can also provide an important oversight function by enable people to understand more clearly how taxpayer money is being used to provide public goods and services.

III. ICT as an Industrial Sector

While it is clearly in their application that ICTs hold the greatest potential for economic and social development, many governments are actively seeking to spur domestic economic growth by nurturing the emergence of local ICT industries. This is hardly surprising, as the remarkable expansion of the ICT marketplace in recent years has generated millions of new jobs and billions in additional tax revenues, growth that has benefited nearly every region of the world. Many developing countries also perceive domestic ICT industry growth as an effective means to achieve related development objectives, including to attract foreign direct investment, provide a basis for technology transfer, satisfy local market demand for ICTs, and generate further growth in upstream and downstream industries (such as marketing or financial services).

As the recent downturn in corporate ICT spending has demonstrated, the scope for growth in the ICT marketplace, like every other sector of the economy, is indeed finite. Thus, it is perhaps unrealistic to think that the ICT sector will account for a substantial share of economic activity in all or even most developing nations in the foreseeable future. Nevertheless, it is clear that many developing countries are establishing domestic ICT firms to service domestic and even regional users. Indeed, recent data from International Data Corporation suggests that a core group of developing countries in several different regions of the world have experienced impressive ICT industry growth over the past several years. For instance:

➢ Asia. Between 1995 and 2001, India experienced over 10 percent annual growth in the number of IT companies and over 13 percent annual growth in the number of IT industry employees. By 2001, India’s IT sector was comprised of almost 15,000 firms employing almost 550,000 people. During this same period, the number of Indonesian IT companies grew by over 14 percent annually and the number of IT sector employees grew by almost 20 percent. In 2001, Indonesia’s IT sector was comprised of over 3000 firms employing more than 55,000 people.

➢ Latin America. Between 1995 and 2001, Mexico experienced almost 10 percent annual growth in the number of IT companies and almost 22 percent annual growth in the number of IT industry employees. By 2001, Mexico’s IT sector was comprised of 9800 firms employing more than 370,000 people. During this same period, the number of Venezuelan IT firms grew by over 6 percent annually and the number of IT sector employees grew by over 12 percent. In 2001, Venezuela’s IT sector was comprised of over 2700 firms employing almost 91,500 people.

➢ Central and Eastern Europe. Between 1995 and 2001, Poland experienced over 11 percent annual growth in the number of IT companies and 13 percent annual growth in the number of IT industry employees. In 2001, Poland’s IT sector was comprised of almost 8500 firms employing nearly 177,000 people. During this same period, the number of Slovenian IT firms grew by over 5 percent annually and the number of IT sector employees grew by almost 8 percent. In 2001, Slovenia’s IT sector was comprised of over 850 firms employing over 15,000 people.

Although these and other developing nations have been key beneficiaries of global ICT industry growth, the paths that these nations have followed have varied tremendously. To a large extent, this divergence mirrors the diversity of the ICT industry itself, which is comprised of many different sectors, each with its own unique characteristics. Briefly, the characteristics of each major segment of the “information technology” component of the ICT industry are as follows:

➢ Hardware. Hardware comprises the tangible element of ICT systems. Despite the proliferation of ITC devices in recent years, the industry has been consolidating and further consolidation seems likely. Hardware firms typically engage in asset-intensive manufacturing and, accordingly, often require large up-front investments. As a result, start-up firms can find it difficult to compete against their larger, established rivals. Also, the current trend is toward commoditization of components, which may make it difficult for new firms to distinguish themselves in the marketplace on anything other than price. At present, much hardware manufacturing occurs in a handful of Asian nations, whose low labor costs and deep manufacturing know-how make them formidable competitors.

➢ Software. Software helps people use ICT devices to perform specific tasks. The software industry is extremely varied and is comprised of literally thousands of firms offering a wide range of products. In contrast to the hardware industry, software development has become more focused and specialized, which has led to significant industry diversification. At its core, developing software is an intellectual activity and, as such, generally requires relatively few up-front resources. Successful software firms can be found in many developing countries and range in size from one-person shops to large multinational corporations. Due to the intangible nature of software, developers typically rely on intellectual property laws to protect their products against unauthorized copying.

➢ Service providers. Service providers help organizations use their ITC systems effectively. Today’s IT services industry is led by a handful of large multinational firms and thousands of smaller firms. Like the hardware industry, IT services firms often operate on small margins. As such, changes in global exchange rates and labor costs can cause rapid changes in the competitiveness of service firms that rely on export-oriented work. In addition, smaller firms may not be able to achieve the economies of scale necessary to bid competitively against large multinational firms.

➢ Software-plus-services. Many nations have developed a mixed software-plus-services industry. To a substantial degree, this pattern results from the fact that most IT service providers also develop and license software. For instance, web site designers, systems integrators, e-commerce solution providers, and IT security providers, among others, typically develop specialized products as an integral part of their business. These firms typically operate with higher margins than “pure” services firms and are less impacted by economies of scale or changing labor rates. Similarly, many software firms also provide customization and consulting services to customers, either through in-house providers or through partnerships with third parties.

Depending on their circumstances, some developing countries might be in a better position to leverage their local strengths and resources to competitive advantage in one ICT sector more than others. Indeed, it is relatively unlikely that any single developing country will excel in every sector of the ICT industry. Accordingly, policymakers working to drive the growth of a domestic ICT industry should carefully evaluate their country’s own resources and other sources of possible competitive advantage against the characteristics of each ICT sector to determine which areas, if any, are potential areas for long-term industrial growth.

* * * * *

As noted at the outset of this paper, the initial enthusiasm for ICTs in the development community has been tempered in recent years by the realization that merely introducing ICTs into development projects – without also addressing other elements of the development equation – will often fail to provide the development panacea that many had hoped. Accordingly, several governments and organizations have turned their efforts to seeking to understand why some applications of ICT to development succeed while others fail. These efforts have helped illuminate the pitfalls that can capsize even the best-intentioned ICT development projects.

Certain of these studies have also sought to illuminate how social, economic, and legal factors can impact ICT-based development. These issues are of particular relevance to policymakers, as a nation’s regulatory environment can have a profound impact on the incentives and disincentives that motivate investors, ICT suppliers, and users and that can often spell success or failure for an ICT-based project.

The next section of this paper explores in greater detail how governments can promote policies to encourage private-sector development and utilization of ICTs and lay the regulatory groundwork for the successful application of ICTs to social and economic development.

IV. Factors Affecting ICT-Driven Development

A nation’s regulatory policies can have a profound influence on ICT investment and use. Legal rules create a complex web of incentives and disincentives to private-sector action, some of which will impact a society’s desire and ability to develop, acquire, or utilize ICTs. Where a nation’s legal framework offers strong incentives for people to develop and acquire ICTs – including the skills necessary to use ICTs effectively – governments will have greater success in leveraging the power of ICTs and ICT industrial growth to advance social and economic development goals.

While a broad range of laws and policies may influence the overall bundle of incentives for ICT investment and use, in most legal regimes the most critical laws and policies arise in the following areas: (i) policies that directly impact ICT innovation and investment; (ii) policies that develop people’s capacity to utilize ICTs effectively; (iii) policies affecting entrepreneurship and R&D; and (iv) policies affecting telecommunications infrastructure and access. The following sections address each of these areas in turn.

A. ICT innovation and investment

ICT-based development is sustainable over the long term only if people have incentives to acquire and utilize ICTs, including meaningful opportunities to leverage ICTs to improve their own lives. The private sector is most likely to invest in ICTs in an environment that provides meaningful protections for property rights (including rights in intangible property), promotes competition and trade, protects consumers, and creates incentives for firms to invest in developing innovative new products and services. The core principles of such a framework are set out below.

1. Intellectual property rights

Intellectual property (IP) laws provide critical incentives for ICT innovation, as they protect the work of any inventor, whether an individual, a research institution, or an enterprise. Robust IP laws enable inventors to capture a portion of their innovation’s value in the marketplace, either by practicing the innovation themselves or by licensing it to others. Intellectual property is of particular importance to the ICT sector, which is characterized by rapid innovation and high rates of investment in research and development (R&D). IP laws allow firms to recoup the R&D investments embodied in their innovative technologies, which provides the funds for future rounds of R&D and product improvement.

Strong IP laws and effective enforcement are just as vital to innovation in developing countries. IP protections enable inventors and entrepreneurs in developing economies to prevent others from copying their innovations and thereby “free riding” on their R&D investments. Effective IP protection also promotes foreign direct investment and technology transfer by giving foreign firms the confidence of knowing that their investments and technologies will not be susceptible to rampant copying or compulsory licensing.

In the area of ICT, domestic SMEs are often one of the driving forces behind technology innovations. Their innovative and creative capacity, however, is not always fully exploited as many SMEs in the developing world are either not aware of applicable IP laws, perhaps more often, do not have confidence that such laws will be respected and enforced.

To promote innovation and ICT-based growth, policymakers should:

▪ Enact and enforce meaningful intellectual property laws. Governments should adhere fully to their commitments under the WTO TRIPS Agreement and any relevant bilateral or multilateral agreements respecting IP. The TRIPS Agreement requires WTO Members to provide right holders with key substantive protections and to provide effective enforcement procedures, including the imposition of remedies that constitute a deterrent to further infringements. Governments should also ratify the WIPO Copyright Treaty, which extends copyright law to the online environment and, as such, provides a supportive legal framework for e-commerce.

▪ Provide effective patent protection for ICTs . Patents stimulate innovation by giving firms the means to protect new and useful technologies against misappropriation. The requirement that inventors publicly disclose their innovations as a condition of protection, combined with the widespread practice in the ICT sector of cross-licensing patented innovations to third parties, promote the diffusion of technical knowledge and spur follow-on innovation by subsequent inventors. Governments should ensure that their patent laws are consistent with international norms and applicable procedures yield high-quality patents in a timely manner. Inventions that otherwise meet the criteria for patentability should not be denied protection merely because they are implemented in computers or other ICTs.

|After Mexico strengthened its IP laws in the early 1990s, Mexican start-up IT firms found it easier to attract private capital, |
|while many established firms increased their R&D spending and found new success in recruiting Mexican science graduates.[4] |
|After Singapore revised its copyright laws in 1987 to protect software and increase penalties for piracy, foreign investment by |
|computer manufacturers and software firms increased, leading some to label Singapore “the second Silicon Valley.”[5] |
|After Korea strengthened its copyright and patent laws in 1987, export revenues from printing increased 41 percent and local |
|firms experienced a “reverse brain drain” as Korean scientists working abroad returned to pursue careers in the new regulatory |
|climate.[6] |

2. Rights in tangible property

While robust intellectual property rules clearly spur ICT innovation and foster foreign investment around ICTs, clear, transparent rules governing the ownership and transfer of tangible property can also substantially impact a country’s development prospects. For many underserved populations, their homes and land are their most important financial asset. Ensuring that people can obtain and establish clear title to such property is vital to developing a broader financial environment that is conducive to commerce and economic growth.

In short, the private sector will not invest in the resources necessary to drive economic growth unless the surrounding property rules are clear, reliable, and consistently enforced. Indeed, clearly defined and enforced property rules are widely viewed as a necessary pre-condition to meaningful participation in a market economy, and the lack of such rules can create significant disincentives to foreign investment. Governments can promote a legal framework that respects property rights in the following ways:

▪ Provide clear rules on property ownership. For many people in developing countries, obtaining clear title to the ownership of real property is essential to enabling them to obtain credit, which they can invest in businesses or other financial ventures and thereby become more productive and economically independent. Governments should ensure that property ownership rules are clear and consistently enforced, and that people and firms have affordable access to courts or other fora in which disputes over property ownership can be readily resolved

▪ Build a regulatory environment that supports microfinance. An important complement to property ownership – and a critical element to the viability of business-to-consumer e-commerce – is straightforward, widespread access to microcredit and microfinance. Governments should also remove regulatory barriers that might impede financial institutions from offering credit cards and similar financing options to consumers, and should provide incentives and consumer protections to ensure that such credit options are available to underserved populations.

|In the late 1980s, the Peruvian government embarked on program to establish formal rights in real property. By August 2000, |
|close to 7 million Peruvians had secured land title, thereby introducing more than $4 billion of assets into capital markets. |
|Over 6.3 million Peruvians below the poverty line now legally own their real estate assets,[7] which they are using to obtain |
|financing to better their lives.[8] |
|Uzbekistan, a country with a population of nearly 26 million people—the vast majority of whom do not have access to personal |
|credit—recently adopted laws enabled the establishment of credit unions offering affordable financial services. As a result, |
|savings and loan activities are rising at a considerable pace.[9] |

3. International trade and investment

The global reach of today’s ICT marketplace means that open and non-discriminatory trade is of paramount importance. Protectionist measures and related barriers to trade can create substantial impediments to ICT access in developing countries. Barriers to ICT trade also have longer-term adverse effects on local ICT industries because they prop up inefficient domestic firms and discourage multinational firms from pursuing local partnerships or engaging in foreign direct investment. Trade barriers also reduce competitive pressures for local ICT firms to innovate and lower their prices, which means that domestic consumers must pay higher prices for inferior goods.

Government procurement policies that extend preferences to domestic ICT suppliers likewise distort international trade. In many nations, governments are the dominant purchasers of ICT products and services, and their procurement practices can have a profound impact on the marketplace. Governments that procure ICTs based on neutral, non-discriminatory criteria – such as performance, suitability for purpose, and overall value – force competing vendors to offer the best products at the best price, which creates a dynamic of competition that often spills over into the broader marketplace. Where, by contrast, governments procure ICTs based on the nationality of the product or supplier, or on non-performance criteria (e.g., a software program’s development or licensing model), taxpayer funds are wasted.

Governments can promote open, competitive trade in ICT products and services by implementing the following policies:

▪ Promote market access for ICTs. Governments should adhere rigorously to their existing trade commitments with respect to ICTs and, where appropriate, deepen those commitments in bilateral, regional, and multilateral agreements. For the most part, these agreements establish an important baseline of trade principles that promote international trade and global economic growth. Governments should also avoid measures that might erect non-tariff barriers to trade in ICT products and services.

▪ Open government procurement to competition. To ensure that the ICT market is not distorted by preferences for certain classes of producers, including those utilizing specific development or licensing models, governments should base ICT procurement decisions on relevant performance-related criteria such as value, total cost of ownership, feature set, performance, and security. Governments should also adhere to the WTO Agreement on Government Procurement, which ensures transparent and open competition in the government procurement sector.

▪ Promote cross-border e-commerce. E-commerce allows vendors in developing countries to reach customers regardless of geographic location at low cost, thereby helping them compete effectively in the global marketplace. Governments should ensure that regulatory measures affecting e-commerce are non-discriminatory and should use the least trade-restrictive means available when pursuing public policy goals that affect e-commerce. Countries should also agree to continue existing moratoria on e-commerce tariffs.

|In India, reductions in tariffs on ICT imports have resulted in lower retail prices for Indian consumers. For example, |
|Singapore-based eSys recently announced the launch of a range of low-cost multimedia PC models for the Indian market, and |
|attributed its competitive pricing in part to India’s recent ICT tariff reductions.[10] |
|Procurement reforms have decreased government procurement costs in the Philippines. The Government Electronic Procurement |
|System, which has encouraged procurement based on merit and value, is credited with substantial savings, including 33 percent |
|reduction in the procurement costs of ICT equipment and supplies.[11] |

4. Competition

The global ICT marketplace is extremely competitive and diverse, with many opportunities for new entrants. competition and industry diversity are two important reasons why the ICT industry is so innovative. It also helps explain why start-up ICT firms and entrepreneurs have been so successful in creating new markets and developing new business models.

The main beneficiaries of this diverse, competitive marketplace are consumers. Competition not only pushes down prices, but also spurs ICT suppliers to develop products and services that make ICTs accessible and easy-to-use for the broadest possible range of consumers. Where consumers face risks that competition and new technologies alone cannot address, governments should respond with legislation that is targeted and technology-neutral and should ensure that liability rules do not deter ICT innovation.

5. Publicly funded research

Government funding of scientific research can play a vital if often overlooked role in economic development. In addition to enriching a nation’s intellectual life, publicly funded research can attract foreign investment and provide the raw material for further innovation and commercial development by the private sector. Such commercialization can also provide a revenue stream back to the research organization itself and strengthen information sharing between research organizations, thereby creating a financial and innovation synergy between the public and private sectors.

The degree to which publicly funded research in fact stimulates private-sector commercialization, however, depends in large part on whether the recipients of public research funds have incentives to claim title to and license such research to third parties for further development, including for commercial gain. This process also requires that research is made available under terms that will attract the private-sector resources needed to commercialize it. While many developing nations do not invest large sums in publicly funded research, governments can ensure that any such funds yield the greatest possible benefits by taking the following steps:

▪ Encourage collaboration between public and private researchers. Joint research ventures between publicly funded institutions (such as universities or other non-profit research institutions) and ICT firms can provide an important financing mechanism for basic scientific research. Such collaboration can also shorten the time between the discovery of new technologies and their commercial application.

▪ Promote technology transfer and commercialization. The results of publicly funded research should be made available under licensing terms that do not impede their commercialization by the private sector. Governments can provided added incentives for commercialization by allowing both researchers and their sponsoring institutions to share in the royalties generated by successfully licensed research.

|In South Africa, the government technology development and tech transfer agency, CSIR, has developed a low-cost point-to-point |
|WiFi application to provide connectivity to rural locations, such as schools, hospitals, and businesses, which are out of the |
|reach of backbone Internet connection.[12] This application is likely to expand the benefits from access to ICT in South |
|African schools, which have been developed through other projects. |
|Indonesia has implemented technology catalyst programs that have created greater incentives for research and development |
|partnership programs.[13] These programs have encouraged the commercialization of products from their nascent R&D phases. As a|
|result, Indonesia, like many of its East Asian neighbors, is increasingly becoming a leader in technology development. |

6. Online security and privacy

The explosion in Internet usage over the past decade has resulted in an increasing amount of data exchanged online or stored on Internet-connected networks. Regrettably, this phenomenon has been accompanied by a dramatic increase in the number, sophistication, and severity of criminal cyberattacks that seek to compromise this data. Viruses, worms, Trojan Horses, spyware, “phishing” and other security threats vary in their method of attack, but collectively they undermine user trust in the Internet and e-commerce by corrupting or stealing online data. Strengthening online security requires a complementary, coordinated response by industry, government, and users.

While online security threats almost always involve clearly malicious and/or criminal activity by bad actors, online privacy implicates broader social questions over the proper limits on the use of personal information. While certain uses of personal information can greatly improve the online experience and consumer welfare, users will maintain trust in online communications only if they have adequate control over the collection of their personal information and how it is used. Here too, an effective response requires coordinated and complementary action by industry and government.

Maintaining user trust in the online environment is no less vital in developing countries. As governments seek to respond to the dual concerns of online privacy and security, they should adhere to the following principles:

▪ Support private-sector efforts to enhance online privacy and security. The private sector has been extremely active in developing products and other resources to help users become more secure and gain greater control over their online personal information. Unfortunately, too many users fail to take advantage of these tools. Governments can best promote online security and privacy by educating consumers about the importance of using security- and privacy-enhancing technologies and the need to regularly update their operating systems and other key programs.

▪ Enact and enforce strong laws against malicious online conduct. While there is broad condemnation of those who attack online users or steal their confidential data, some countries do not have the legal framework in place to penalize such behavior or the resources needed to prosecute violators. Governments should pass laws criminalizing malicious online conduct and allocate the resources necessary for law enforcement to enforce these laws. Governments should also foster efforts to promote international collaboration between law enforcement and rapid information-sharing on emerging online security threats.

▪ Ensure that laws do not stifle innovation or proscribe legitimate conduct. Although new laws may be necessary to combat security and privacy threats, policymakers should ensure that these laws do not inadvertently stifle innovation or proscribe legitimate conduct. This risk is particularly acute in the area of online privacy regulation. Where governments enact online privacy laws, they should avoid technology mandates, complement industry efforts to promote privacy, and make every attempt not to inhibit legitimate e-commerce or online activity.

7. Technology standards

Technology standards are increasingly relevant to development. Broad adoption of standards can promote interoperability by making it easier for ICT products and services to share and mutually use data. Interoperability, in turn, can drive down costs and expand ICT access for developing-world users by allowing them to select competing products and services from multiple vendors and combine them in a single network. Interoperability also facilitates the transfer of information among governments, development organizations, and the populations they serve.

Although ICT firms have strong commercial incentives to make their products interoperate with others, voluntary industry adoption of technology standards can reinforce these incentives by providing a common set of guidelines for data exchange. Particularly where they are developed by consensus, are publicly available, and can be implemented by anyone on reasonable and non-discriminatory terms, technology standards can promote interoperability in a way that also encourages innovation, enhances competition, and expands consumer choice.

Although the ICT industry should always remain the principal driving force in developing technology standards, governments may also play a role. To ensure that laws involving technology standards do note inadvertently impede innovation or competition, regulatory policies in this area should be consistent with the following principles:

▪ Allow industry to lead in promoting technical interoperability, including by developing voluntary, consensus-based standards. IT vendors have strong incentives to promote interoperability, both through the voluntary disclosure of technical information and through the development of standards, and industry standards bodies are already successfully developing standards and facilitating their broad adoption within the IT community. Governments should support these efforts.

▪ Support interoperability mechanisms that can be implemented using multiple technologies and platforms. Standards that specify objective performance requirements rather than use of particular technologies, or allow for implementation using alternative, equally suitable technologies, can be implemented across a wide range of platforms and products. Such standards will encourage IT firms to build innovative products that incorporate such standards while preserving interoperability and competition.

▪ Avoid policies that would mandate or extend preferences to specific technologies or development models. Regulatory mandates risk creating product uniformity, which in turn will restrict competition and prevent users from taking advantage of alternative technologies from multiple sources. Policymakers should also recognize that software developed under an open-source development model is no more or less conducive to interoperability or standards compliance than software developed under other models.

8. E-Government

Governments across the globe are turning to ICTs for the same reasons that are attracting the private sector: to increase efficiency, streamline processes, and provide better services to a larger base of users. Government uptake of ICTs, however, can have important added benefits, such as increasing citizen participation and making government processes more transparent and public officials more accountable. E-Government initiatives can also play an important “leadership” role, particularly in developing countries, by providing a concrete example of how ICTs can drive productivity and economic growth.

In adopting e-Government solutions, policymakers should adhere to the following guidelines:

▪ Leverage commercially available products and solutions. Although governments have historically tended to adopt highly customized ICTs, such solutions tend to be expensive and to frustrate interoperability. Technology innovation and market dynamics have led to a dramatic growth in powerful, sophisticated ICT solutions that are also cost-effective, flexible, and easy to use. To save resources and maximize interoperability, governments should leverage commercially available ICT products to the greatest extent possible.

▪ Procure e-Government solutions based on merit and value. In evaluating competing e-Government solutions, procurement officials should utilize objective, performance-based criteria that focus on the merits of various solutions and total cost of ownership. As in other areas of procurement, governments should not allow protectionism to bias their decisions and should avoid utilizing criteria that do not strictly relate to a product’s performance or overall value.

|In order to join the European Union, the Bulgarian government committed to provide 20 Internet-based public services by 2005. |
|Bulgaria now offers online searches of civil registrations, social security information, and corporate registrations. This has |
|helped to decrease corruption and to increase government productivity, bringing Bulgaria closer to EU membership.[14] |
|The Egyptian government provides access to certain government licenses and documents through a single online portal. This |
|portal has made these services more accessible while lowering costs by reducing the average number of visits required to obtain |
|these services.[15] |

B. Human capacity building

Investments in people are fundamental to social and economic development. Investments in technology will do little to alleviate poverty or improve the lives of underserved communities unless they are matched by efforts to build the capacity of target populations to harness the opportunities that ICTs offer. Education and skills development are critical components in helping individuals, communities, and even entire countries thrive in the global information economy, and therefore should be central elements of any development agenda. This section describes certain core policies and principles that support human capacity building through education. [[More detailed statements of these policies and principles as set forth in Appendix I.]]

1. Education and digital literacy

Expanding educational opportunities and digital literacy in underserved communities is critical to broadening economic opportunities and removing barriers to digital inclusion. Although certain forms of ICTs (e.g., telephones) can be and are being used effectively without widespread digital literacy, it is equally clear that digital literacy is vital to enabling users unlock the full potential of ICTs.

ICTs can also play a significant role in helping teachers expand learning opportunities. Microsoft recognizes the vital role of education in human capacity building and the contribution that ICTs can make in this area. The company supports several initiatives that focus on the specific educational needs of developing countries and has partnered with many governments and development organizations to implement these initiatives. These efforts, and the broader role of ICTs in education, are described more fully in Part V of this paper.

While the developing world and the broader development community are to be commended for their efforts to improve literacy and in working with the private sector to address this problem, more needs to be done. Important steps include:

▪ Compulsory primary education. Compulsory, free primary education for all children is vital to the goal of improving literacy, and indeed is one of the objectives of the United Nations’ Millennium Development Goals. Primary education can provide children with the basic literary skills to function and succeed in society, while also promoting economic growth by ensuring the availability of a skilled, productive labor force.

▪ Affordable secondary education. In the knowledge-based economy, basic written communication skills are critical across a range of industries and economic sectors. Industry and development organizations should work with policymakers in the developing world to explore ways to broaden access to secondary education, particularly to marginalized and underserved communities.

▪ Opportunities for higher education. Universities and other institutions of higher learning are an important part of the ICT ecosystem in many nations. University research labs may be an important source of basic scientific knowledge for subsequent commercial development, while also providing a pipeline of skilled scientists, engineers, and developers on which local technology firms will depend. Policymakers should seek to make higher education broadly available and particularly seek to strengthen course offerings in science and mathematics.

2. ICT skills development

ICT skills are vital to enabling individuals and organizations to leverage the full potential of information and communication technologies. Yet in many parts of the developing world, relatively few users have the skills to utilize ICT effectively. Fewer still have the expertise to develop ICT products or provide critical IT services. A shortage of skilled ICT workers will make organizations reluctant to invest in ICT, thereby curtailing demand for domestic ICT products and services and leaving fewer opportunities for entrepreneurs and domestic ICT firms. A chronic shortage of skilled ICT workers will impair a country’s competitiveness not only in the ICT sector – one of the fastest growing areas of the global economy – but in many other more traditional sectors as well.

To address these problems, policymakers, development organizations, and industry should work collaboratively on the following initiatives:

▪ Provide incentives for ICT education and training at all levels. Primary and secondary schools should offer ICT skills training and testing opportunities, and colleges and universities should be given incentives and additional resources for providing ICT skills training. ICT retraining and lifelong learning programs are also critically important to ensure that workers have the opportunity to strengthen their IT skills and thereby become more employable and productive.

▪ Establish specialized certified training programmes for IT professionals and developers. The field of information technology (IT) covers all aspects of managing and processing information. IT professionals design, develop, support and manage computer software, hardware and networks. To better prepare students for technology careers, governments should encourage academic institutions to provide coordinated IT curricula, courseware, and online collaboration tools that help students achieve certification in technologies. In addition, governments should encourage the private sector to establish certified training and testing centres to certify IT professionals.

▪ Strengthening business education and training and including ICTs. Lack of critical business skills may impede the emergence of a domestic, entrepreneurial ICT sector. Governments and domestic business associations have major roles to play in providing a framework to encourage business skills development, e.g., through vocational training and other training programmes directed at improving the businesses of SMEs

C. Enterprise and entrepreneurialism

As noted in section A, government policies can have a vital impact on the utilization of ICTs to achieve social and economic development. Yet the private sector is and will likely always remain at the forefront of ICT innovation, investment, and use. Governments can leverage these private-sector forces by improving access to capital, requiring transparent accounting and investment practices, facilitating access to local and global markets, and stimulating investments in ICT and technology research and development.

1. Access to capital

Leveraging ICTs for social and economic development also requires access to capital. For developing nations to take full advantage of ICTs and spur the growth of domestic ICT industries, it is imperative that individuals and businesses have ready access to affordable financing. Competitive, flexible capital markets make it easier for individuals and firms to purchase ICTs on credit, and make it less expensive for start-up ICT firms to obtain the funds necessary to develop, manufacture, and market new products.

To promote affordable access to capital, policymakers should:

▪ Remove barriers to private sources of capital. Many ICT firms in the developed world initially relied on venture capital financing, stock options, and similar sources of financing to survive in their first few years. Access to these less conventional sources of capital can spell the difference between success and failure. Governments should remove regulatory impediments to these sources of financing and should likewise provide market access by foreign financial institutions and ensure that rules regarding cross-border transfers of capital do not create impediments to affordable sources of capital.

▪ Support microfinance mechanisms. Microfinance has proven to be an extremely effective development tool, although to date much of this financing has been provided through non-profit organizations. Governments should foster microfinance-based initiatives and remove any regulatory obstacles that might impede access to such financing. In the longer term, governments should examine ways also to provide such financing through for-profit institutions so as to ensure that these mechanisms are sustainable.

2. Incentives for private-sector investment

Particularly in an age of limited public resources, the private sector must remain the primary engine of ICT-based growth and industrial development. While governments cannot, of course, dictate the course of private-sector investment, it can help channel private-sector investment into pro-growth areas by providing appropriate tax and related incentives for ICT investment. Governments can also encourage foreign investment by providing a regulatory framework that increases predictability and reduces financial risk. To these ends, governments should consider the following measures:

▪ Incentives for private-sector R&D and ICT spending. Promoting a regulatory environment that values innovation and encourages ICT investment is vital to capitalizing on the potential of ICTs to promote development objectives. Tax credits and other incentives for private-sector R&D will foster innovation, while similar incentives for investments in telecommunications infrastructure will promote broad public access to the benefits of ICTs. To promote productivity growth, businesses and other organizations should be offered financial incentives to invest in ICTs and provide IT training to their employees. Examples of such incentives include tax credits, loans at favorable interest rates, and accelerated depreciation schedules for ICT assets.

▪ Transparent accounting rules. Investors are less likely to invest in firms whose balance sheet is unclear or whose financial status is less than transparent because such uncertainty raises the level of financial risk. Recent accounting scandals in several nations have only reinforced the importance to investors of open and accurate accounting. Rules that encourage or require firms to adhere to industry-standard accounting principles and provide third-party audits will increase transparency and make domestic ICT firms more attractive to foreign investors.

D. Infrastructure and access

The ability of the Internet and other online networks to serve as effective communications and distribution mechanisms – in short, the ability of ICT to fulfill its potential as an “enabler” of economic growth and development – depends in substantial part on the quality and reach of the underlying telecommunications infrastructure. Users cannot achieve the full benefits of ICT unless the telecommunications infrastructure is both extensive and affordable. Governments and industry must also work together to promote affordable computing initiatives that do not undermine market incentives for innovation and product development.

To promote ICT-enabled development in the telecommunications sector, policymakers should consider the following:

▪ Promote ubiquitous telecommunications access. Liberalizing telecommunications markets – whether fixed-line, mobile, or cable- or satellite-based – is an important first step in enhancing competition, which generally results in broader access and lower costs. In certain cases, policymakers might also consider offering incentives to private-sector investment in telecommunications infrastructure, such as through tax credits and by removing restrictions on foreign investment and ownership.

▪ Invest in targeted broadband network development. Although universal broadband network access is likely to be prohibitively expensive in the short term, targeting specific industries or locales for broadband development may in certain cases be economically feasible and provide important benefits. For example, efforts to provide broadband access to technology parks or other areas with high concentrations of IT firms would stimulate IT sector development and serve as a model for broadband deployment more broadly.

▪ Support pro-growth spectrum management policies. In most nations, governments retain ultimate control over electromagnetic spectrum, then lease or otherwise make available parts of the spectrum for private-sector use. Governments should ensure that spectrum regulations do not unfairly favor legacy providers or domestic firms, and should make available spectrum for private-sector use consistent with their security and other social welfare needs.

▪ Provide a technology-neutral regulatory environment. Laws and regulations that favor certain technologies or networks over others may impede competition and increase costs to consumers. Competing providers should be free to offer a wide range of services on the network or platform of their choice.

|In many African countries, mobile telephone markets are far more open to competition than the traditional, fixed-wire |
|telecommunications networks. As a result, the number of mobile telephone subscribers in Africa now exceeds the number of |
|fixed-line subscribers, and mobile telephone subscribers in Africa are projected to exceed 100 million by 2005.[16] |
|Since 1998, five members of the Organization of Eastern Caribbean States (OECS)—Dominica, Grenada, St. Kitts-Nevis, St. Lucia |
|and St. Vincent—have experienced significant benefits from the liberalization of their telecommunications markets. With the |
|removal of an unregulated regional telecom monopoly, these countries have halved the cost of telephone and internet charges to |
|consumers. These lower costs, in turn, have enabled business growth across borders through increased access to efficient |
|internet, fax, phone, and teleconferencing options.[17] |

V. ICTs Applied: Microsoft’s Approach to Development

Microsoft’s proposition for helping to spur economic development, promoting economic growth and fostering digital inclusion is multi-dimensional. The company’s fundamental goal is to offer products and services that enable our customers to become more productive and unlock their full potential. For countries and communities, this means helping to drive competitiveness in the global economy and providing powerful tools that bring digital opportunity to the broadest possible number of users. For businesses, it means ongoing reliance on a partnership-based business model, which enables local firms around the world to harness the power of Microsoft products, resources, and technologies to build their own successful enterprises.

In short, Microsoft’s value proposition for developing countries combines: (i) its basic customer value proposition of producing products that enable Microsoft users to be more productive; (ii) a business model based on partnership and local economic opportunity; and (iii) dedicated development initiatives focused on specific country needs.

A. Products that Empower People

The driving force behind Microsoft’s products is the company’s goal of enabling people and businesses around the world to realize their full potential. Software is a powerful tool and is at the heart of the knowledge-based economy that has become the model for modern enterprise. But in order to help individuals and organizations succeed in their endeavors, software must be easy to use and offer access to the widest possible range of users around the world. Microsoft has been leader in developing innovative, easy-to-use software that empowers people.

• User friendly. Microsoft pioneered user-centric design to make its software easy to use. Its products’ unparalleled ease of use enables non-technical workers and other users to harness the benefits of technology, become more productive and realize their potential without extensive, specialized training. In 1998, Microsoft created its Usability Group to incorporate extensive user feedback into the design of its products. Microsoft’s Usability Group consists of more than 120 usability engineers with expertise in a wide variety of disciplines including human-factors psychology, social psychology, industrial engineering, technical communications, developmental psychology and information science, as well as computer science.

• Familiar. The human interface and features of Microsoft’s Windows operating system and well-known productivity applications are familiar to many millions of non-technical workers and other computer users worldwide, who are able to use them at work and in their everyday lives without specialized training or extensive support.

• Interoperable. Microsoft is committed to ensuring that its software works well with many other platforms and systems, without requiring customers to spend extensive resources on systems integration. For local businesses, this commitment to interoperability improves information sharing, reduces computing costs and extends the benefits from past technology investments.

• Manageable. Microsoft is committed to reducing the complexity and cost of managing computer systems so that customers can invest more of their resources into being more productive, growing their businesses and competing globally. In partnership with other technology leaders, Microsoft has made significant investments in an effort called the Dynamic Systems Initiative (DSI). The goal is to build a comprehensive set of solutions that help automate the design and management of increasingly complex and distributed computing systems. This initiative will free valuable resources and make computing simpler and more cost-effective for organizations large and small.

• Accessible. Microsoft strives to build products that are accessible to everyone, including people with disabilities, so that no one is denied the benefits of technology and everyone can contribute to the economic and social progress that technology can bring. For more than a decade, Microsoft has consciously integrated accessibility into its products. The accessibility of its software extends greater economic opportunity to people with disabilities and to older workers. The company’s commitment to accessibility enables its customers to retain valued employees, enhance their productivity and reduce costs.

• Localized. Microsoft’s Local Language Program extends the benefits of technology to minority linguistic and cultural groups and helps governments nurture strong local IT industries. The Local Language Program supplies tools to help build local language interface packs for Windows XP and Office 2003. With localized technology, multicultural and multi-linguistic nations are able to broaden economic development, build unity among their peoples, and compete globally.

• Innovative. Microsoft’s commitment to software innovation continues to bring product improvements and advancements that boost customers’ returns on their IT investments and create competitive advantages for customers. The company will invest nearly $7 billion in software innovation in fiscal year 2005.

B. Partner-Centric Business Model

Microsoft focuses on creating great software, and then works with an array of different partners around the world to accomplish most other tasks that are vital to its business. The company understands that its success depends in large part on its relationships with more than 600,000 independent software vendors, system integrators, resellers, and other partners worldwide.

Microsoft’s partner-centric business model means the company plays an active role in supporting local economic growth and competitiveness in countries around the world. Some of the areas where Microsoft makes significant contributions include:

• Platform for Growing Local IT Industry. Microsoft provides a platform for other developers to build their own applications, which contribute to vibrant software sectors in many economies around the world.

o The company invests substantially in the success of more than 600,000 independent software vendors, systems integrators and other partners worldwide.

o Millions of software developers worldwide draw upon MSDN, the Microsoft Developer Network, a set of online and offline services designed to help developers write applications using Microsoft products and technologies.

o The company provides the most powerful tools for enhancing the productivity of developers and ensuring their success in the global marketplace. The forthcoming Visual Studio 2005 will offer further innovations and enhancements to support the advancement of local IT industries.

• Standard Bearer. Microsoft’s commitment to support and contributions to standards for computing helps the IT industry move forward worldwide. In Web services especially, Microsoft’s leadership in the development of computing and communications standards is helping create opportunities for developing countries to build new, high-value services industries.

• Leader in Solving Big Challenges. Advancing technologies will continue to benefit humankind only if industry leaders take responsibility for big challenges that otherwise could discourage innovation and stall progress. Microsoft is on the vanguard in tackling some of today’s most difficult problems.

o In security, Microsoft is developing and disseminating new engineering processes for creating more secure software; helping organize more effective industry and governmental responses to security incidents; and helping strengthen enforcement against criminal hackers.

o In privacy, Microsoft is collaborating with governments and private organizations around the world to ensure strong privacy protection online; to create clearer and more consistent policies and programs to help consumers protect their privacy; and to support enforcement of privacy laws worldwide.

o Against junk e-mail, Microsoft is a leader in the development of new anti-spam technologies; creation of new industry-wide initiatives against spam; and legal action against illegal and fraudulent spam attacks.

• Research and Innovation. In fiscal year 2004, Microsoft spent more than $7.7 billion on research and development. Microsoft places a high importance on innovation and in investing in people, facilities, and technologies that will allow it and its partners to execute on a broad vision for the future of software and computing.

• Respect for Rights of Local Innovators. To survive and grow, local IT industries must be able to protect their innovations and reap the benefits from widespread use of their technologies. Microsoft helps support the development of local IT industries by respecting their rights and often paying for the privilege of using their innovations. In addition, Microsoft recently announced a program to license its own intellectual property more broadly, on fair and reasonable terms, so as to assist innovators and companies around the world.

C. Commitment to Digital Inclusion

Microsoft works to help countries around the world put information and communications technology and software to use in ways that improve the social and economic well-being of local populations. Whether the goal is improving teaching and learning through technology, helping to create jobs, extending digital access to minority linguistic groups and people with disabilities, or increasing productivity levels and competitiveness, Microsoft works closely with governments, local partners, and NGOs to help countries reap the full benefits of ICT.

Microsoft has made a comprehensive commitment to helping individuals, communities, and nations gain access to the technology tools, skills and innovation they need to realize their potential in the changing economy. Last year alone, Microsoft contributed more than US$40 million in cash and US$224 million in software to more than 5,000 nonprofit organizations around the world.

Learning and Skills Development. Microsoft’s flagship digital inclusion initiatives are Partners in Learning and Unlimited Potential. Together, the programs aim to provide IT skills training to 500,000 individuals around the world by the year 2008.

Microsoft Partners in Learning is the company’s global learning initiative for schools. Partners in Learning aims to increase access to and empower the use of ICTs by educators and students. Partners in Learning consists of three components:

• Partners in Learning Grants: Through Partners in Learning grants delivered from 2003-2008, Microsoft is investing $253 million in delivering technology skills training to students and teachers. Partners in Learning funding also supports the establishment of local ICT Academy Centers through joint partnerships with local advisory boards, education institutions and training providers. In addition to this $253 million investment, Microsoft is also making a curriculum available for schools that are seeking to integrate technology and technology skills instruction into the classroom.

The Partners in Learning curriculum provides lesson plans and materials for five courses totaling 200 hours of instruction. It can be adopted in its entirety or customized by ministries of education, school administrators, or teachers to meet local education priorities. Courseware includes instruction guides and grading rubrics for teachers, as well as classroom materials for students.

• Fresh Start for Donated Computers: Donated computers are an economic necessity for educational programs around the world. Microsoft’s Fresh Start program helps schools make the most of donated computers by providing a licensed copy of the Windows 98 and/or Windows 2000 operating systems for donated PCs (Pentium II or older) at no charge. (Older PCs are not capable of running the Windows XP operating system.)

• School Agreement Subscription Licensing Program: Participating primary and secondary schools receive free upgrades to Windows XP Professional for both new computers and computers already in the classroom as well as dramatically reduced pricing for the professional version of the Office productivity software suite. This program is not currently offered in the United States.

Microsoft’s Unlimited Potential is our global skills development initiative for communities. The program aids global workforce development by providing technology skills training through community technology and learning centers (CTLCs).

Unlimited Potential grants are made to NGOs that support CTLCs and are used to enhance and enrich technology access and training opportunities. For example, Microsoft teamed with the United Nations Development Programme (UNDP) to equip ten CTLCs in Morocco as part of an agreement the two organizations entered into in January 2004. The agreement followed a successful pilot project that is now helping to build a pool of skilled ICT professionals in war-torn Afghanistan, providing technology access and skills training to 12,000 Afghan citizens annually at 16 regional centers.
The Unlimited Potential Community Learning Curriculum provides quality content for the community (non-matriculating) learner that focuses on skill development in the areas of beginning information, technology and computer literacy, and preliminary technical certification preparation. The training emphasizes real-world applications and may be modified and/or reproduced by CTLCs, their instructors and students to enhance local learning programs.

E-government. Governments worldwide are looking for effective and efficient ways to increase citizen engagement and improve citizen access to information and services. To do this, governments require applications and solutions that will help them with the business of governing. Microsoft’s e-government initiatives and the Windows platform provide governments with the foundations upon which to base their mission-critical applications as well as the customer-facing and internal tools that are at the core of e-government implementations. Some of the core e-government applications Microsoft works with governments to implement cover the following areas:

• Procurement • Financial Accounting • Taxation • Customs • Criminal Justice • Open Application Sharing Portals

Accessibility. Microsoft strives to build products that are accessible and easy to learn and use. The company continually works to demystify technology and make it more accessible to people, regardless of their physical abilities, or their economic, cultural, or educational backgrounds.

Among other innovations, Microsoft continues to build into its products a wide range of accessibility features that make it easier for people with physical or cognitive difficulties, impairments, or disabilities to use a computer and customize their work environment. The company also works closely with partners that design and build assistive technology devices—such as screen readers that convert text to speech for people who are blind or visually impaired—which run on the Windows platform and enable people with disabilities to perform a wide range of tasks and access information more easily. Accessible and assistive technologies are designed to help people with disabilities unlock their potential and optimize their abilities.

There are other efforts that Microsoft has implemented to make software more accessible to populations around the world. Launched in March 2004, the company’s Local Language Program is a global initiative that enables minority cultural and linguistic groups to access and use Microsoft software. Through the program, governments, universities, and local language authorities develop language localization resources for Windows XP Home, Windows XP Professional, and Office 2003. This enables users to view their desktop and many commonly-used features in their own native languages.

Availability. In addition to making software more accessible, Microsoft also works to make the tools of the information age more broadly available. For example, The Microsoft Windows XP Starter Edition is a product designed for first-time PC users in developing technology markets, offering them an affordable, easy-to-use version of the Windows operating system that is localized in their native language. The Windows XP Starter Edition pilot program began in 2004 with three markets—Thailand, Malaysia and Indonesia—but Microsoft will extend the program to Russia and India in early 2005.

Another example of how Microsoft works to make technology more available is the Microsoft Authorized Refurbisher (MAR) program. It is designed to facilitate community ICT access and learning, and to lower the environmental impact of ICT hardware by enabling authorized PC refurbishers to re-install Microsoft operating systems into donated pre-used PCs destined for schools, NGOs and community centers. Through MAR programs in countries from Australia to Austria, Microsoft helps facilitate the refurbishing and recycling of thousands of PCs every year by donating software licenses through NGO refurbishers, enabling schools and charities to take full advantage of personal computers they receive from donors.

VI. Conclusion

The story of ICT innovation over the past three decades has been a story of empowerment and growth. ICTs have brought new opportunities to people of all ages and in all countries, enabling them to achieve more in less time and to discover new ways of communicating and relaxing. The use of ICTs has fueled astounding productivity and economic growth and has truly transformed the way people work, learn, and socialize.

To date, however, the benefits of ICTs have not been spread as equally as one would have hoped. This has led some to question whether ICTs have a meaningful role to play in bridging the divide between developed and developing countries.

While it is unrealistic to believe that ICTs alone can provide the “silver bullet” that will solve the challenges facing the international development community, Microsoft firmly believes that ICTs hold tremendous untapped potential as an enabler of development. Microsoft’s commitment to this view is embodied not only in the company’s many development initiatives, but also in its company-wide effort to develop products that enable people be more productive and successful.

Microsoft also recognizes that addressing the needs of underserved populations will require commitment and determination by both the public and private sectors. Microsoft welcomes this opportunity to have shared its views on ICT innovation, public policy, and development. We look forward to future opportunities to meet with policymakers in order to learn more about their needs and goals. Microsoft is convinced that by working together, governments, industry, and the populations they serve can create new opportunities and leverage the power of ICTs to help people everywhere realize their full potential.
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[1] U.S. Department of Commerce, Digital Economy 2002, 31-40 (2002).
[2] OECD, ICT and economic growth: Evidence from OECD countries, industries and firms (2003).
[3] Markle Foundation, Global Digital Opportunities: National Strategies of “ICT for Development”, 12 (2003).
[4] See Robert M. Sherwood, The TRIPS Agreement: Implications for Developing Countries, 37 IDEA: The Journal of Law and Technology 491, 497 (1997).
[5] See Dru Brenner-Beck, Do As I Say, Not As I Do, 11 U.C.L.A. Pacific Basin Law Journal 84, 108-09 (1992).
[6] Id., at 112.
[7] See Instituto Libertad y Democracia, Some of the Instituto Libertad y Democracia’s Practical Achievements, at http://www.ild.org.pe/Annex_01.pdf (last visited 22 Sept. 2004).
[8] See Elena Panaritis, Marc A. Weiss, & Alven H. Lam, ed., Do Property Rights Matter? An Urban Case Study from Peru, in The Globalization Index (World Bank 2001), at http://poverty.worldbank.org/library/view/14120/ (last visited 22 Sept. 2004).
[9] See World Conference on Credit Unions: 2003 Annual Report, at https://www.woccu.org/pdf/annrpt_03.pdf (last visited 24 Sept. 2004).
[10] See Now a PC for less than Rs 10,000, Ciol Media (22 Jan. 2004) at http://www.ciol.com/content/news/2004/104012203.asp (last visited 22 Sept. 2004).
[11] See World Bank, Procurement Reform in the Philippines, at http://www.worldbank.org/wbi/governance/pdf/11iacc_cam_pim_gav.pdf (last visited 22 Sept 2004).
[12] See Markle Foundation, supra note 3, at 46.
[13] See United Nations Conference on Trade and Development, Report of the Expert Meeting on Policies and Programmes for Technology Development and Mastery, Including the Role of FDI, 8 (2003), at http://www.unctad.org/en/docs//c3em18d3_en.pdf (last visited 23 Sept. 2004)
[14] See Microsoft Corp., Case Studies: Government of the Republic of Bulgaria (2003), at http://www.microsoft.com/resources/casestudies/CaseStudy.asp?CaseStudyID=14746 (last visited 21 Sept. 2004).
[15] See Microsoft Corp., Case Studies: Ministry of IT and Communications, Egypt (2004), at http://www.microsoft.com/resources/casestudies/CaseStudy.asp?CaseStudyID=14922 (last visited 21 Sept. 2004).
[16] See International Telecommunications Union, African Telecoms on Track for Massive Growth (Nov. 16, 2001), at http://www.itu.int/newsroom/press_releases/2001/26.html (last visited 21 Sept. 2004).
[17] See Reducing Telecom Costs in the Caribbean, at http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20052229~menuPK:67443~pagePK:36694~piPK:36693~theSitePK:4607,00.html (last visited 22 Sept. 2004).

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