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Telecommunications: The Engine for Economic Development in the New Century

By Alan P. Larson, Assistant Secretary for Economic and Business Affairs , January 30, 1997.


Today's global economy demands a modern information infrastructure to support growth. The rapid developments in telecommunications and information technology make quick and reliable exchanges of data, orders, and analyses crucial to today's business environment.

Information technology has become the engine driving development throughout the economy. From manufacturing to agriculture, from insurance to entertainment, from banking to environmental protection -- computer, telephone, fax, cellular, and other telecommunications marvels of our era are spurring international economic growth.

The World Trade Organization (WTO) Ministerial in Singapore made a commitment to eliminate tariffs on over $500 billion of the products that are essential to building the information superhighway. A good WTO agreement on Basic Telecom services will stimulate competition and efficiency in the development of our Information Age, ensuring that this superhighway extends to all nations.

Advances in telecommunications technology will not be slowed by governmental deliberations over the Information Technology or a Basic Telecom Services agreements. At best, these deals can only help countries keep up with the changes industry and technology will continue to offer us. These agreements help countries, their companies, industries, and citizens to benefit from progress.

To be competitive in today's world, our businesses demand telecommunications regulations which offer reasonably and competitively priced services, transparent and consistent licensing procedures, and pro-competition and nondiscriminatory regulations. In an era of instantaneous global communications over a variety of media, regulatory authorities should now realize that their barriers do not keep "outsiders" out as they once could; in fact, the concept of the "outsider" is now an anachronism. What the barriers hurt, first and most lasting, is a country's own indigenous industry, which gets left behind by the inevitability of information technology's advances.

Countries that choose to develop their telecom infrastructure to carry this traffic will become economic players. Countries that fight it off will hurt their own industries, business leaders, and constituents. Even developing or lower income countries have the opportunity to leap frog over the industrial revolution, and advance straight into the information, post-industrial age. Many have opted to use new information technology to spur their agricultural and other industries' growth, or have opted to enter the telecom industry itself as "hubs," providing instant foreign direct investment for their economies and, perhaps most importantly, jobs and training for their people.

We've agreed that development in telecom is necessary, but it takes money. The World Bank has calculated that over the next five years, $60 billion per year in capital is required to build the world infrastructure to take advantage of the Information Revolution. The World Bank has, however, not offered the $60 billion annually to do the job. The necessary investment must be attracted from the private sector.

To attract such investment, each country that wants to keep its citizens in pace with the world ought to set up a domestic regulatory regime which encourages investment and competition. A number of countries, such as Mexico, Chile, and Singapore, have done so; many in the Americas and elsewhere unfortunately remain resistant.

Countries also need to take action internationally. An agreement on Basic Telecom will mean lowering the barriers to trade and investment in the modern sector. An agreement will serve all of us well by promoting a pro-competitive framework for the benefit of our best and most efficient industries and services.

The WTO Basic Telecom negotiations have entered into the final phase for nations to make "offers" to spur investment. We are hopeful that industry will urge governments to make their best possible offers. The agreement on telecom must be global to match the reach of the technology.

We've taken the first step. Our $213 billion market is already one of the most open, competitive, and efficient in the world. But we have gone further, by allowing unlimited market access in local, long distance, and international services, 100% indirect foreign ownership, and regulatory commitments to enhance competition.

We challenge developed countries to make offers similar to ours and countries in the developing world to make phased-in commitments for future liberalization. We believe that the global economic growth we have begun to see at the end of the century can be continued with the conclusion of the most pro-investment, most efficient telecom agreement possible.

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