Information and Communication Technology - Essential Vector for a Durable Economic Development

Abstract

Technology such as personal computers, the Internet or mobile telephoning have transformed the entire world into a global network for persons, economic agents, schools and governments that communicate and interact in various ways. The drive behind the information society is the IT infrastructure that encompasses computers, operating systems, communication infrastructure as well as general information. The information and communication technology represents one of the most dynamic sectors in our national economy, while being among the top areas of interest for foreign investors. Compared to other developed countries, the IT&C sector's financial contribution to the country's GDP is relatively low in Romania. Nevertheless, the effects that pertain from the wide usage of information and communication technology have profoundly influenced the economic development of our country. [PUBLICATION ABSTRACT]

Headnote

Abstract

Technology such as personal computers, the Internet or mobile telephoning have transformed the entire world into a global network for persons, economic agents, schools and governments that communicate and interact in various ways.

The drive behind the information society is the IT infrastructure that encompasses computers, operating systems, communication infrastructure as well as general information.

The information and communication technology represents one of the most dynamic sectors in our national economy, while being among the top areas of interest for foreign investors. Compared to other developed countries, the IT&C sector's financial contribution to the country's GDP is relatively low in Romania. Nevertheless, the effects that pertain from the wide usage of information and communication technology have profoundly influenced the economic development of our country.

Keywords: IT&C, economic development, Internet

JEL Classification: O16, G01, L17, L86, L88, M15

Introduction

The technological leaps of the last decades are the pillars of that raise the level of everyday life. E-commerce and other similar applications in the IT&C sector are turned into economic development boosters, bringing positive results. IT&C has a fundamental contribution regarding the nature of global relations and the opportunities that arise for economic and social development.

Technology such as personal computers, the Internet or mobile telephoning have transformed the entire world into a global network for persons, economic agents, schools and governments that communicate and interact in various ways. The dynamic and complex character of today's activities, sustained by a continuous increase in the levels and diversity of information and electronic communication, has marked the onset of a new stage of civilization, the information society. Transition to an information society is essential in order to benefit from using the Internet to increase productivity and the competitive level by creating new jobs and support social progress. This allows a broad access to all its members and entails a new way of life, a new style of working and a new level of knowledge and know how, entirely superior, based on an intensive use of information in all sectors of activity.

The engine behind the information society is the information and communication infrastructure that encompasses computers, operating systems, as well as information resources of general concern. These are upheld by the legal framework necessary for building the infrastructure and granting access to it with maximum levels of performance, security, confidentiality and affordable costs1. Nowadays one issue that stands out is the security of transmissions and the principles that stand behind it: confidentiality, integrity, authenticity and non repudiation.

Digital development has become in Romania, as well as other EU countries, an essential vector of support for economic growth but also for social change. As a result of technical development, the IT&C sector in EU countries generates approximately 5% of GDP. One fact that needs mentioning is that the regulation framework in IT&C sector within the EU, is supported by the 2002/19/EC Directive, approved by the European Parliament and EU Council and completed in 20092. The development strategy for the IT&C sector is described in "Communications from the Commission of the European Parliament - A digital agenda for Europe"3. This document provides for the framing of a unique market for electronic information and communications, improving standardization and interoperability of specific equipments, improving the level of trust and security of this type of technology, improving the Europeans access to high speed Internet, energizing research and innovation, offering online services, capitalizing the potential of this particular sector for the benefit of society.

Still, Europe is still behind regarding the development of high speed Internet, the level of penetration of high speed fiber optics being only 1%. In Japan, the penetration level is 12%, South Korea has 15%. In 2007, EU investments for research and development for IT&C sector amounted to 37 billion Euros which is only roughly half of the USA invested (88 billion Euros). The global demand for IT&C represents a market of approximately 2000 billion Euros but only a quarter reverts to European companies.

IT&C represents one of the most dynamic sectors in the national economy, being extremely attractive for foreign investors. Comparing the status to that of developed countries, the contribution to the GDP is relatively low in Romania, but due to the positive effects that issue from the broadening of IT&C usage and wide knowledge access, one can say that this activity sector has a profound effect regarding economic development.

In Romania, 94% of the companies use Internet services from fixed points - cable, radio, etc - or mobile points - mobile phone, USB modem, etc. The use of Internet services tend to grow proportionally with the number of employees and the business transactions. 100% coverage is specific to companies that have from 50 to 249 employees and an annual turnover from 1 to 5 million Euros.

Most public institutions (99%) use fixed or mobile points for Internet access services4.

On an international level, regarding the information and electronic communications technology, the 2007-2009 financial crises has had a different impact, most losses being suffered by subsectors such as computer hardware and equipments. Generally speaking, on a global level, there has been a reduction in the consumption levels for specific products and in the level capital investments. An economic revival is forecasted for 2011 - 2013.

In Romania, according to the National Authority for Administration and Reglementation for Communications (ANCOM), the market for electronic communications has registered at the end of 2009 an amount of 4 billion Euros, while postal services amounted to only 414 million Euros. The figures indicate an overall reduction of approximately 12,5% compared to 2008. Nevertheless, in spite of the electronic communications market's reduction, the year 2009 has had, on certain segments, a series of significant positive trends regarding consumption.

On 31st of December 2009, 2.8 million wide band Internet access connections were registered, on a 12% increase from the previous year, while the number of mobile points for wide band Internet access reached 2,5 million, which means an increase of 66% from the previous year.

For the year 2010, ANCOM has yet to publish data regarding the market value for electronic communications, but from the received hints from the market one can draw the conclusion that the reduction of incomes has continued but at a lower rate compared to 2009.

Information technology and electronic communications have become essential success vectors for democracy, education and economic growth. Communications and information technology accelerates the expansions of the economy, modifying the competitive components and generating new sources of economic growth, as well as new jobs. The economic and social implications regarding the development of IT&C sector derive from raising the level of accessibility of information, disregarding the geographic position or time frame1. The wide use of information and electronic communication technology offers new market opportunities for economic agents and people in general, it puts out the barriers that usually suppress the information flow and allows a better circulation of goods outside the state borders, promoting efficiency as an ultimate goal. People involved in various economic activities may learn of new opportunities for commodity market and management techniques in order to improve the firm's activity, public authorities are able to offer more efficient services, people can better communicate with friends and family and can be informed of virtually anything in their area of interest.

Raising productivity is regarded as a condition for market breakthrough and the impact made by information and communication technology on the productivity growth is well known. Using information and communication technology has a tendency to stimulate an intensive development production of goods and services. Regarding the extensive development, it offers an opportunity for Romanian companies to access new markets, on a regional level as well as global, or to promote and sell products and services on the internal market through the use of electronic means. An intensive development follows as a result of lowering the production costs, management and marketing, owed to the usage of information and communication technology2.

Therefore, maintaining a high competitive level depends greatly on the economic agent's ability, regardless of their area of activity, on the usage and interpretation of information in order to raise the quality level of their products and services. The information society allows for flexibility of work methods due to the fact that employees may receive and distribute tasks as easily as being in the same building. Coming to support this activity, online-banking, online-purchasing of goods and services have been available for some time now and are easily accessible from the workplace or from home.

Conclusions

In order to take advantage of these technological trumps, users must be educated on how to use the newly available means, one way could be the introduction of IT classes in the schooling system. To do this, schools must integrate the mechanism of information and communication technologies in their curricula; teachers must be taught on using computers and the Internet as ways of teaching that would benefit the students and future IT&C programmers and developers of software and hardware products.

The Internet and information and communication technology entwine virtually every technological process, offering a large contribution to raising productivity, economic recovery and a faster way out of a crisis. Allowing a faster and more solid growth and innovations within the IT&C sector offers the possibility of orienting the economy towards a more durable development. Nonetheless, the need for massive investments must be first on the priority list.

Footnote

1 Nicolescu O., Plumb I., Pricop M., Vasilescu I., Verboncu I. (coordinators), 2003, Abordari moderne În managementul si economia organizatiei, vol. 2, Management on activity domains, Bucharest: Economica, 228-229.

2 Directive 2002/19/EC, Directive 2002/20/EC; Directive 2002/21/EC; Directive 2002/22/EC; Directive 2009/136/CE.

3 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52010DC0245R%2801%29:EN:NOT

4 Research report on companies and public institutions, made by Gallup Organization Romania for ANCOM, April 2010.

1 Scarlat I., Consideratii cu privire la societatea informationala, http://www.biblioteca-digitala.ase.ro/biblioteca/pagina2.asp?id=cap13

2 Charbit, C., Fernandez, V., 2002, "Les trajectoires d'adoption des TIC dans les systèmes productifs localises: vers des communautés virtuelles?"

References

References

Charbit, C., Fernandez, V., (2002) "Les trajectoires d'adoption des TIC dans les systemes productifs localises: vers des communautes virtuelles?"

Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of electronic communications networks and associated facilities http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L: 2002:108:0007:0007:EN:PDF

Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorization of electronic communications networks and services (Authorization Directive) http://www.ancom.org.ro/uploads/links_files/1_Regulamentul%20BEREC.pdf

Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002, on universal service and users' rights relating to electronic communications networks and services (Universal Service Directive)

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32002L0022:EN:NOT

Directive 2009/136/CE of the European Parliament and of the Council on the change of the Directive 2002/22/CE regarding the universal service and users rights regarding networks and services of electronic communications, the Directive 2002/58/CE regarding the use of personal data and the protection of confidentiality in the public communication sector and the Rules (CE) no. 2006/3004 regarding the cooperation of national authorities charged with ensuring the relevant laws regarding the protection of consumers.

Nicolescu O., Plumb I., Pricop M., Vasilescu I., Verboncu I. (coordinators), Modern approaches to modern management and the organization's economy, vol. 2, Management regarding areas of activity, Bucharest, Economic Publisher, 2003, p. 228-229

Research report on companies and public institutions, made by Gallup Organization Romania for ANCOM, April 2010 http://ec.europa.eu/information_society/digital-agenda/index_en.htm

Scarlat I., Considerations regarding the information society, http://www.biblioteca-digitala.ase.ro/biblioteca/pagina2.asp?id=cap13 accessed 09.06.2011