E-business, e-ideas, e-government, e-policies, and e-education

Ramiro Jordan

Department of Electrical and Computer Engineering

University of New Mexico and ISTEC Executive Office

801 Yale NE, Albuquerque, NM 87131-1016

Tel: (505) 277-2412 Fax: (505) 277-2986

"Just what should the good society be? Toward what, stated as clearly as may be possible, should we aim? The tragic gap between the fortunate and the needful having been recognized, how, in a practical way, can it be closed? How can economic policy contribute to this end? What of the public services of the state; how can they be made more equitable and efficiently available? How can the environment, present and future, be protected? What of immigration, migration and migrants? What of the military power? What is the responsibility and course of action of the good society as it regards its trading partners and neighbors in an increasingly internationalized world as regards to poor of the planet? The responsibility for economic and social well being is general, transnational. Human beings are human beings wherever they live?." From The Good Society: The Humane Agenda by John Kenneth Galbraith (1996)

I. E-business

"Globalization" means that there are fewer resources and more competitors. It also defines new rules of the game bringing new risks as well as new opportunities. We must think locally and act globally. And also, globalization is not standardization. Even though e-commerce, e-business, and e-transactions are the most attractive terms used in the new Creative Economy, the most important force of the present change is the growing power of ideas. Ideas, that is, what is inside people's heads. In an economy based on ideas rather than physical capital, the potential for breakaway successes is far greater. That is because ideas, like germs and viruses, are infectious. It can spread to a large population overnight; the cost of copying ideas (software) is negligible. The two definitions found below warrant a good starting point with all its implications.

World Trade Organization: as "the production, advertising, sale, and distribution of products via telecommunication networks." This definition focuses on the trade of tangible products as opposed to services and content.

Merrill Lynch: as electronic transactions of information exchange, expanding the definition to include services and content. But e-business uses Information and Communications Technology (ICT) to conduct business transactions among buyers, sellers, and trading partners to improve customer service, reduce cost, and increase shareholder value. Thus, e-business extends the use of ICT to include people (customers, suppliers, distributors, and job applicants) who previously did not have access to the enterprise information resources.

E-business means new business within a week, new markets overnight, new products within an hour, new services all the time. Faster, smaller, cheaper have become the mantra describing e-business themselves, not just electronic circuits. E-business bring into play an organization's resources and partners in new an innovative ways to create clear strategic advantages. E-business goes far beyond technology to impact and engage all aspects of a business, strategy, process, organization, and technology, to extend the business beyond its own boundaries. It enables organizations to accomplish the following goals: build customer loyalty, reach new markets, create new products and services, achieve market leadership, optimize business processes, enhance human capital, harness technology, manage risk and compliance, adds new dimensions to adaptability, flexibility and customization.

Advances in ICT are felt in the rest of the economy. Many economists now attribute a productivity increase of 1% due to ICT. For the $8.5 trillion USA economy, this results in an additional $85 billion of free output each year. And this productivity increase is understated because government statistics do not adequately define and measure output in the fast growing service sector, including banking, finance, health, and education. Investment in telecommunications and computing equipment has quadrupled over the past decade, similar increases are found in spending on software, consulting, technical support, and training. The impact of ICT industry in the US GDP can be seen in the table depicted below.

ICT Industry Share of US GDP





ICT Industry contribution to annual GDP growth





According to the International Telecommunications Union (ITU), the total trade in telecommunications equipment and services worldwide reached $1 trillion in 1998. The trade is growing 7% annually, twice the rate of the world economy. International traffic doubled between 1990 and 1996. Technological advances in fiber optic communications and increased competition are dramatically doubling bandwidth every 9 months and reducing costs by 50%. The traffic mix is changing. Mobile subscribers increased from 10 million in 1990 to 2000 million in 1998. The number of computers on the Internet grew from 1 million in early 1993 to over 50 million in 1999. The Internet Society estimates that the number of Internet users will reach 300 million by the end of 2000. That is 5% of the world population. Under pressure from users, suppliers, and a worldwide movement for deregulation, telecommunication monopolies are ending. The 1997 World Trade Organization agreement on telecommunication services calls for the liberalization of nearly al markets by the end of 2000.

Hot e-commerce companies have gained the attraction of the media, but it is in the back-office operations of invoicing, purchasing, and inventory control that the impact of intranets and Internets is most profound. Business-to-business (B2B) commerce over the Internet is projected to jump from $48 billion in 1998 to $1.5 trillion by 2003. During the same period, consumer sales will rise from $9 billion to $108 billion.

With more than a million pages added each day, the Web is now a large bulletin board. Currently the size of the Web is estimated in over 2 billion pages. To navigate this dynamic and expanding bulletin board, search engines were invented. They crawl through these sites maintaining, for every word, a list of all Web pages containing that word, so far this is not satisfactory since the results are still to large. The Web becomes an information-rich market space through which buyers and sellers interact. Such market spaces are not fixed in physical territory but are created by the confluence of standards-based networks, Web browsers, software, content and people. The physical barriers of time and distance between the provider and the customer are minimized. The elimination of physical elements (no store, no salesperson, no order book, no cash register) lays bare the essentials of a commercial transaction. E-business changes the rules of engagement. For the buyer, e-business means the cost of finding an alternative provider is minimal. For the seller, the risks of not engaging a customer's attention and thus losing a customer are high. Thus, much of the ability to decide how business will be done has shifted from the seller to the buyer.

Telecommunication enables giant media companies to manufacture and spread worldwide mass culture, erasing local boundaries and sensibilities, also giving a new dimension to privacy. Currently, over 80% of all WebPages are in English and in Latin America and the Caribbean 80% of e-commerce transactions are in favor of the developed nations. 77% of all those transactions are books, food, and PCs. Clearly, the wealthy are benefiting from this inequality. An advantage of ICT is that isolated, like-minded individuals are forming communities to pursue their common interests and to build new cultural islands outside mass culture. People are also beginning to tune out from the media system dominated by fewer than 10 multinational conglomerates. The control of the media is becoming a political issue all over the world. The media that a truly democratic society deserves is a media that brings us a wealth of diverse opinions and entertainment options; which encourage the free flow of information in both directions, and where the average citizen can voice his/her concerns. Further in the future lies the possibility that education will become a truly lifelong process, enabling a much fuller development of our potential, and direct democracy will make the average citizen more involved and active, and leaders accountable.

II. E-Change

ICT has shortened effective time and distances, facilitating the exchange of products, ideas and services across geographical, cultural and time barriers. It is changing the world economy, society, and daily life. No country can ignore the benefits and opportunities to transform society that are available with the tools based on ICT. For maximum benefit, adequate and appropriate policies in ICT are essential requirements for productivity growth and development in the private and public sectors. This must take place with total participation from society in an equitable fashion. The risks of not reaching an equitable development can be counterproductive against the challenges of today.

What is change? One definition points to forces that cannot be controlled, forces that produce new businesses. Change comes in waves, originating with the new technologies, growth, and restructuring of the affected industries. Next come the changes in other businesses as they absorb those technologies. New businesses are started, and traditional practices are overthrown. Societies and governments try to adapt to shifts in the demands for goods and services, investment, skilled workers. All of us change our daily routines in work, recreation, and in the way we interact with others, as we adapt, willingly or under pressure, to the new opportunities. The struggle of daily business will be won by the people and organizations that adapt most successfully to the new world that is unfolding.

Awareness of change is one thing, but the ability to do something about it is quite another. Chapter 1 identifies the management challenges we face in the new economy and explore good practices in greater detail. Briefly, we can identify three waves of technological chance, the first being the Personal Computer (PC) wave, followed by the telecommunications wave, and presently we are in the net-sources wave. Several developing countries, the majority, have watched or are watching these opportunities pass by with few reacting to it. In addition, depending how these waves are added we can have negative or positive feedback. A second question is related to time, that is, when to react? Time is now! As many experts preach, it is better a poor decision than no decision at all.

For nations to compete successfully, it is imperative that they place at their disposal elements of this technology. The degree of success that they experience in economic and social development will be directly proportional to strategic investments in science, technology, information systems and human capital. Countries in Latin-America that do not adapt to the new technological paradigm will face difficulties trying to keep pace socially and economically with the rest of the world, and will be marginalized from the process of integration and globalization.

Positive or negative feedback, what should it be?

ICT is an effective indicator of the difference between developed and developing nations. More than ever, governments, industry, academia, and international organizations have a social responsibility to their citizens in reallocating resources to dedicate them to science and technology in order to rise standards in education, mobilize market forces and secure a better development for the new generations of the XXI century.

A key factor in the success in this endeavor is the instigation of effective procedures for searching, processing, and distributing information in a minimal amount of time. As the evolution occurs from absolute and centralized systems to distributed systems, we find ourselves at a new "renaissance". Resources must be shared at a national, regional, and global level. These are becoming more limited in the amounts and by the number of growing institutions that compete for them. Strategic alliances (consortia) among academia, industry, government agencies, and international organizations are essential. These must promote project identification, partnering and funding to diversify and expand the capabilities of projects. If done correctly, these alliances will improve the Latin America and the Caribbean profile in S&T by increasing the quantity and quality of publications, production of science, and participation and organization of international forums. These alliances are also important to promote and raise the awareness on the need to create/enhance S&T sustainable policies and infrastructure. S&T needs to form an integral part and be top priority for the economic development and sustainable growth of the region.

Latin America and the Caribbean countries have a second change to integrate among themselves and with the rest of the world through Science and Technology. This agrees with the new multi-lateralism being supported by all nations. By integrating the region we are placing the region in a leading role and provide a response to the challenges from other regions. This new renaissance will create new opportunities for business, academia and governments, will help reduce the existing inequalities and create/enhance the human capital needed for the future. With every day that passes, computer networks become more and more important to the lives of most people. This can be clearly observed in the areas of medicine, education, commerce, the environment, economics, finance, engineering, and security, among other sectors. For instance, ICT is critical in the following areas:

In summary, an idea of the importance and necessity of ICT for the development of a country and a region can be obtained by observing the following indicators (Piaggesi 1998). It is important to observe that the top 15% of the population are the beneficiaries of this technology, the info-rich or upper class. In Latin America and the Caribbean the number of people currently connected to the Internet are 9 million, it is expected this number to grow to 35 million in the next three years. Another important fact in Latin America and the Caribbean is that 62% of the software is pirated.

Teledensity (telephone lines per 100 inhabitants):

Industrialized countries


Countries of medium development


Countries of lesser development


World average


Informatics Gap (PC's per 100 inhabitants)

Industrialized countries


Countries of medium development


Countries of lesser development


Participation in the IT Market:







Rest of the World


Internet Connectivity (% of population)





Latin America and the Caribbean


Eastern Europe


Middle East


Telephone Internet Access

Wash. D.C.








In the US, statistics indicate that 35% of all families have a PC, 50% of teenagers have a PC, 65% of computers sold are for the home and 90% of them come with a CD-ROM because the users demand multimedia applications. The average new car comes with 50 micro controllers for its control. The Internet has more than 140 million users and it is growing at a rate of 10% per month (Negroponte 1995). Moore's Law indicates a doubling of performance in computing power every 18 months, and in telecommunications, bandwidth is doubled every 9 months and prices drop by 50%. Also, it takes 18 months to go from and idea to a product in the marketplace, and 90 days to launch a company. In Latin America and the Caribbean, there are 10 million estimated users, and Internet growth in 1997 was at 250%. With similar projections for future growth, in the year 2000 the number of users will surpass 35 million. The fastest growing area on the Internet is Latin America and the Caribbean and with great opportunities. Only 3% if its population is connected to the Internet, and this represents the info-rich, broadening the digital divide.

Telecommunications and computer equipment are constantly becoming more powerful, less expensive, and more accessible to all. For this reason, we can tackle more complex problems, like climate simulation and modeling, including the effects of weather patterns such as El Niño or La Niña. This increase in compute power permits the processing of large amounts of data such as that obtained by remote sensing. This can be used for the identification and proper administration of natural resources. The solutions to many of the problems of this nature require costly and specific resources that not available to everyone; advanced computer networks are needed to provide access to resources like supercomputers available at distant locations.

Like capital and labor, information is considered a vital factor to production. In the decade of 1980, the information sector amounted from 30-50% of GDP and employment in the developed countries of OECD. This sector will increase to 60% among the European Union countries. In the telecommunications context, this is considered a strategic investment to maintain and develop a competitive advantage at national, regional, and hemispheric levels. Countries and industries that do not have access to modern communications systems will not be able to participate effectively in the global economy, and will not fully develop economically or socially. This is a critical reality to those countries in the region that aspire to become developed (World Bank 1994).

III. E-Organization

In the beginning, global meant for a company to sell its goods in overseas markets. Later global companies assumed manufacturing sites in various countries. The organization of the future will call on talent and resources - especially intellectual capital - wherever they can be found around the globe, just as it will sell goods and services around the world. Headquarters of a company is now determined by the place that offers the greatest advantage.

The Internet is a tool, and the biggest impact of this tool is speed. Speed of actions, deliberations, and information, and the speed continue to increase. This implies that the old process-oriented organizations must revamp or die. This means that there is no more time for deliberations and bureaucracy. The organization of the future will not have one ideal form. Some will be completely virtual, wholly dependent on a network of suppliers, manufactures, and distributors for their survival. Others, less so. Some of the most successful organizations will be very small and very specialized; other will be huge in size, scope, and complexity. Some companies will only last the time it takes for a product or technology to reach the market. Once it does, the organization will pass their innovations on to host companies that can leverage them more quickly and at less expense. Just as small companies will use technology to gain economies of scale, larger companies will harness technology to reduce the costs of complexity. Digitization means removing human minds and hands from an organization's most routine tasks and replacing them with computers and networks. Digitizing everything from employee benefits to accounts receivables to product design time, cost, and people from operations, resulting in huge savings and vast improvements in speed. The truly great business of today and tomorrow will have powerful bit engines, digital systems for capturing, managing, and leveraging information both inside and outside of the company.

The organization chart of a traditional enterprise had long been defined as a shrinking pyramid with the CEO at the top. The 21st century organization will look like the Web; horizontal, a mesh that connects partners, employees, external contractors, suppliers, and customers in various forms of collaborations. The players will grow more and more independent. Fewer companies will try to master all the disciplines necessary to produce and market their goods but will instead outsource skills. Outsource to those outfits that can perform those functions with greater efficiency. Managing this type of intricate network of partners and competitors, spin-off enterprises, contractors, and freelancers will be as important as managing internal operations. The boundaries of the firm will not only be fuzzy but in some cases very difficult to define. Size of a company will no longer be the metric of success; instead, the market will prize the ability to efficiently deploy assets. Good bit management can allow an upstart to beat an established player, it can also give an incumbent vast advantages. By using information to manage themselves and better serve their customers, organizations will be able to do things cheaper, faster, and with far less waste. The new organizations will tailor its products to each individual in contrast to mass production and mass consumption. It will bring its customers into partnerships and give them the technology to design and demand exactly what they want. The best performers increasingly are great communicators, compromisers, and masters of change. In the next decade the new skills requirements and a more entrepreneurial mindset will produce a superstar class of CEOs. Chapter 1 goes into more detail regarding organizations and human resource practices in the electronic environment.

Tomorrow's corporations will be virtual, defined not by their location but by their ability to acquire knowledge, organize information, and organize independent contractors and suppliers worldwide. In the process, businesses and professions are disappearing. Customers are leaving traditional business practices through intermediaries to making their own transactions on-line. In addition, the world workforce is changing. There is a global shortage of workers in information management and technology. At the same time there is increase employment insecurity as corporations shift their demand for skilled labor in the face of competitive pressure to change their operations. Recently, the US Immigration law has been modified to increase the number of talented personnel from 65,000 to 115,000 a year. Other nations such as Germany are following this trend.

Many organizations have already begun to adjust to the new realities of the Creative Economy, by allowing power to tilt from the sources of capital to the sources of ideas, by embedding themselves in fertile ecosystems, and by adopting codes of social responsibility to win the trust of a wary public. The 21st century organization will be in many ways the opposite of traditional ones. Until recently creating intensive rivalries among competitors motivated their employees and assured success. Presently, an organization's fiercest competitor might also be its most important collaborator. In the past business leaders strived to build enduring enterprises. In the future many organizations will be ephemeral, formed to create new technologies or products only to be absorbed by sponsored companies when their missions have been accomplished. From the need to expand to beyond national borders to the inexorable shift toward intellectual capital, are driving changes, but none is more important than the rise of Internet technologies. Instead of seeping out over months or years, ideas can be zapped around the globe almost instantly. Thus, the new organizations must adapt itself to management over the web. It must be predicated on constant change, not stability, organized around networks, not rigid hierarchies built on shifting partnerships and alliances, not self-sufficient, and constructed on technological advances, not bricks and mortar. As shown in Chapter 1 the push is to get breakthrough ideas to market first. The advantage of bringing breakthrough products to market first will be more short-lived than ever; because technology will let competitors match or exceed them almost instantly. To keep ahead of the steep new-product curve, it will be crucial for organizations to attract and retain the best thinkers. Companies will need to build a deep reservoir of talent - employees and free agents - to succeed in this new era.

IV. E-People and their E-ideas

As was stated above, the most important force is the growing power of ideas, which forms the basis of the Creative Economy. Because of globalization and ideas, the definition of Intellectual Property (IP) and ownership is changing. The best that organizations can do is to create an environment that makes the best people want to stay. This is exactly the environment in a competitive organization that must be created, protected, nurtured, and funded. Furthermore, synergy from multidisciplinary activities must be facilitated by tearing down old divisions between departments, sectors, colleges, and alike. The advanced organizations have gotten so efficient at producing physical goods that most of the workforce has been freed to provide services or to produce abstract goods, that is, data, software, books, music, entertainment, advertising, that is, digital content. For instance, new competition for academia is coming from industry expanding into Distance Learning, creation of content and ideas. The bad turn is that theft of intellectual property is lethal to innovation. But overly strict enforcement of IP protections can dampen innovation as well as lazy IP owners. Organizations will have to strike a delicate balance: reward mechanisms, enforce patents, copyrights, trademarks, and non-compete clauses to preserve the incentives to create, but not so much that it suppresses competition.

Education is likely to become even more essential to prosperity in the future. The five fastest growing occupations are computer-related. Organizations facing a shortage of talent are likely to respond through a combination of training, exporting work offshore, and looking for ways to de-skill certain jobs. A chronic shortage of skilled help will be accompanied by a change in the mix of people in the workforce. The long-term trend toward earlier retirement has recently been reversed, and the ethnic mix of the workforce is changing because of the influx of talented immigrants. That translates into more women and minorities in the workforce. To retain employees corporations will begin providing services that in other times were provided by the government (child and elder care). Employees will handle more work matters at home and more personal matters at work. Presently, Web-based education in the US is expected to grow from $197 million in 1997 to $6 billion in 2002. In Latin America and the Caribbean the exponential growth in Web-based education can also be seen, from almost $0 to $2.5 billion in year 2000. Clearly, education via the Web is great business but we must be careful. What now must be addressed are Quality Control issues in education in general. In addition, curricula reform is essential for development. Education must become a dynamic process instead of the current static model. Teamwork must be encouraged as well as working in multidisciplinary environments where opportunities are created, ideas generated and entrepreneurship fostered.

Currently, the volume of available information is being doubled every 5 years, and it is estimated that by the beginning of the next century this information will double every 72 days. In order to effectively utilize this information, the solutions to problems require multidisciplinary work teams and collaborative technologies that allow both synchronous and asynchronous interaction. These solutions must the results of projects that take a minimum amount of time from the genesis of an idea and to its actual implementation. In the system solution, we are referring to projects labeled both "hardware" and "software", and the line that separates them becomes increasingly blurred.

Worldwide the demand for IT personnel far outstrips supply. In the US, this causes the delay of development schedules, projects to go over budget, and hamper expansion plans. Vacancies affect more than 10% of IT jobs in an organization, turnover represents 10%, and in the Silicon Valley turnover represents 20%. Current estimates indicate that the shortage of IT personnel will last ten to fifteen years. It is estimated that this will have an effect of negative 5% growth in GDP over the next 5 years. This translates into a loss of 200 billion dollars, almost one thousand dollars for every citizen.

In the US, the number of degrees awarded in this area fell from 42,000 in 1986 to 24,000 in 1997. Additionally, industry leaders have indicated that the degrees and the quality of the professionals do not adequately address their needs. University programs have been slow to react to changes in the marketplace, and their degree programs are based on outmoded technologies. Stated briefly, recent graduates have been trained in technologies that are no longer used. As a reaction to this, many companies collaborate with universities to update their curricula, or they create their own universities. In order to retain their employees, industries have placed a priority on Continuing and Advance Education Courses.

This lack of professionals translates into a dead weight for the economy. There are 850,000 potential job openings for IT workers in the US, and universities are producing 1/6th of what is needed. In Europe the number of potential IT workers is 1.2 million. The question to be asked then is: - where will industry turn to find the talent that is needed?

The globalization and integration of the world's markets will lead industries to search for this talent in other parts of the world, particularly in Latin America and the Caribbean. According to trends and studies conducted by American industries, the next decade points to Latin America and the Caribbean. The Latin America and the Caribbean markets are subject to this process of globalization, and in order to ensure more suitable development, these markets must be restructured. Various governments, educational institutions, research facilities, and industrial firms have great interest in establishing efforts of cooperation in technical fields. The identification of areas of common interest is also crucial for the investment in appropriate resources. In the next ten years the population of Latin America and the Caribbean will have a workforce of 120 million, another 120 million will be in schools, and the amount of people in poverty will be 140 million. Clearly, hands-on education, research, and technology transfer in state-of-the-art technology and science is critical for the success of Latin America and the Caribbean. More importantly, Latin America and the Caribbean must take advantage of their second chance to integrate among themselves.

In order to address these challenges, the US has launched three initiatives to increase academic and R&D resources. These are: vBNS, Internet 2, and Next Generation Internet (NGI). These projects, proposed by Vice-President Al Gore and known as Global Information Infrastructure (GII), are instruments created within the US's independent vision, and unique to that country's development and needs. This is precisely what the Latin American and Caribbean regions need in order to develop and avoid an unnecessary technological dependence.

V. E-Governments and E-policies

Industries and societies that can make the transition to the new models of creating wealth and value will have greater chances of being successful in the new and volatile world market. A key concept there is that of community. Relations among businesses, businesses to consumers, are key as long as businesses learn to develop themselves among businesses communities that are on-line. These new relationships demand transparency, efficiency and effectiveness. Not only businesses are feeling the pressure of the digital age but the public sector as well.

Citizens from all over the world wish for an inexpensive, transparent and efficient government. The message is simple: it is not enough to make small changes, it is necessary to reinvent it. What is needed is designing a network to improve its performance. Government programs can be distributed over the net and thus improve the quality and reduce costs. Access to public information must be made available to make governments more open, develop a truly participative democracy, regain the confidence of the citizens, and eliminate bureaucracy. Transparency, efficiency and effectiveness should be the new metrics for public organizations. Furthermore, positive effects can be amplified and negative consequences can be mitigated through a participative democracy, with a new sense of responsibility and consciousness, to the exercise of rights and duties, and to the education of all people. Transparency and universal access to information are necessary for interactive creativity and world solidarity. The technological and humanistic perspectives need to be reconciled. One of the great benefits of the Internet is that is the new equalizer, it democratizes, brings accountability, and eliminates intermediaries.

What does reinventing government mean? It refers to a change in quality imposed by the new reality. This new reality is based and determined by ICT, a new economy, reformed international policies, advances in world regionalizations, and a more globalized and interdependent world. Once again, this marks the characterization of the 21st century. This new governance brings agility, accountability, new mindset and leadership, more equity, and solidarity to bridge the digital divide. It must confront head-on the Digital Divide and turn it into Digital Opportunities with Information Technology (DD to DO IT!).

Some of the most significant and immediate courses of actions are up-to-date legislature to foster Science and Technology, protect intellectual property, provide investment incentives, systemic education reforms, facilitate and strengthen regional efforts that eventually will lead to the creation of economies of scale and integration. Latin America and the Caribbean region must create/strengthen its regional effort to present a competitive regional group to other existing regional projects in today's competitive global economy. New dynamic collaboration, funding mechanisms, and agencies must be established. These agencies must promote project identification, partnering and funding to diversify and expand the capabilities of projects. They must be savvy to play with the new rules of the game called "strategic alliances". Strategic alliances (consortia) among academia, industry, government agencies, and international organizations are essential. If done correctly, these alliances will improve the profile of its members by increasing the quantity and quality of innovation, and participation and organization of international forums. These alliances are also important to promote and raise the awareness on the need to create/enhance ideas, sustainable policies and infrastructure. They also must be horizontal, multidisciplinary, reaching across boundaries, aggressive, fostering synergy, and effective, efficient and transparent. These alliances overcome the old model of public versus private.

How can the generation of ideas be fostered and sustained? Where can resources be found? With the appropriate and forward thinking legislature where IP is protected, critical for innovation, an unlimited number of possibilities are possible. We list below a number of sources.

VII. Case Study: Investments in Science and Technology

In the group of industrialized nations known as the Group of 7, industries are responsible for 50-70% of S&T. Resources originate from both the industrial and government sectors, yet most of them are spent in the industrial sector. In the US, the government mainly sponsors basic R&D, while both industries and the government sponsor applied R&D. Universities are responsible for a large portion of this basic R&D, and industries finance approximately 7% of their needs (Organization of American States 1997 and National Science Board 2000). In Latin-America R&D is primarily sponsored by governments. Brazil, Cuba, Chile and Costa Rica are the only countries in Latin America and the Caribbean with greater than 1% investment of their GDP in R&D. It is interesting to observe the amount of expenditures in S&T as well as where the talent is found.

Ratio of R&D to GDP (1997 Figures)





















Latin America and the Caribbean average


Expenditures in S&T (1997 Figures)


$185 billion


$11 billion


$9.1 billion


$5.4 billion


$1.7 billion


$1.4 billion

Human Resources in S&T (1997 Figures)


1 million



Spain and Portugal



(Brazil 50,000; Argentina 29,000; Mexico 15,000)


Rest in Latin-America

Under 10,000

VIII. Case Study: Israel

Israel has demonstrated that with the Internet, geography is irrelevant. It ranks 3rd in the world in the number of NASDAQ listed companies. Also, the number of start-up companies per capita is the highest outside Silicon Valley. Currently there are 1500 startups. Before 1992, Israel had no access to Venture Capital (VC). Now there are 130 VC firms that raised last year $1.6 billion most from the US. Polaris is the most famous VC firm. In 1993 it struggled to raise 20 million, its latest goal was to raised 300 million but it stopped accepting when it reached 500 million.

Israel is a leader in voice over data communications. They are focusing on Internet business like security, encryption. Their culture is superb at innovation but not so good in strategic management. 90% of startups are incorporated in Delaware because Israel's rules are too antiquated for high-tech era. A potential problem is the gap between the rich and poor, it is the fastest growing in the western world. This gap will widen 15 to 1 between Israel and its Arab neighbors. In number of patents, it ranks 3rd in the world, lead by 1st the US and 2nd by Japan. In terms of skilled labor, engineers as percentage of the national workforce, it ranks 1st in the world.

Engineers in workforce (per 10,000 employees)

















South Korea






IX. E-Conclusions

Competition, markets and opportunities are now global in nature, even for the smallest Internet-based organization. Thus uncertainty, ambiguity and stress are feelings that are global too. New directions need to be identified so that the next historic period is one where promises have been implemented and dangers have been mitigated.

The lesson for 21st century leaders is not just about clever applications of the latest software. As shown in Chapter 1, it is also about culture and mind-set. The new organization is a learning organization that shares ideas across its many boundaries. Technology not only gives the ability to make an organization more efficient but it also provides the potential to spark transformative change and the Internet empowers such creativity and innovation. It flourishes if unconstrained by government bureaucracy and where there is vision and when businesses are freed from legacy business models. Innovation is independent of who you work for, what rank you have, and it comes from the best ideas. The potential of E-business to transform Latin America and the Caribbean economies cannot be underestimated. Digital content and digital libraries are cornerstones in the development of electronic commerce, access to public information and educational opportunities. In this new millennium, new governance must confront head-on the Digital Divide and turn it into Digital Opportunities with Information Technology (DD to DO IT!).

Furthermore, by integrating the region through Science and Technology we are placing the Latin America and the Caribbean in a leading role and provide a response to the challenges from other regions, and creating economies of scale to foster regional development.


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Further reading and supporting information obtained from the following web sites: