By: Dr Pulasthi Gunawardhana

Senior Lecturer, Faculty of Technology, University of Sri Jayewardenepura

In modern society Innovation and Entrepreneurship are crucial for long-term economic development. In recent years, the progress of Information and Communication Technology (ICT) has caused many structural changes such as reorganizing of economics, globalization, and trade extension, which leads to capital flows and enhanced information availability. The vast growth of the ICT gives a drive to the economic growth in many ways: the use of the technology enables the various participants in economic and social life to have quick and easy access to information and knowledge; ICT enables companies to communicate faster and better. This results in lowering the production costs and improving productivity; ICT also allows access to new markets, lower capital costs as a result of increasing the efficiency of the functioning of financial markets, reduces regional incongruities in incomes and productivity, allows access to human capital through Tele-networking; the use of ICT, in particular, Internet access, can promote the sustainable development of entrepreneurship and small and micro-businesses. Hence, it reduces the difficulty of financing them by mitigating information asymmetry and reducing agency costs.

Technological developments such as AI, IoT, 4G, and future commercialization of 5G have brought about a large increase in communication traffic data. The reasons for this increase include a higher number of Internet users, more devices and connections, faster broadband speeds, and increased video viewing. The impact of ICT on economic development and demonstrated positive economic effect when using ICT components. Such as; IT infrastructure, IT competence, IT investment, and IT trade size. On the other hand, in some regions with a lower level of development, ICT factors have not yet become a decisive factor in economic growth. Therefore, it is reasonable that we have inadequate educational systems and poor IT infrastructure. We need to identify that ICTs have the impending to outgrowth local economic growth and make effective development in the country. The following key attributes needed to be addressed when considering the economic growth with ICT.

• Knowledge management. Knowledge management is an acute part of the global economy. ICTs help level the playing field in this regard between firms in the developing and developed world, thereby enabling developing nations to compete more effectively in the global economy. Furthermore, many non-economic development challenges have their roots in barriers to information, ICTs can help overcome these barriers.
• ICT enables both public and private institutes in developing countries to operate more efficiently and productively at a reduced cost. Tapping into these efficiency gains can make enterprises in developing countries more competitive and also increase the viability of development projects by making them more cost-effective. ICT-driven efficiency likewise opens opportunities to small and medium enterprises (SMEs) in developing countries to exploit their competitive strengths
• With the COVID-19 pandemic, people start to engage more with technologies to tap into networks and information. The Internet is perhaps the quintessential global ICT network, which itself runs on a multitude of physical networks. ICT networks are an indispensable element of the development equation, as they can provide users in developing countries with equivalent access to information, resources, distribution mechanisms, and potential customers as users and firms in developed countries.  Providing the infrastructure necessary to access ICT networks can, however, be expensive and complex.

The role of ICT in economic growth and development has greater attention from economists, researchers, and policymakers. Human capital is deliberated key part of economic growth. A healthy economy to a larger degree is dependent on its human resource and skilled workers, as the economy of a country is run by its people. Developing countries can benefit from their large portion of youth capital as a potential skilled workforce. Appropriate training and the right exposure to professional and educational knowledge provide a powerful, qualified workforce by which a country fosters its economic growth. ICT has a dual role, creating employment and also making education accessible and affordable, for example through E-learning and mobile learning solutions. Internet usage by employees has been positively correlated with productivity. It is also a condition for e-commerce, which could contribute to poverty reduction, innovation and financial inclusion. Similarly, it facilitates participation in global value chains and, thus promotes exports. Businesses that fail to develop digital tools for reaching out to customers may be at a higher risk, as became evident during the COVID-19 pandemic.

An economy’s ability to increase productivity is a powerful measure of its economic well-being.  Expansion in productivity allows firms to raise wages without raising prices, thereby creating real, non-inflationary income growth. E-commerce is a practice developed with help of the internet that fosters sustainable development. Namely, e-commerce affects organisational performance, facilitates access to products and reduces environmental impacts through fewer documents, waste and emissions. During the pandemic, economic activities that entail close physical contact have been restricted or prohibited. Firms and customers face several challenges in supplying goods and services. Many stores have already moved online, while customers are ever more inclined to shop online. E-business is generally demanding in terms of the ability to create, process, store and exchange information and data, integrate into e-networks, and adapt to changes and problems by working with customers and partners.

The COVID-19 pandemic crisis has resulted in spikes in B2C and B2B online sales, as business and consumer replaced their traditional channels for retail and wholesale trade with e-commerce alternatives. In addition, many traditional businesses rapidly deployed an e-commerce presence to continue their business during the containment measures. However, e-commerce has also faced restrictions and delays imposed by the limited capacity of traditional distribution networks, as well as by disrupted trade channels, supply chain bottlenecks and regulations affecting logistics services. In order to grow the economy in developing countries, it needs to gain insight into their preparedness for e-commerce, and also need to develop the B2C e-commerce index. This index evaluates the prerequisites for the development of e-commerce, such as payment methods, cyber security, postal reliability, and Internet use amongst the population. Developing countries such as Sri Lanka, need to develop all the fundamentals of e-commerce. ICT tools are powerful tools for marketing as they provide businesses with new ways of reaching out to and serving their customers. People now also have access to information and other aspects of the digital era, such as networking and social media, almost in every aspect of their day to day lives.

Nevertheless, the benefits of ICTs have not been spread as equally as predicted.  This has led some to question whether ICTs have a meaningful role to play in the country. In a nutshell, ICT helps in creating jobs, generating income, enhancing GDP, increasing effectiveness and productivity, improving business services and processes, providing accessible information and communication networks, etc. In addition, ICT helps make more stable economies by promoting economic fundamentals. It also makes economies mature enough to support sustainable capital markets through improving operations via the Internet and broadband. The use of ICTs has fueled astounding productivity and economic growth and has truly transformed the way people work, learn, and socialize. Considering all the aforementioned, it should be noted that the role of ICT  concerning the economy of the country is cannot be ignored.