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The South needs to invest in digital and concrete highways

By Ramesh Jaura

Regional cooperation involving the poorest countries can provide a significant contribution to infrastructure development in the LDCs, according to representatives of multilateral organisations and government officials from around the world.

They took part in an interactive thematic session Saturday. The consensus reached was that "adequate provision of infrastructure is a key element of countries' poverty reduction strategies", said Masihur Rahman, Permanent Secretary in Bangladesh's Finance Ministry.

Rahman, who chaired the session, said the Asian Development Bank had gathered "a very positive experience" in the Asia-Pacific region in this regard.

"Therefore, LDCs and donors should develop new mechanisms to support regional cooperation in infrastructure development, in particular by developing regional cooperation funding mechanisms, such as regional funds." In fact, a paper tabled by the UNCTAD said the development of infrastructure networks is intimately connected with the process of economic growth.

Studies show that on average a one per cent increase in infrastructure stocks is associated with a one per cent increase in GDP.

The relationship runs in both directions; with infrastructure leading to growth that leads in turn to further expansion of infrastructure, said the paper.

It added: "One of the key avenues through which infrastructure contributes to economic growth is by improving competitiveness and facilitating international trade." The Trans-African Highways Network is another positive example of infrastructure development through regional cooperation. It is an on-going regional programme sponsored by the African Development Bank with the Organisation of African Unity and the UN Economic Commission for Africa within the framework of the UN Transport Decade for Africa.

A representative of the African Development Bank, who took part in the thematic session, invited industrial nations and multilateral organisations to support the establishment of a Programme Implementation Bureau in Addis Ababa and to consider the organisation of a donor conference in June 2002.

The importance of such projects was stressed by the UNCTAD study. It said: "Transport infrastructure plays a pivotal role in facilitating the integration of the global economy." With global trade flows growing at annual average of 5.5 per cent during the 1990s, international trade has become an increasingly important source of economic livelihood. However, LDCs are lagging behind with annual trade growth standing at 2.7 per cent.

In Africa, for example, poor infrastructure is one of the main causes of low competitiveness and transport costs represent a more significant trade barrier than customs tariffs. According to the World Bank, a 10 percent reduction in transport costs will increase trade flows by 25 per cent.

The transport problem is particularly severe in the case of landlocked countries, which represent about one in three of the LDCs. In landlocked African countries, for example, freight expenses can absorb as much as 40 Per cent of the value of traded goods, compared with 4 per cent in the industrialised world.

The UNCTAD paper tabled at the session also pointed out that the Internet is becoming increasingly important in facilitating trade between developing and industrialised countries.

As a result of the cheaper and faster communications provided by the Internet, many service industries - from computer programming to clerical support - have for the first time become 'tradable commodities'.

"While still in their infancy, these 'tele-service' industries promise to create employment opportunities in developing countries that would previously have been available through migration; particularly for graduates of secondary and tertiary education," said the UNCTAD study.

It describes the software industry in the southern Indian state of Karnataka as "highly successful". The study argues that small businesses also stand to benefit significantly from the Internet, which provides them with unprecedented low cost access to a global market place. However, the issue of equity arises.

The major gap that exists in terms of access to modern ICT infrastructure between rich and poor nations has led to a growing concern about the 'digital divide'.

According to the UNDP, there are more Internet hosts in Bulgaria that in all Sub-Saharan Africa, excluding South Africa.

Against this backdrop, ITU's Hamadoun Touré noted that there was an upturn in telecommunications development in LDCs. "The deployment of information communication technologies (ICTs), including telecommunication, plays a very pivotal role in bridging not only the digital divide but also other divides in the political, economic and social domains." He urged officials of LDC governments to enhance their cooperation with the ITU, multilateral development agencies, United Nations, and the private sector in the development and deployment of the telecommunications infrastructure.

An adequate telecommunications infrastructure was necessary to integrate LDCs into the world economy and to reach the goal of providing universal access.