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The Paradox of ICT’s Impact on Growth and Inequality

Thirty years ago a UN commission published the Maitland Report, proposing that by the early 21st century, every individual on the planet should “be within easy reach of a telephone” given the economic benefits. That was interpreted as being within a one day walk of a phone. Anyone suggesting back then that over 90% of the global population would be covered by mobile cellular signals, and over half of the world’s population would have a phone in their pocket, would have been labeled a crazy optimist. Yet, today it’s all about high-speed broadband connections, which total over 3.4 billion as of 2014 – nearly half of the world’s population.

This year’s Global Information Technology Report, and chapter 1.2 in particular, details this history of ICTs as a powerful driver of economic growth, and discusses the remaining barriers to more inclusive prosperity. While ICTs have a multiplying effect on income and growth, unconnected countries and people are being left behind. To address a widening income gap, particularly within countries, more needs to be done to increase broadband adoption, particularly through policies that focus on universal access, affordability, digital skills and the gender gap.

Evidence from the last two decades demonstrates that ICTs, particularly broadband Internet, are an income multipliers. At the country level, macroeconomic data links fixed telephony, mobile telephony, Internet use, and broadband use to gross domestic product (GDP) growth in a causal relationship across developed and developing countries. , And increasing the intensity of data use also drives per capita income growth. This growing body of evidence highlights the fact that we are long past the days of the “Solow paradox,” when, in 1987, Nobel Prize–winning economist Robert Solow noted, “you can see the computer age everywhere but in the productivity statistics.”

At the microeconomic level, emerging analysis highlights the impact that ICTs can have on driving income growth at the bottom of the economic pyramid. Mobile phones in particular, have spread across the developing world and this ‘mobile miracle’ is contributing to income growth as handsets act not only as a communications device for sharing public and private information, but also as educational tools delivering learning content, and as a financial transfer and savings device.

A direct result of ICT adoption is the steady decline in absolute poverty across developing regions. The global extreme poverty rate (those individuals surviving on less than US$1.25 per day) dropped from 1.9 billion people in 1981 to 1.3 billion in 2010 according to the World Bank: extreme poverty rates in developing countries dropped from more than 50 percent to 21 percent. This decline in extreme poverty has been driven by long-run economic growth in China and India, recent growth across Africa, and the impact of social programs in Latin America.


The picture is more mixed, however, when looking at ICTs’ impact on income inequality. At the global level, the latest available data from the World Bank show income inequality (the distribution of income across all people in the world) to be on the decline. The most recent analysis finds that global income inequality has fallen steadily from a Gini coefficient of 72.2 in 1988 to 70.5 in 2008 with the decrease attributed to the large overall income gains of the global median (around the 50th percentile) of the population.

However, the decrease in global income inequality masks the income inequality increases observed within individual countries. With-in country income inequality appears to be rising in many countries (developed and developing) and one analysis by the International Monetary Fund suggests that technological progress, measured as the share of ICT capital stock, has a statistically significant impact on inequality. The available evidence presents a paradox where ICTs are driving economic growth and decreasing global inequality while at the same time contributing to rising within-country income inequality.

While this paradox appears, the full benefit of ICTs has yet to accrue to lower income groups. For example, network effects and externalities that multiply the impacts of ICTs require minimum adoption thresholds before those impacts begin to materialize. One analysis finds a positive impact of a 2.8% increase on GDP resulting from a 10% increase in telecommunications infrastructure, but only once a minimum threshold density is reached. In this case, the threshold was at 24% of the population. In other words, countries will only experience the full growth impacts of ICTs once penetration passes that point. Similarly, a 2009 analysis determined that increasing returns to broadband investment occurs when a critical mass of penetration—above 20% (20 subscriptions per 100 people)—is reached. Greater access and adoption of ICTs in lower-income groups will further accelerate income gains at the base of the economic pyramid.

To counter the disparity in the utilization of ICTs between lower- and higher-income groups, immediate actions should focus on closing the disparity in ICT adoption/penetration. To ensure that benefits of ICT accrue to lower income populations, more needs to be done to increase broadband availability and adoption, particularly through policies that achieve universal access, increase affordability, increases digital skills and close the gender gap. These include:

1) Focusing public resources and incentives for building broadband Internet access out to rural and underserved communities
2) Connecting schools and libraries to broadband Internet service and ensure widespread connectivity within schools
3) Removing excessive taxation on devices and access, and consider targeted subsidies for certain populations
4) Developing robust ICT training curricula and programs
5) Focusing on closing the gender gap in ICTs

The data in this year’s Global Information Technology Report leave no question that the adoption and use of ICTs has a positive effect on income and growth on lower-income countries and populations. However, the challenge to accelerate ICT adoption, particularly among lower-income groups, remains. Combining the positive economic growth impact of ICTs with targeted interventions focusing on alleviating poverty, will improve the well-being of citizens everywhere, especially those in absolute poverty at the bottom of the pyramid.


On Wednesday, April 15, at 10am US EDT, please join me and colleagues from the World Economic Forum to discuss the findings of the 2015 Global Information Technology Report. 

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How-To Video’s on Demand

Hello all,

I hope everyone’s week has been a fruitful one.

Alike many product teams, ours sometimes have a tendency sometimes to keep a large amount of focus churning out new products with all of the features and performance characteristics our customers want in quality networking products.

While one of our product traits is #useability, we all know, there are features that are perhaps not as straightforward to the layman, small business owners, even though these savvy folks understand the need to use these features for their businesses to be successful.

So in that spirit, we have assembled a team of young, bright individuals and challenged them with an aggressive list of topics. The first of these topics is an informative yet light video-on-demand on Quick VPN configuration tips for some of my RV Series router models. Configuring VPN’s, even though it sounds exciting (yes that is a joke), is not always straightforward, so this video should be very helpful for many.

I would like to introduce you to Ruben:

I also wanted to pass along two Cisco Small Business Links that house a set of VoD’s that are a little more technical in nature that our team in Greenville has produced for topics such as Configuring VLAN’s on the RV320 and RV325 and setting up multiple types of VPN’s on RV130, RV320, RV325 and others. These again are little more technical in nature, but very informative and helpful in getting your Small Business Networking configured as needed.

Here is the Cisco Small Business YouTube Page.

And here is the Cisco Small Business Vimeo Page.

Make it a great day.



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Product Transitions

We made it! It is Friday afternoon and the weekend is almost upon us. But before closing up shop, it is a good time to bring up some product transitions that we have going on.

First off the wireless team has this update:KO27034

The popular WAP4410N model is no longer available. There are options:

The current replacement is WAP121 but if you looking  for more performance and more features, take a look at the WAP321, WAP551 or the dual-band WAP561.

To close this out, we have the new WAP371. It is brand new, it performs and it has wireless 802.11ac!


Now for the RV Series:

The RV120W and RV220W will be going end-of-sale at the end of December this year. The RV180 and Rv180W will be going to end-of-sale by April of next year. Quantities could be limited on certain regional SKU’s.

The replacement models are the RV130 for the RV180, and the RV130W for the rest.

Update: We also have five PIDs that are now EoL: RV220W-A-K9-AU, RV180W-A-K9-AU (both for Australia/NZ), RV180-K9-AR (Argentina), RV180-K9-CN (China), and the RV016-G5 (EMEA). In Mexico, the RV180-A-K9-NA is now replace with the RV130-A-K9-NA.

Have a great week.


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The Cisco RV130W – A Small Business Review

Hello all,

I hope the week is going well for all of you.


I had a Small Business owner reach out to me yesterday to let me know how her experience was in setting up and configuring her new Cisco RV130W wireless router for her small business she started a couple of years ago.

She owns a small but growing business that sells unique holiday card tree displays. Growth has been amazing so far as word is getting out about this new product. I am definitely planning on getting one for our house.

Here is here is Laura’s experience:

“As a small business owner, I am responsible for all aspects of the business – from accounting and marketing to shipping and IT.  I do not have time for technology that is hard to set-up or doesn’t work.  The Cisco RV130W works exactly as advertised.  It is easy to set-up, has been hands-off since the initial configuration and works – period.

I switched from an inferior solution that did not have wireless coverage for the entire office, connectivity consistently dropped, and was a drain on my time.  I am incredibly happy with my purchase and will be a Cisco customer from now on.”

Laura Burrows
Owner, Social Fruitfly

For more information on Laura’s business and these awesome card displays, skip on over to

Abby-400x599 IMG_1716-400x599



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Small Business Profile: Auto Union Tuning

Hello all,


Out here in Southern California, in a town called Huntington Beach, is a growing Auto Shop called Auto Union Tuning.

It is a special place where the owners, Dave and Raz specialize in car care, maintenance and tuning of VW, Audi and Porsche automobiles. On any day, you will find a combination of these three car makes on the lifts and in the garages. From quick VAG-com checks to complete engine rebuilds, you name it, this shop can take care of most work.

There is one specific car they specialize in is the Audi B5 S4. This particular model is sought after by Audi enthusiasts for the tuning potential. This S4 was manufactured between 1997 and 2002, which sported a twin-turbocharged 2.7 liter inline 6 cylinder engine. Some key upgrades can make a 10+ year old car beat new Nissan GTR’s, Supercharged BMW M3’s, Supercharged Corvette’s, Vipers, Shelby’s etc. down a quarter mile.

But alas, that is another story.

I first met Raz back when I was in search of someone to work on my own B7 Audi S4 Avant. Thankfully, I met Raz and he worked on my baby until I sold her to a gentleman that flew out from Salt Lake City and bought my Audi S4 site unseen. This largely because of a conversation I recommended my buyer to have with AUT. Yes, AUT did a good job not only maintaining and caring for my then car. But it is the countless other AUT customers who told others about their experience in how AUT handled their customers and their customers cars. Simply, the they did a great job in running a great business. In the few years I have known the owners, I have seen their business being born, move into a small shop, expand into neighboring units, then move into their current facility, which I must say, is impressive.


The Office


The Lifts

With all of this growth, Raz and Dave has seen their network needs and requirements evolve. At first, basic network connectivity using a consumer all-in-one router did it’s job obediently for the first few years, but once they moved into the new facility, things had to change. Simply, the networking strategy had to grow up.

Fast Forward to today, there’s now a total of two new mechanics, office employees, three new workstations and a new ticket writing software that needs to be available on multiple workstations. No doubt new employees and more requirements on their network will be coming in the future.

Yes, Raz and Dave have planned for growth. The new waiting room and front office now houses new couches and a TV. New wheel displays are set-up, vendor banners are hung, and the walls are newly painted.There is a bunch of exhaust and performance parts displayed around the room.

But this planning also included a new need for wireless guest access and of course a secure network where Auto Union Tuning Employees can access secure files and applications, such as the new ticket software. With some discussion, and some assistance, Team AUT procured new Cisco Small Business product, including one of Ivor’s 300 Series PoE Managed Switches, and a pair of Nasser’s WAP551 wireless access points. All of the workstations are hard-lined into the 300 Series Switch, and the WAP551’s are set-up and deployed with a guest network and secure internal network and they are now providing blazing performance in the office and garage workspaces. The entire deployment was said to be under 30 minutes. Much of the time savings was due to the WAP551’s Single Point Setup. The team has some cleanup work, cable management, mounting the wireless access points, but most of the heavy lifting work is complete. The AUT Team is happy with the new network and greeting new customers every day.


Auto Union Tuning’s Owners: Raz and Dave

Auto Union Tuning is but one example of how a small business can literally take off from day one and transform and evolve into a growing, thriving business. With honest, good old fashioned hard work comes success and growth. With this growth comes the necessity for it’s networking infrastructure to be flexible and scalable.

We think you will find that the Cisco Small Business portfolio fits this model rather well.

For more information on our portfolio of networking products – click on these links: switching, wireless, routing.

Thanks for the read.


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