Local ICT sector not profiting enough from cooperation with international companies — report

AMMAN — Foreign direct investment in Jordan’s ICT sector did not lead to growth spillovers among local firms interacting with the foreign tech companies, according to a new World Bank report.

The “World Development report 2016: Digital Dividends”, issued last week, said that in Jordan neither domestic firms supplying goods or services to foreign tech companies, nor domestic firms consuming their services grew as results of such linkages.

“The lack of measurable growth spillovers could be due to the relatively small number of foreign multinationals in the ICT sector,” the report said, noting that there are eight in ICT-producing sectors, and 160 in ICT-using sectors. 

It added that there are still relatively few domestic ICT companies in Jordan, such as software programmers, which are expected to benefit most from linkages with foreign tech companies. 

“Furthermore, foreign firms like Microsoft or Oracle might use Jordan primarily as a hub to support regional activities involving few linkages to the domestic economy”.

A World Bank statement said this report shows that while the Internet, mobile phones and other digital technologies are spreading rapidly throughout the developing world, the anticipated digital dividends of higher growth, more jobs and better public services have fallen short of expectations, and 60 per cent of the world’s population remains excluded from the ever-expanding digital economy.

It added that the benefits of rapid digital expansion have been skewed towards the wealthy, skilled and influential around the world, who are better positioned to take advantage of the new technologies. In addition, though the number of Internet users worldwide has more than tripled since 2005, four billion people still lack online access.

“Digital technologies are transforming the worlds of business, work, and government,” said Jim Yong Kim, president of the World Bank Group. 

“We must continue to connect everyone and leave no one behind because the cost of lost opportunities is enormous.”

Although there are many individual success stories, the effect of technology on global productivity, expansion of opportunity for the poor and middle class, and the spread of accountable governance has so far been less than expected, the statement added.

The report said the lack of spillovers to ICT-using sectors in Jordan suggests that local firms import ICT services rather than depend on the presence of foreign tech companies in the country.

Jawad Abbasi, founder and general manager of the Arab Advisers Group, said this information “has some truth to it but is not entirely accurate”.

“Many ICT companies in Jordan export locally-produced services across the region and the world, but do that from sales offices in the region and are not captured fully by Jordan’s figures,” Abbasi told The Jordan Times.

Meanwhile, the report showed that poor digital literacy limits the productive use of digital technologies. 

It is hard to use the Internet when, even among young people, more than half have a level of functional literacy below what will enable them to participate productively in life, as in Albania, Indonesia, Jordan, Malaysia or Peru, the report said.