International Trade in Services.pdf - DSpace at Khazar University

230 International Trade in Services
but also local businesses in general. They include activities that would remove
infrastructural bottlenecks, address weaknesses in the business environment,
increase the number of graduates with adequate training, reduce barriers to labor
mobility, and promote best practices in the IT service sector and, thereby, attract
foreign investors.
Address the limitations in infrastructure and the
business environment
The IT service sector is not particularly dependent on inputs of external goods
and services relative to the manufacturing sector or backbone service sectors such
as transportation and telecommunications. Stable power and reliable telecommunications
and Internet connectivity are the main critical inputs for production in
the IT service value chain. While the installation of reliable broadband capacity
may take considerable investment and years to achieve, small, dedicated power
generators in countries with poor capacity or volatile distribution can provide
adequate electricity. These generators often run on diesel fuel and may be noisy,
environmentally unfriendly, and more expensive than the electricity provided by
real power plants; yet, they do the job during power cuts. IT service exporters in
developing countries generally operate in software and high-technology parks in
which infrastructural bottlenecks and weaknesses in the local business environment
can be overcome.
Internet bandwidth capacity: Critical for electronic supply
Table 7.3 presents information and communication technology performance indicators
for regions (simple averages) and countries within those regions that show
the lowest and highest reported costs for fixed residential broadband connections
(see annex table 7A.2 for information on all countries). Residential broadband
prices ought to be a good proxy for the prices that, in particular, small and mediumsize
enterprises are charged. The data reveal extreme differences within and across
regions. Most notably, broadband is prohibitively expensive in many African countries
and some countries in East Asia and the Pacific, as well as in Latin America and
the Caribbean. The cost for a monthly residential broadband contract exceeds
US$100 in purchasing power parity dollars in 39 of 171 countries and territories. In
Burkina Faso, the Central African Republic, Cuba, Ethiopia, The Gambia, Guinea,
Malawi, Nigeria, and Swaziland, it exceeds US$1,000 in purchasing power parity
dollars. While these price levels may effectively shut out any export-oriented startups
in the IT service sector, other factors are equally important. For example, the
data do not reveal to what extent the broadband services are stable over time.
Downtime is detrimental to companies that need to be able to access client data systems
all the time or, at least, connect frequently throughout each day.