Preliminary draft: Not for quotation
Information Revolution, Foreign Direct Investment and Globalization
A Blue-print of Actions for Youth Employment
Nuimuddin Chowdhury*, Consultant, Century Foundation & Youth Employment
Summit,
nuim2@yahoo.com
December 5, 2000
*The author is deeply in the debt of Dr. Bernard Wasow for many hours of
discussions while this draft was in progress. Financial assistance from Century
Foundation is gratefully appreciated. All errors in this draft are due to the
author.
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- Executive summary
- Section I: Introduction
- Section II: The Problem of Youth Unemployment
- Section III: The Information and Communications Technology Revolution: An
Overview
- Section IV: Information and Communications Technologies and US Industries
- Section V: Changes in the Structure of Employment due to Diffusion Of
Information Technologies
- Section VI: Globalization of Information-Technology Jobs
- Section VII: Policies for Youth Livelihood Opportunities to Leverage off
Information Technologies
- Box-1: A Medical Transcription Start-up: the Sophisticated Route
- Box-2: Jobs in Urban India: Medical Transcription in a Greenfield
Environment
- Box-3: Diversification into Information Processing: From Real-estate To
Transcription
- Box-4: From Literature Graduate to Entry-level Network Administrator In an
Indian City
- Box-5: From a Data-entry Operator to Company Boss
- Box-6: From Wang Basic to Java: the Odyssey of a New-economy Indian
Entrepreneur
- Box-7: From Stock Market Maven to Information Technology Czar In
Bangladesh
- Appendix-I: Terms of Reference for the Study
- Appendix-II: Document Management and Forms Processing: Synergy And
Tensions
- Appendix-III: Computer-aided Automation in US Offices since 1960s: A
Bird's-eye View
List of Tables
- Table 1: Revenue Growth Rates in Telecommunications, Information and
Mass-Media Industries, US, 1995-1998
- Table 2: Employment growth rates in Telecommunications, Information and
Mass-media Industries, US, 1995-1998
- Table 3: Employment in US Banks and Financial Industries, 1990-1999
- Table 4: Employment in Several Services Industries, US, 1990-1999
- Table 5: Real Wage Rate in Finance/Insurance, and Private Manufacturing
Industries US, 1990-1999
- Table 6: Projected Percentage Change in Total US Employment by Major
Occupations, 1998-2008
- Table 7: Information Technology-enabled Services in Indian Economy: 1998
figures And Forecasts for 2008
With a stunning alacrity, changes in information and communications
technology (IT) have began to pervasively and deeply affect the organization of
both work and workplaces in the rapidly innovating developed countries of the
world in the twilight years of the last century. This paper is about how much
and how to harness IT to the ends of fostering youth employment or livelihood
opportunities, especially in developing countries of the world. The signature
impact of the changes in IT are about (a) cost, scope and convenience of
processing and, transmitting over large distances, information which have a
preponderant importance in the production processes especially of developed
countries; (b) the practicability and, even more importantly, the imperative of
establishing global brands and marketing spheres; (c) unleashing a process of
ferocious, stintless competition; (d) of fostering globalization riding the
crest of foreign direct investment amid an incredible growth in the importance
of portfolio capital relative to the world’s gross domestic product.
Information technology, foreign direct investment and globalization have become
the three all-dominating threads in the ongoing panorama of international
development events. This paper is about the impact of all three on the changing
location and structure of jobs or livelihood opportunities in processing
information and/or transmitting it.
Information is often of economic importance. It is not only the case that
with proper processing, information can substitute for inventories and
thus change quite significantly the end story of productive efficiency in any
economy. Granted, to do well based on that transformation needs high level of
software skills. However, at least a quarter of the 60% of US GNP that is about
information---that need processing--- lends itself to low-skill handling. Here
is an opportunity to give young people from poor countries, communities and
families a potential break. What you know and when you know it have
become equally important. Especially the last is becoming a key determinant of
market advantage. Information regarding the customer, and providing her feedback
is becoming a marketing tool of great importance. There are other uses of
information, and therefore the cost of processing and making it available over
long distances is of vital economic importance. The recent spate of
technological advances about processing, sharing, capturing, storing,
displaying, managing, and transmitting information---the information and
communications technologies (IT)---in the twilight years of the last century are
now being rapidly diffused, with a profound impact in the form of much-expected
productivity surge.
While companies producing informational tools, whether in the hardware or
software spaces, have together created an awesome and hyper-competitive economy,
the firms in the IT-using spaces have their hands full taking advantage of the
many new opportunities to harness IT to the ends of improving their top and
bottom lines. Mastering the Net has become central to both kinds of endeavors,
and software expertise has become central to mastering the Net. Reorganizing
work has usually to accompany making IT investment pay well. Rapid diffusion of
the Internet, satellite communications technologies, convergence between
computing and communications technologies are also reorganizing supply chains of
information workers’ work-time. Can planners of youth employment avail of
these outsourcing opportunities?
US economy is the largest market in the world for software products, with
annual turnover of $ 250 billion. Between 1990 and 1999, US firms invested
heavily on IT products, the proportion of business investment in IT products and
services rising from about 10% to a whopping 50%. Banks and manufacturing
industries are among the hungriest users of IT resources, with healthcare,
retailers, defense industries and government in their wake. Information
processing is an important part of US economy. Banks and healthcare industries
depend on information processing within tight deadlines that owe themselves to
Federal regulations. Modern economies have also to process information because,
despite banishing the paper trails, they still generate a lot of paper documents
that need processing and archiving. Information workers in service industry have
to process HCFA-1500 forms, UB-92 forms. Transcriptionists have to transcribe
medical records. Court reporters have to make verbatim reporting. Documents are
processed as part of imaging workflow.
This paper is interested in the substitution of computer power for low-end
motor power (of low-skill production workers). Banks have been the bleeding edge
of this kind of automation. Checks processing in the banks has evolved from
relying on reading magnetic intelligent character recognition (MICR) lines to
now being able to pull off Courtsey Amount Recognition (CAR)---a traditional
labor-intensive cost-center---to the point of allowing fully-fledged automation.
Powerful high-end mainframe-led computing solution, from IBM and Unisys etc.,
can capture all data without any imaging solution, while less automated
solutions will couple optical character recognition technologies with imaging.
Banks have indeed downsized, largely due to automation, even though all banks
and financial institutions taken together have seen their total employment in US
grow during the 1990s.
Data entry keyers, medical transcriptionists, pre-press workers, call center
workers, legal transcriptionists are the other major types of low-wage
information workers in the US economy. Of these, keyers and call center workers
are the largest categories. More recently, the category of computer engineers,
network technicians, and professional computer specialists have had stellar
growth in the numbers of jobs, and forecasts for these categories are equally
bullish. The high skills barriers of these jobs render them less relevant to the
problem at hand than the low-end jobs named earlier.
It is the IT-enabled jobs---in call centers, transcription, "back-office
work", forms processing using both manual and recognition technologies,
type-setting, document processing and editting using the Internet---that present
tantalizing prospects for jobs creation in developing countries. Technologies,
coupled with rapid advances in Internet capabilities, have evolved to the point
that many of these jobs are ready to migrate to cheaper-wage locations.
This has envigorated the supply chain of information processing, and has
thrust into prominence a small number of developing countries who have the right
blend of information infrastructure, trained human resources, the right approach
to policy making, entrepreneurial culture, and capital market institutions. In
Asia, India and the Philippines stand out on these counts. Especially India has
become highly visible as an icon of the international information industry
scene.
Policies for Youth Livelihood Opportunities to Leverage off IT
Information infrastructure build-up (fiber-optics or satellite transponder
capacity for data transport) should be undertaken as a matter of some priority.
This is also about creating a bevy of internet gateways and Internet Service
Provider (ISPs) that actively compete. In countries severe excess demand for
basic telecommunications services, there will be a need to invest first of all
in network expansion. It is very important to wrest subscribers to be given the
fullest range of facilities and freedoms in matter of the "last mile".
The entire machinery of governance would need to reinvent itself when it
comes to how to leverage off IT. First, governments should buy into electronic
governance and should publicize a time frame for such an implementation.
Governments should become a considerable employer of IT human resources, and
should pay for at least a part of these costs by saving on employees in
paper-based departments. Secondly, the entire investment on informational
infrastructure should be funded without any increase in the development
budget of the government: because all ministries would need the informational
infrastructure, they should all chip in to funding the project, if necessary
accepting a cut for other "pet" project in the bargain. Governments
will need to re-examine its own business processes through the prism of where
the developed world is headed and what kind of technological re-invention would
force itself on even the developing countries, willy-nilly. Perhaps, it would be
necessary to raise the technological bar in matters of creating the right
infrastructure, business environment and facilities for continuous staff
training. In effect, the informational economy will call for an enabling
leadership to match.
Education and training are the policy arenas with the greatest prospective
payoff in terms of an impact on youth employment. Web-based but compact modules
of ICT training will need to be launched in collaboration with the each country’s
top public universities. Self-selection of computers in poor neighborhoods will
be implemented. If country-wide zip codes are not available, then it will be
necessary to first of all implement such a nation-wide digital map, as a part of
providing the requisite infrastructure. In order to screen in only the most
motivated students---another self-selecting variables--- the servers dispensing
such training courses could use scheduling as a self-selecting variable. For
instance, the servers could only be up during the weekends or after-hours, (when
teens from wealthy families would more likely be socializing). Students could
pay (perhaps a part of the costs) using debit cards. As a quid pro quo, those
who successfully complete such short courses would have to serve gratis,
as interns for a period of, say, a year or six months, at the same "virtual
colleges"
Interventions through the credit market would be necessary. For instance,
recently the World Bank has teamed up with City Bank in India and India’s
largest IT training major, NIIT, to create a $ 100 million credit facility.
Children from poor families and street children would qualify for students’
loan that would be financed with the proceeds of this facility. Where
non-governmental organizations have a track record of working successfully in
the field of education of the poor, like in Bangladesh or India, the Ministry of
Information Technology (MIT) could usefully build bridges with such NGOs and use
them as conduits for delivering the import of policies to the schools under the
jurisdiction of such NGOs.
UNDP in Malaysia has mounted a program that deserves replication elsewhere.
Buses have been fitted out with necessary gear to the point of becoming
fully-fledged IT laboratory. Wireless internet connections are available on
these cyber-buses. Poor localities have been selected, and children from poor
families have been signed up for availing of the training. Once every week,
children including from aboriginal families, take a stab at building a Web page
or do some other useful thing using the set-up on the bus. This project deserves
replication elsewhere in the developing countries.
Youth employment through IT training and vocational "boot-camps"
will need involvement of youth self-help groups. Non-political self-help groups
will need to be nurtured where they exist, and be brought into existence where
they don’t. The Ministry of Labor should task itself with the creation of such
groups, especially in peri-urban and rural areas. Within villages and provinces,
high-school teachers---because they are respected as elders in the society---
can be reached up to for mobilizing their contacts and their support for such
jobs program. Computers could be donated to such groups: or computer loans could
be made available to them. These computers could receive priority in matters of
having access to the distance-education modules that I have already talked
about. Governments could also be making an effort of hiring, on affirmative
action basis, the alumni of such training programs to man its own IT
initiatives, by stipulating that for instance about 20% of its hires will come
from the trainees associated with such groups.
Finally, all governments that have taken to heart the message that the
arrival of the information economy makes it necessary to reinvent the business
of governance and policy-making would do well to look carefully at the raft of
policies created by the Central and State governments in India.
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