IT can boost economic development by increasing efficiency, reducing costs, and improving the quality of output. Countries with a competitive IT sector and a pool of qualified engineers can have a competitive advantage. IT can also enhance government services, public utilities, and education.
Information technology (IT) can play an important role in economic development, itself providing a thriving industry that increases employment and boosts exports. Industry can also contribute to broader economic development within a country by creating greater efficiency in industrial sectors, helping to reduce costs and increase the quality of industrial output. Information technology and economic development are also linked when service industries are able to provide their services over a larger geographic area. Government services can be enhanced with the introduction of information technology, assisting back office services and leading to greater efficiency in record keeping. The management of sectors such as transport and utilities can also be enhanced by the use of specialized information technology services.
Countries that encourage the development of a competitive IT sector often see a close connection between information technology and economic development. Barriers to entry in the IT sector are not as high as in other sectors and relatively little investment may be required. A country that has a pool of qualified engineers and computer scientists can have a competitive advantage in IT services. An example in recent history is India, which has developed a software industry through tax breaks and other incentives for software developers and exporters, building a thriving industry based on a workforce that has the relevant IT and language skills. .
Information technology and economic development are linked when IT services spur innovation and efficiency throughout an economy. Greater ease of communication and the introduction of IT systems can reduce costs, promote efficiency and increase the quality of products and services. The use of collaborative technology facilitates the dissemination of knowledge within a company and between companies in an industry, improving communication and collaboration with customers and suppliers. Digital processing, storage and communication of information increases efficiency in back office services such as accounting, payroll, inventory management and various production operations. Financial institutions can increase efficiency using information technology that leads to more efficient loan processing and management of microfinance operations.
Government services can be operated more efficiently through the use of IT in areas such as data collection and record keeping. Key government operations such as tax collection can be made more efficient, and electronic filing of tax returns can reduce the administrative burden on the government. Electronic storage of data by government can also aid transparency by making it easier for the public to access government data relevant to them. The operation of public services such as electricity and water services can be improved with the introduction of IT systems. Information technology and economic development can also be linked to the expansion of the education system through distance learning or the use of IT in schools.
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