In the previous two articles, we talked about the concept of the economy in general, and explained that the economic process cannot be achieved unless there is an interaction between two parties, justified by the need of one party for a product or service, and its availability to the other party. We explained that the availability of a resource of economic value to a party remains an unrealized potential value, but its value appears when requested and its ownership is transferred from one party to another through value chains. It also showed that value chains are nothing but production networks that link economic interests through integrated and overlapping relationships, and that the technological solutions available today mainly contribute to linking the components and parties to this network, and even become permeated in the same value-added creation cycles.
In this article, we will single out our talk about the technological and communication infrastructure, to clarify its importance and role in building competitive knowledge economies based on innovation, which would drive GDP growth, create new job opportunities and support other infrastructure services.
Digital communications infrastructure can be just as similar to, for example, transportation infrastructure, which transports people, goods, and materials such as roads and bridges, as well as to transportation such as cars, trains, planes, and ships, as well as to organizational facilities such as airports and ports. The importance of communications infrastructure has emerged with technological developments that have created a new need in our societies for modern wired and wireless communication systems to transmit data and digital information accurately, quickly and reliably, and with it what is now called Networked Societies are formed.
The diversity of digital transactions that today require the transfer of data from one point to another – that is, from the service requester to the parties that will use it according to the procedure associated with the transaction – is beyond limit, especially with the global trend of adopting artificial intelligence and Internet of Things technologies. By way of illustration, we will list some approximate examples of this information and its use cases:
The above are only simple examples that show that the prerequisite for creating a value network responsible for the flow of economic movement in digital societies is the existence of the network connection as a dialogue medium and a carrier of data and information. And the concept of parties here is no longer limited to human societies, but, as we explained, reached machines and devices that have become connected to each other as they collect and exchange data, which is known as the Internet of Things (IoT), which is one of the pillars of future societies and its components such as smart cities, self-driving cars, robots and others. .
Today, it is not possible to hesitate to affirm the need for individuals, companies and governments to have reliable and expanded access to data networks, communications and digital services that are flexible in their content, and in their tools with accuracy, speed and lower cost, in light of the decline in hardware costs and the emergence of innovative applications.
Given the central importance of telecommunications infrastructure to activate the digital economy and the development of countries, international organizations such as the International Telecommunication Union and the United Nations have developed several important measures to measure the effectiveness of the infrastructure in countries, which determine the level of service maturity and reach the required levels. These measures are concerned with several main dimensions, represented by indicators such as:
These seven indicators provide a comprehensive picture of the level and extent of Internet penetration in any society, through which it is possible to link and draw directly from the state of the economy and its development opportunities. The study prepared by the League of Arab States on the Arab digital economy in cooperation with Harvard University and international organizations confirmed that there is a close and direct relationship between the level of digital penetration in societies, the level of well-being, the rise in income and the strength of the economy. The same study also indicated that adopting the concepts of the digital economy would contribute to doubling the Arab national product to rise from about 2.5 trillion dollars, which is currently estimated, to reach more than 4.5 trillion dollars by 2030.
By comparing the indicators of the Arab world with the global average, we will find that the average results of the Arab countries are much lower, especially in the indicators of broadband services. For example, we find that the Arab index for high-speed data packages (3G-4G) subscriptions for fixed lines reaches 5%, compared to 31% in developed countries such as the European Union, according to the report of the International Telecommunication Union issued in 2018. The spread of the infrastructure for broadband communication services in the Arab world is still in the middle of the road, and has not yet matured enough to reach a larger segment of the population, which is necessary and obligatory to achieve the effective operation of the network of economic value-creation chains, the importance of which we have explained.
Digital infrastructure, especially telecommunications in the Arab region today, requires sufficient investments in digital infrastructure and opens the door to competition in the provision of high-speed networks and services to obtain the best geographical spread of high-quality broadband communication services at a lower cost. This is coupled with the need for legislative and regulatory change, to encourage investors to expand investments in data communication services and allocate appropriate capital to invest in developing applications based on this infrastructure to maximize the potential of digital transformation.
We expect that with the arrival of network coverage and digital access to the largest percentage of the population in the Arab region, this will contribute to a higher volume of benefit from digital economic opportunities, and will positively affect the Arab economy for several reasons, the most important of which are: The high rate of financial inclusion (access to financial products and services such as Payments, credit, insurance, and others to stimulate commercial activities), and the inclusion of large proportions of businesses in the formal system, in addition to the high ability of various business sectors to develop their business results as a direct result of connection to value-added chains and their full integration with a broader global economic network. This would also contribute to the development of the government system, not only in terms of accessing services to individual or institutional beneficiaries, but as a basic and organizing source of economic and social growth.
Therefore, investment in the telecommunications infrastructure in the Arab region is imperative, because it has become a pivotal pillar for the development and progress of various sectors, such as education, health, industry, trade and others, which drive and contribute to the growth of national economies and support their competitiveness. Very simply, we are certain that the success of countries in utilizing the capabilities and opportunities offered by the Fourth Industrial Revolution will not only rearrange the influential economies on the global map, but will also determine the ability of countries to meet the requirements of development and development for their societies.
As Arab countries, we have to face the digital divide that we suffer from, which is most evident in the size of the Internet-related economy in the Arab world, which ranges between 1% and 4% of GDP at best. If we compare this with the best beneficiary countries of the economy connected to the Internet, we will find that a country like China has its digital economy contributed to about 30% of the total Chinese economic output. On the other hand, a recent study prepared by Ericsson indicated that there is a positive relationship between the growth of mobile broadband subscriptions (Mobile Broadband MBB) and the GDP. It is estimated that for every 10% growth of MBB subscriptions, the GDP grows by about 0.8%.
Dr..Eng. Ali Mohamed Al-Khouri
Advisor to the Council of Arab Economic Unity and President of the Arab Federation for Digital Economy