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IER 2012 co-author, Scarlett Fondeur Gil (right) and Vi's Susana OlivaresScarlett Fondeur Gil (pictured, left), co-author of UNCTAD’s Information Economy Report (IER) 2012, explored the economic potential of the software sector for developing countries during a Vi videoconference with core university member, Pontificia Universidad Católica del Perú (PUCP), March 27. The videoconference was moderated by PUCP Vi member coordinator, Alan Fairlie, and Director of Studies, Romina Seminario.

Attended by 33 participants, and webcasted to a wider academic audience by PUCP, the exchange  featured commentary from national information and communication technology (ICT) experts, PUCP communications professor Eduardo Villanueva Mansilla, and Carlos Sanchez Tarnawiecky, of OSPITEL (Organismo de Supervisión de la Inversión Privada en Telecomunicaciones).

“The current state of technology is unprecedented,” Fondeur Gil said. “The high penetration rate of mobile phones and the advent of smartphones and social media, for example, have generated a strong appetite for new software applications, and opened opportunities in the industry for developing countries.”

Despite the sector’s characteristic low capital barriers to entry and potential to generate employment, developing countries in general have not yet taken full advantage of its opportunities.  Their spending in software is also minimal, with Latin America averaging only 3 percent of total ICT expenditures.

But a few developing countries are making a go of the sector’s potential, though their market orientation (export vs. local) varies.

“India is the main exporter of software among developing countries,” Fondeur Gil reported. “And the case of Brazil is unique in Latin America, as it counts with a large local market and high local demand.”

The IER recommends that developing countries begin by taking advantage of the domestic market, encouraging the use of locally developed applications and free and open source software (FOSS) -- which translates into cost savings, and provides opportunities for innovation, learning and the creation of tailor-made solutions by local software developers.

“The key to exploit the software sector begins at the micro level, with small enterprises,” she said.  “But the private sector can’t do it alone. Governments have a powerful role to play.”

The IER proposes the following areas of intervention for the government:

  • Providing affordable, accessible ICT infrastructure, particularly broadband, which further enlarges the scope for application development;
  • Working with academia and the private sector to cultivate a qualified workforce;
  • Facilitating the business environment and providing adequate industry certification and access to finance;
  • Strengthening the legal framework governing intellectual property protection and electronic transactions;
  • Leveraging its position as consumer of ICT services to privilege FOSS and locally developed software for e-government applications and public procurement.

PUCP’s Villanueva Mansilla emphasized that quality education and qualified local software developers are key in inciting the government to adopt local ICT solutions rather than mainstream ready-made packages, perceived as “trusted” and cost effective.

“Development of the sector requires more cooperation between public, private and academic players,” he said. “This is a dialogue that is not taking place in Peru.”

Sanchez Tarnawiecky, on the other hand, said that much dialogue has taken place through various fora and commissions, but “what we need to do is concretize.”

And although some agencies offer financing for ICT start-ups and capacity building, the lack of a centralized agency to oversee the sector impedes progress in the area.

“We have the capacity to innovate” he said. “Now we need to earn trust, legitimacy and experience – and funding -- to enter the market.”

For more about the topic, read the Information Economy Report 2012.

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