129. Continuing change in informatics. Information technology will continue to change at a fast pace for the rest of this century. Recent advances, such as expert systems and text storage and retrieval systems, are likely to revolutionize knowledge work. Even the "leading edge" industries and organizations are likely to continue to learn the capabilities of new information technologies and the strategic use of the relatively established
technologies. These organizations are gradually moving from the early stages of automation of routine production and administrative processes toward exploiting information technology for increasing their capacity to respond to their clients and to transform their relationships with them.
130. Delayed measurement of full impact. The effect of information technology on the productivity of whole economies will take time to be fully realized. It is likely to resemble the profound shifts of earlier
techno−economic paradigms. Researehers have been preoccupied with the seeming contradiction between accelerated technical change in the 1980s (fueled primarily by information technology advances) and the failure of industrialized countries during this period to reach average post Second World War levels of productivity growth.49 The growing consensus is that productivity statistics and indicators currently in use only capture fundamental technological
49 See: summary of the discussions and conclusions of the International Seminar on the "Contribution of Science and Technology to Economic Growth," held in June, 1989 by OECD.
change long after it has begun to take place. Productivity data cannot capture what is happening at the technological frontier or measure technological potential. Corporations and social institutions are undergoing profound organizational change to absorb the potential productivity benefits of information technology. As problems of diffusion and systemic adjustment are overcome, the effects of information technology will be fully realized.
131. High qualitative impact on developing countries. When microcomputers appeared about a decade ago in industrialized countries, the computing power from mainframe computers was already taken for granted. In developing countries, however, there was relatively little installed mainframe computer capacity when the microcomputers began to trickle in. Therefore, the importance of microcomputers may be especially profound in the developing countries. Today's inexpensive and powerful microcomputers are easy to set up in the developing world; they represent a far greater qualitative change for public and private management in the developing countries than in the developed ones.
132. Constraints to diffusion. The spread of information technologies will vary significantly among developing countries. It could be more rapid than in the history of previous technologies, largely because global
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telecommunications has integrated the world economy, and new technologies such as software are more difficult to protect. But the most important constraint is that these new technologies are effective mainly when
incorporated into new organizational structures with practices that require a heavy infusion of complementary inputs, such as highly skilled management and flexible, trainable labor. Managers may hold fundamentally different perceptions of change and power and of the value of time, quality, schedules, responsiveness, risk taking, and so on. In the "wrong" hands, information technology could be used to de−skill, dehumanize, and excessively centralize decision−making. Adoption of organizational innovations and practices depends on an environment where competition and accountability are important In addition, high−quality telecommunications are required for the successful diffusion of information technology.
133. Opportunities for diffusion. These constraints are balanced by very significant possibilities. First, most developing countries' enterprises and organizations are relatively small and free of labor union problems. Most lack advanced specialization or complex systems that might otherwise hinder reorganizing away from an
"assembly−line" model. Second, developing countries can learn from the experiences of "front−runner"
organizations in industrialized countries, and management consulting firms are making the new organizational practices codifiable and accessible. Third, subsidiaries of foreign firms whose headquarters are pursuing organizational
changes aided by information technology can become conduits for transferring their accumulated organizational learning to their subsidiaries and other associated suppliers in developing countries. Fourth, learning from the Japanese experience, developing countries may use informatics to build upon some of their traditional strengths, such as group decision−making and intensive informal and horizontal communication. Finally, some recent models of "best practices" in organizational change are emerging from the private sector in the developing countries themselves. Among them, a large clothing producer in Brazil, who by reorganizing production around group technology concepts, reaped 200 to 400 percent productivity increases for various tasks.50
134. Opportunities will vary among developing countries. Strategies for applying informatics should be differentiated for countries at different levels of development The more industrialized developing countries are already participating in the information technology revolution and are able to overcome many barriers. For them, the emphasis would be on using informatics to remain competitive in global industries and services. Other countries, with large domestic markets, such as India and China, could negotiate their integration into the emerging techno−economic system on the basis of their potential domestic markets. However, most developing countries are not yet participating significantly in the new technological revolution. The poorest countries suffer the most from information scarcity as it hinders effective functioning of markets and of public and private
institutions. The new technology could be blended with traditional technologies to improve their performance (for example, by using remote−sensing and geographic information systems to support agriculture and water resources development). Informatics could also accelerate regional integration, for example, by using electronic networks to exchange information among developing countries in areas such as trade. Not surprisingly, the development assistance community is actively involved in informatics application for information management improvement in the poorest and least developed regions.
135. A period of transition. The shift from the technological paradigm of mass production to a new paradigm based on informatics represents a "window of opportunity" for many developing countries.51 During the initial phase of the new paradigm, new entrants have full access to the necessary technical and organizational principles from universities and the public domain. As shown in Figure 3, what makes it difficult to enter during the later growth phase of the paradigm is
50 Manuel Gaetan, "An Alternative to UPS," Bobbin , February 1986.
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51 For example, see Carlota Perez, "The Institutional Implications of the Present Wave of Technical Change for Developing Countries," paper prepared far World Bank seminar on technology and long−term economic growth prospects, November 1988.
Figure 3
LIFE−CYCLES OF SUCCESSIVE TECHNOLOGICAL PARADIGMS:
Accessibility of Knowledge and Expertise Source: Carlota Perez
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Figure 4
INFORMATION TECHNOLOGY APPLICATION EVOLUTION Source: Nolan/Norton
the accumulation of increasingly private expertise, as well as the development of in−house knowledge that is patented or kept secret. This sets up barriers to entry in each specific industry and also generates externalities for all organizations in that particular region or country. Entry at an early stage of a paradigm shift thus enables a country or firm to learn before others translate their learning into complete dominance and competitive advantage.
This model is particularly relevant to the information technology paradigm. Developing countries need to get on the learning curve as quickly as possible so that they do not miss this "second industrial revolution."
136. Stages in learning. As organizations accumulate experience with information technology applications, they go through stages in learning how to capture more fully the potential benefits of the technology (see Figure 4). In the first stage, the focus of the organization is on automation of administrative functions and routine transactional decisions, with primary concern for efficiency gains. The second stage involves the use of information technology in the core business activities to reorganize work relationships, to decentralize and create flexible structures, and to leverage the knowledge and managerial resources of the organization, thus enhancing overall organizational effectiveness. This stage requires mastering the institutional and behavioral factors that determine the effective use of information technology. In the third (most advanced) stage, information technology is used to transform relationships with clients, suppliers, and collaborators and to develop new services and products. Only the front−runner organizations have reached the third stage, demonstrating the transforming power of informatics.
137. Developing countries at the first stage. Informatics applications in developing countries currently focus on the automation of tasks that can no longer be handled manually. Most organizations are at the first, or efficiency, stage of organizational learning, if at all (see Figure 4). Aid agencies have primarily focused on such applications as computerized customer billing (for public utilities) or transaction systems (for taxes and banking), but they are also beginning to use informatics to generate valuable planning, management, and marketing information.
Moreover, a high percentage of informatics applications has supported short−term goals, giving little attention to sustainability and to building the necessary local conditions for cumulative organizational learning. Exploiting informatics on a significant scale—for organizational effectiveness, for a sustainable competitive advantage, for innovation of new products and services, or for linking organizations to their suppliers and customers—has yet to
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be learned.
138. Growing importance in the 1990s. The real promise of information technology may lie not in what it is doing now, but in what it will do in the future. This is particularly the case as more "intelligence" is incorporated into software. Increased application of expert systems could raise the
productivity of the relatively few scientists, engineers, and professionals in many developing countries. For example, pilot projects are under way to develop expert systems to evaluate public enterprise performance (Peru), to use national economic databases for planning (Philippines), and to disseminate the accumulated knowledge of agricultural research in an interactive problem−solving mode.52 Information technology can improve the participation of country officials and non−governmental organizations in designing and monitoring development assistance programs and in analyzing economic policy. This could transform these processes into real partnership by building capabilities within countries and engendering ownership of solutions. The development assistance community must develop the necessary approaches and capabilities for a field that will only increase in importance during the 1990s.
52 Peter Browne, ''Support for Information Technology Development," Ottawa: IDRC, 1989.