Thoughts on Energy, Water, Social Development & Sustainability

After World War-II one of the topics gathering most attention in the circles around us is “Development”. While a lot has been said and written about development, there is no consensus on a single definition of what is and how it is measured. However, there is no doubt that the term “development” is used for countries, regions and societies that are technologically not as advanced as many of their western counterparts. This seems to be a very narrow view of development for a simple reason that the scope of development is reduced to just technological advancement and its measurement.

Is development the same as economic growth? Let us consider one fact before delving into development any further. Of the world’s 6 billion people in the year 2000, 1.2 billion lived on less than $1 a day. About 10 million children under the age of five died in 1999, most from preventable diseases. More than 113 million primary school age children did not attend school – more of them girls than boys. More than 500,000 women die each year during pregnancy and childbirth. More than 14 million adolescents give birth each year.

In this essay it is argued that economic growth of the society is a prerequisite for its development and should be concentrated on in parallel to developmental efforts of other institutions. Based on this assumption technology has been portrayed as a driver for economic growth, which indirectly results in development as many understand it.

Technology and Development are two issues that are often considered to be interrelated and each seems to be inactive without the other. It is important to understand the economic role of technology in the development process of a society and its role as a mandatory requirement for development. This essay discusses one specific developmental activity and how some of the present day technology can be used for its adoption and execution for economic development and the challenges it faces.


Development and Economic Growth – Dilution of Efforts
A lot of socio-economists argue that it is a myth that the early development economist maintain that they viewed growth as identical to increasing per capita income. On the contrary, increasing production and consumption was thought to increase employment and improve the standard of living. Hence, the national income translated into the average per capita income was thought to be the right indicator of economic development. However, the World Bank found a flaw in the approach and argued against the view on several grounds. The reasons varied from being unable to gather right data in developing countries to a situation where the high-income groups witness growth and low-income groups face stagnation on decline in incomes. Uneven distribution of growth socially as well as geographically too contradicts the fact that the increase in aggregate per capita income is an indicator of economic development. But there’s a consensus on the notion that growth in per capita income of a country over long periods of time with simultaneous reduction in poverty and inequality in society reflects economic development.

While economic development is just one aspect of the overall development process human development has also been argued to be an additional objective not to be omitted. The first human development report from the United Nations Development Program (UNDP) defined human development as a process of people’s choices. For these, the attention is concentrated around the opportunity to lead a healthy and long life, the opportunity to acquire knowledge, and the opportunity to have access to resources needed for a decent standard of living. In addition to these, political freedom and human rights, human development for men and women, environmental and other aspects of sustainability, and themes regarding citizen’s participation and opportunities to affect the political decisions in society have also been added.

With the same argument as before, development cannot be restricted to just the two spheres of economic and social conditions. To justify the cause, it must be holistic in approach and must at least include:

• Economic development,
• Social development,
• Political development,
• Technological development,
• Development of formal institutions, and
• Development of informal institutions.

Development in true sense should also be nationally responsive. There are certain benchmarks that have to be achieved before national responsiveness can take precedence. Development is its true essence does not necessarily require elements of westernization and modernization beyond a certain threshold.

This above defined scope of development has diluted the effects of efforts that have been put into by various agencies. Economic Development is the first and foremost pre-requisite for any other kind of development to happen. The ‘holistic’ model of development can only sustain itself if economic development is insured.

Economic Growth – Is Human Migration a Factor?
If economic growth causes development, then it becomes important to understand the causes of economic growth. A few examples are needed to understand the gist of how and why the countries have developed in the past and are developing today. The Netherlands (Holland), the marvel of medieval Europe, and West Germany in Europe, and Hong Kong, and Singapore in Asia are a few good examples that exemplify the causes of economic growth.

The Dutch were the first republic with sound rights to property ownership. This combined with the pluralistic (religious) attitude of the Dutch attracted educated merchants and bankers from all over the Europe, which helped and contributed to turning Amsterdam into the financial center of the 17th century Europe and resulted in the world’s first stock market in Amsterdam. Singapore opened its administrative, legal and educational system to multiracial population, which brought prosperity to the poor immigrants from rest of Asia. In a similar fashion Taiwan and Hong Kong were providing security and opportunities to the countless Chinese immigrants, mostly merchants, which were denied to them due to political instability. It was the migration of skilled people and lower taxes that brought prosperity to West Germany, very much like it did in the past in Holland, Singapore, Taiwan, Hong Kong in the past. Preeminence of Silicon Valley in the United States due to a large Indian and Chinese talent migration is a very good example as a contemporary phenomenon.

In Scotland, a financial market developed that was a response to the demands of a private economy. In 1810, there were forty independent banks. Unlike banks elsewhere that would lend only if the loans were backed by the security of goods in transit or in process and for no more than 90 days, the Scottish banks were free to lend for unspecified periods of time with no tangible securities. This later became the precursor of junk bonds. The Scottish banking developed and thus emerged differently from the hindered and distorted English banking safeguarded by a reliable English political and legal system.

Scotland further developed its education system and the output of Scottish scientists was the highest between 1800 and 1850. But Scotland allowed a large fraction of its bright and energetic people to migrate. With the absence of large scale of talent movement from around the world to Scotland the country declined and the Scottish miracle ended with the emigration of Scottish talent, more regulated financial markets, and higher taxes due to Scottish savings being all in private enterprises instead of government.

When capital and people move, the wealth that disappears in one country reappears in another. Even within a country it is important to stop people from migrating to cities. In increases the burden on cities and impedes rural development. India is a good example of this ‘rush to city’ phenomenon for the last two decades that has almost crippled the rural sectors. To make the matters worse, proportionally less efforts are being spared to plan for rural development, which is transforming the country as a society of extremes.

Therefore, the first and foremost effort towards developing a country economically should concentrate on preventing emigration. This can only be achieved by providing growth opportunities utilizing the modern day science and technology.

Clearly, in this century, where contrasting political ideologies, rising nationalism, religious persecution, resurgence of identity, and constraints of natural resources have risen to prominence than they have ever been in the past century, the dynamics of international labor migration is not an answer to address the problem of human development. Although, this has huge benefits for some of the recipient nations of the labor, this trend is a big drain on the talent pool of the source nations and a setback to their demographics that could have otherwise contributed to their economic bottomline. So, how should be respond?

Reprioritizing Efforts in the 21st Century
The spectrum of development is very broad, as discussed before; economic, social, political, etc. The scope of development starts from the very embryonic effort of a literacy drive in countries like India and Bangladesh and goes as far as formulating and implementing laws for protection of intellectual property in the relatively technologically developing countries like China and Russia.

Considering the social setup of societies in different countries and taking into consideration the stage of evolution they are in, both socially and technologically, development policies should be framed that best help them emancipate the sorry conditions they are in and takes them to the next stage of developmental evolution. International organizations like the World Bank, International Monetary Fund, and the United Nations have all been actively monitoring and aiding numerous developmental projects across the globe. As expected the projects are very well divided into different areas of execution and there are various parameters that reflect the success of developmental efforts. While these statistics are a boon to us in order to understand the intensity of underdevelopment in a society and decide the magnitude of efforts required, we should not mistakenly use these statistics to misinterpret the extent of development in different societies. While a simple statistic like the number of ‘internet users per thousand people’ is a good indicator of development and should be used to compare the extent of development in countries like Norway and the United States, they are meaningless in countries like societies of East Africa and Asia, simply because there is a generation gap between the development stages in technology in both these cases. Hence, while each and every parameter used by these international organizations carries a lot of weight and significance, care should be taken in selecting the right set of measures to evaluate developmental progress and economic development should not be forgotten.

As professionals engaged in high-tech industry, often employed with organizations that have vast amount of monetary and intellectual resources at their disposal, it is not a surprise to see donations of technology to solve developmental problems around the globe. A majority of us, especially in the developed west believe in technology as the governor and driver of social change.

This has resulted in technology being utilized to ensure development as a whole: economic, social, political, technological, and formal and informal institutions. Many of these endeavors have been successful, but countless have failed to bear any fruits. Amongst many reasons, the one that usually is quite apparent is the lack of economic development. It should not be a surprise any more. Basic human needs need economic development of a nation and society. Economic development is almost a prerequisite for development of other institutions. With the failed experiment of socialism in communist USSR, capitalism is now the predominant economic model of the world. Most of the world is now capitalist, and even those not yet are somehow linked to the markets of capitalists. This warrants a reevaluation and reprioritization of developmental efforts across the globe. Ensuring economic development should be the first and foremost concentration. Although the war of political ideologies is still on, the journey to market remains the common underlying desire.

People-Centered and People Inclusive Development Approach
In the recent past the role and importance of technology in the development of countries has been very prominent and discernible. While there should be no doubt, whatsoever, about the relevance of technological determinism (the belief in technology as a key governing force in society) in the American society, it is still debatable for some other developing countries.

Technological determinism is embedded in the American culture and shows how artists, advertisers, and professional historians contributed to the emergence of a widespread popular belief in technology as a driving force in the society. This argument is even more plausible after witnessing the rise of ‘information society’, in the last two decades, which has become instrumental in shaping the economic and social policies of many economically developed countries.

We have witnessed the arrival of a technology driven revolutionary new global society which is beneficial to a lot of citizens and to society at large, and which has brought about great improvements in many areas. In particular, the concept of information society has become central in shaping the economic and social policies of the most economically developed countries, both individually and collectively through organizations such as the Organisation for Economic Co-operation and Development (OECD) and the G8 group of nations.

In addition to having bought into the concept of technological determinism, knowledge and innovation are increasingly recognized, almost everywhere, as critically important for development, by many governments and agencies because in the advanced developing countries, the advances in scientific knowledge appear to have been a precursor to social and cultural changes critically important to development. Public policies are being framed to create network of institutions in the public and private sectors whose activities and actions initiate, import, modify, and diffuse new technologies. The new emphasis is on the enabling environment, which fosters innovation and technical change and the linkages between all the actors involved in innovation. These policies, widely, concentrate on:

• Macroeconomic conditions and regulatory frameworks providing the environment for innovation in the private sector,
• National systems managing and coordinating science and technology institutions,
• Communication and information technology,
• The capacity to monitor and assess relevant information,
• Mechanisms for linking academic institutions and society,
• Scientific and technological services and mechanisms to promote and facilitate the diffusion and transfer of technology such as information services and technological consulting,
• Operating conditions and procedures, research and development capacity to generate knowledge and technique,
• Programs to educate and train personnel,
• The scientific and technological know-how of the labor force, and
• Financial intermediaries and resources.

These policies concentrate on a wide range of fronts, but by their nature exclude individuals from being a part of the implementation group. These are meant to be played by Governments and International Organizations. The commitment of the private sector is utilized only to the extent of dialogs with the governments and devising e-strategies.

If economic development is the priority in this century, then the development programs have to be inclusive of all. Everyone everywhere should be able to participate; not just the individual recipients but individual donors as well.

How can we use the Information and Communication Technologies (ICT)?
In the developed world technology now has no country and regional boundaries. In a similar fashion, for countries to develop in science and technology and social structures and affairs, importation of technology as well as sharing and diffusion of regional successes and lessons learned have to be encouraged.

Over the last ten years social scientists too have been able to come to a conclusion that social development needs deliberation, participation, and information. If these are required then there must be:

• Public spaces and networks for deliberation and exchange of services among people,
• Channels through which experiences and knowledge can be shared among people, and
• Sites where information/knowledge sources must be consulted.

Consequences of ICTs – From Foreign Direct Investment to Personal Finance
The availability and use of ICTs has in the very recent past created an atmosphere for many Indian entrepreneurs and multinational companies to invest in India. It is morphing the previously worrisome phenomenon of ‘brain drain’ into ‘brain circulation’. The very problem that plagued Scotland is now being prevented in countries like India and Mexico. With the investments that have brought down the telecommunication costs over the years and have made computers and Internet so pervasive, a lot of teleworking jobs are being exported out of the developed economies. Countries like India have leap-frogged into a world-class exporter of software services and production.

This will prevent the developing countries from being eroded of their talent pool further, which to a large extent addresses the problem of human migration. It ensures economic development of a country, a crucial process, in absence of which social development has seldom succeeded.

Micro Finance – A Step beyond Economic Development
In the interest of philanthropy, individuals and organizations struggle almost everyday to increase their impact and outreach. Some even struggle to start as the myriad of possibilities, both in number and nature, and the impact of help and investment are difficult to assess and hard to sustain. Amongst the many novel ways that have been explored in the past ranging from grants for low-income housing projects to research and development of a cure for deadly diseases like AIDS and malaria there is very little role and control for an individual or a small organization with a relatively smaller fund size. These, however, combined may well be the largest pool of donors; smaller private companies and high-income professionals who are associated with the high-tech industry or are involved in the development of ICTs. Microfinance is a basic and very opportune avenue that addresses the problems of social development at grassroots. As households have the economic means and financial resources they will concentrate on education, healthcare, and will ensure the sustainability of any developmental program, be it political, social, or institutional in nature.

Micro-finance or Micro-credit, as it is often called, is the extension of small loans, often collateral-free, to entrepreneurs too poor to qualify for traditional bank loans to fund their micro-enterprises. These loans are typically $200 or less and are used for investment in very small businesses. Being small in amount and with the associated high costs of transactions and lower profit margins, these loans are not attractive to traditional banks, which therefore do not commit resources like banking centers in remote areas. There are many micro-finance programs running all over the world, but none is as successful and prominent as Grameen in Bangladesh.

Grameen Foundation leverages the power of microfinance to create innovative and sustainable solutions using technology that:

• Makes microfinance (micro-credit) operations more efficient
• Creates income-generating opportunities for the rural poor
• Provides poor communities access to information and resources

ICTs are very critical to make these micro-finance operations and supported businesses a success because a successful micro-financed venture needs:

• Availability of Lenders
• Availability of Credit (remittance systems from overseas)
• Access to Borrowers
• Management of front-line transactions
• Back office MIS
• Exposure to Markets

In absence of ICTs the management of the above components is a very human intensive task which runs a high risk of bureaucracy creeping in, fraud, and community marginalization. While all of the above are important for a successful microfinance operation, its sustainability depends on a combination of transparency, efficiency, and communication, and regulation. A successful operation of microfinance needs software that is able to seam together the various centralized and distributed devices like handhelds, ATMs, phones using both text and voice technologies over broadband connections in remote areas.

Without the help of ICTs even the most successful microfinance operations in the world, Grameen in Bangladesh, has struggled. In absence of appropriate tools required to run a successful microfinance operation, Grameen has faced problems like[1]:

• Limited coverage of only 50% poor because it requires large number of human resources
  Fraud by credit workers and its late detection
• Expensive audits
• Borrowers remain hesitant because of cheating and lack of transparency
• High transaction costs

Any replication of the Grameen model can utilize ICTs to de-risk its operations with the above identified series of problems. The inherent nature of ICTs will bring down the administrative costs. These savings can be passed on to the borrowers in terms of lower interest rates, which will encourage low risk taking potential borrowers to generate self employment.

Diversity in Contribution
Thus far developmental efforts have been almost exclusively a privilege of the rich and kind-hearted. Individuals who have pledged directly to a developmental activity, other than fund raisers and charity drives, have been very few and far between. Even the end goal of these contributors have been almost always been philanthropy, an investment in the deprived strata of the global society. Rarely has such community service ever been done as an investment with the goal of generating capital growth. Such intentions, especially by individuals, have been shunned as exploitative, inconsiderate, and selfish. Microfinance as a concept is a new dawn on the concepts of compassion, giving, and social development. This is an opportunity where for the first time both institutions and individuals can participate for development of the trampled without any guilt of profiteering materially from it, albeit a very small amount that is negotiable.

Some of the technological solutions suggested alleviating the current problems in microfinance operations are:

• Operations – High costs of custom software development, scalability, high hardware introduction costs. This is further exacerbated by the fact that these technologies have to operate in strenuous conditions with little or no operational support.
• Information asymmetry between investors, microfinance institutions (MFI), and clients – Client information is difficult to obtain, investors have little or no means to make informed decisions, and a prevalent lack of awareness about microfinance that still carries the image of failure and misuse of funds.
• Impact and Outreach – High cost of decentralized operations due to geographic spread of clients in remote areas, illiteracy, and user-friendliness of technology.

The Holy Grail
Microfinance institutions currently use technologies that are outdated and far less efficient than what the need is. The penetration of ICTs in MFI is still very low will little innovation applied over the years. The relationship of ICTs and MFIs is in a rapid evolution with the offerings that exist in the market today. But the industry is plagued with cost and software problems. No two MFIs operate the same way, which makes the need for customer software development very high. This, however, warrants high costs that the MFIs are not predisposed to spend. Hence, here’s how the MFIs can be helped by individuals and institutions:

• Donate money to MFIs
• Donate technology – hardware and software
• Donate effort for custom software development
• Donate training in the implemented ICTs.
• Donate infrastructure support
• Create customer directories at regional and national levels

As with many other sectors in the past the efforts to integrate ICTs in MFIs have not been perfectly executed. The results so far have been mixed. The dominating discussion in the industry currently on how to realize the promise of technology appropriately. Cheryl Frankiewicz[2], in her report of the AfriCap seminar, states, “One conclusion that emerged clearly from the seminar is that MFIs cannot do it alone. Partnerships are going to be key, and stakeholders must build and share open infrastructure.”, and has made a few recommendations for any MFI for using ICTs as their strategic tool.

• Define what technology should do and now how it should do it – Avoid copycatting just because your competitors are doing it. That’s not strategic.
• Design for “should be” and not “as-is” – Since ICTs provide the opportunity to do things differently, MFIs should be open to redesign their business processes and not try to computerize their existing processes, if they are incorrect or have a scope of improvement.
• Have a process – The biggest challenge in such endeavors is that there are many people involved who all may have a different idea of what they need and they’re building. It is therefore important to use a good methodology to determine the ICT needs.
  Involve users early and regularly – The IT department should interact with the users up and down the organization early and regularly. This will increase technology acceptance and quality of implementation. Even the adjustments in the technology to meet the user requirements will be less costly and faster.
• Look for partners, not vendors – Since technology investments are expensive they should be looked at as strategic investments. Look for mutually profitable partnerships where there’s a clear understanding of what’s to be developed.
• Make sure everyone benefits, especially your customers – Those who do not benefit are unlikely to embrace the technology and may contribute to failure of the project. MFIs need to understand the value proposition to the client as well.

Concluding Thoughts
So far, it has been argued, and there still is an ongoing debate that the technological advancements, especially in the United States, have brought about large increase in inequality and an absolute decrease in the standard of living of the poorest strata of society. Recent evolutionary development in ICTs present to societies world over an opportunity to bridge the gap and integrate socially and economically with the developed nations.

While it may be argued that technology has always been responsible in making or breaking a nation, there should be no failure to understand that it is the failure to use technology, and sometimes improper use of technology that has in the last century introduced differences in standards of living, strengthened and paralyzed economies that have created circumstances where we have the haves and the have-nots, the developed and the underdeveloped. As much as it appears to be a social phenomenon, it is a consequence of either neglect of technology or its underutilization.

Efforts in individual capacity or as corporate now have another option of harnessing technology for economic development. In particular, harnessing technology for transforming data and information into knowledge and making capital available is easier than ever and provides an opportunities like never before to help the needy, without having to associate themselves with governments and world bodies like the UN.

Reference:
[1] ICT in Microfinance: A Bangladesh Perspective. Md. Badruddoza Mia
http://www.fdc.org.au/Electronic%20Banking%20with%20the%20Poor/6%20Mia.pdf
[2] Information Technology as a Strategic Tool for Microfinance in Africa – A Seminar Report. Cheryl Frankiewicz.
http://www.africapfund.com/site/IMG/pdf/2004_IT_Seminar_Report-2.pdf