IT-enabled Services as Development Drivers in Lowincome Countries. The Case of Fiji

Transcription

1 IT-enabled Services as Development Drivers in Lowincome Countries. The Case of Fiji Charles Davis, University of New Brunswick in Saint John, CANADA Jim McMaster, University of the South Pacific, FIJI ISLANDS Jan Nowak, University of the South Pacific, FIJI ISLANDS This paper addresses the issue of outsourcing ITenabled business services by firms from developed countries to service providers located in low-income countries. The authors first analyse current trends in outsourcing of IT-enabled services and then identify conditions, which low-income countries must create or be endowed with, in order to attract outsourced ITenabled services. On the basis of this identification of necessary conditions, the authors analyse Fiji s potential for the development of IT-enabled services and make policy recommendations regarding what the Fiji Government should do to facilitate the utilisation of the potential. Introduction Outsourcing of information systems, data processing, and other IT-enabled business services is expanding rapidly as connectivity decreases the transaction and communication costs among firms. Many or most business services are now intensive users of IT. While the location of knowledge-intensive business services, such as R&D and engineering, software development, content production, or highly reliable applications hosting, tends to be restricted to major metropolitan areas in developed countries, lower-end IT-enabled services, such as keyboarding, text entry, transcription, data processing and call centres, can be located successfully in lower-income countries, provided that infrastructure standards and other conditions are met. Countries such as Mexico, India and the Philippines, as well as several Caribbean states, have already attracted a substantial amount of outsourced, low-end, IT-enabled service work. Other developing countries with similarly favourable conditions, such as Fiji, are now following suit, making the development of IT-enabled services their strategic priority. The authors of this paper first analyze relevant trends in IT-enabled business services that are taking place in the world, especially the trend towards the migration of the low-end portion of these services from developed to developing countries. In this context, the authors then identify technological, human resources, political and business-regulatory conditions, which developing countries must create or be endowed with, in order to be attractive locales for outsourced IT-enabled services. On the basis of this conditions identification, this paper asseses Fiji s potential for the development of IT-enabled services and puts forward appropriate policy recommendations. The paper is based on an extensive review of current articles and reports dealing with outsourcing business services and export development in the Digital Economy, and draws upon several individual country cases reported recently. As one of the authors is involved in advising the Fiji Government on the development of IT-service industries, the paper also uses this author s intimate knowledge of the Fiji business environment and the Fiji Government s strategies and policies. Trends in Outsourcing IT-enabled Business Services The rapid growth of the service industries during the last few decades has been one of the most significant features of economic development. Many services that were previously non-tradable are now actively traded regionally and internationally. Driving the expansion of the service sector is advancement in information and communication technologies (ICTs). The diffusion of inter-networked multimedia technologies within the business sector lowers the costs of transacting and communicating among firms, blowing to bits value chains (Evans and Wurster, 2000) and making it possible to unbundle the production and consumption of information-intensive service activities, thereby inducing the emergence of markets for services (Quinn, 1992; Casson and Wadeson, 1998). Outsourcing and procurement have become strategic issues for the firm, which must determine which steps of the value-adding

2 process it will produce internally and which kinds of business relationships it must maintain with suppliers of essential and commodity inputs. 1 Outsourcing of business services is expanding very quickly as connectivity decreases the transaction and communication costs among firms and enables specialized slivers of the value chain to be located far from the client in places that can provide suitable infrastructure and personnel at suitable cost. Specialized markets have developed for critical knowledge-intensive business service (KIBS) activities such as R&D and engineering design (Howells, 1999; Quinn, 2000) as well as for less skill intensive information technologyenabled services (ITES) such as data processing and customer service delivery. 2 Overall, global outsourcing of manufacturing and services doubled in value to approximately one trillion dollars between 1997 and 2000, with North America, Europe, and Asia accounting for 94% of the outsourcing market (Corbett, 2001a). The fastest growing areas of outsourcing are in business process or back office functions such as human resource administration, media management, information technology, customer care, and marketing (Corbett, 1999). Participants in the 2001 Outsourcing World Summit expected that the economic slowdown in industrialized countries would increase incentives to outsource non-core activities in order to obtain greater efficiencies (Corbett, 2001b). Migration of business services to low-income countries is driven first and foremost by the lower costs of critical human resource inputs. Labor is often the single largest cost component of a service activity, representing up to eighty percent of the cost of a call centre, for example. A further illustration of the cost savings is that qualified accountants in India are paid $3,000 compared to $35,000 in the United States. In addition to the cost savings that translate into shareholder value, executives of firms that outsource business processes or back office functions consider that outsourcing yields improved service quality and freedom to focus on core competences (Management Trends in Outsourcing, 2001). The emergence of a globally inter-networked economy provides a new opening to developing countries, particularly in the area of long-distance service exports (Primo Braga, 1996), in an international 1 Strictly speaking, the term outsourcing refers to the external procurement of a product or service that was previously produced internally. However, the term is often used to refer to the acquisition of any product or service not previously used by the firm, or indeed to any product or service that a firm has decided to purchase rather than produce for itself. 2 Table 1 describes the range of knowledge-intensive and information technology-enabled business services. economy that only a few years ago seemed to offer few development options to poor countries. Export of services provides an opportunity for development after industrialization (Kobrin, 1999). Low-skilled keyboarding, text entry, data processing, transcription, translation, secretarial services, insurance claim processing, and customer interaction services (sometimes called back-office work) is increasingly located in areas with lower labour costs and acceptable infrastructure in offshore information processing centres in Mexico, the Caribbean, Taiwan, the Philippines, India, and China. Lower-cost jurisdictions in economically developed areas such as Ireland and New Brunswick join countries such as India with pools of highly competent technical workers to compete for remotely-delivered knowledge-intensive business services such as engineering and design services, animation, data conversion, database development, accounting and auditing, distance education, network management, applications hosting, software development, and online health service delivery. Factors Conditioning the Development of IT-enabled Service Industries in Low-income Countries While Asian countries seem best positioned to take advantage of the current outsourcing boom (Corbett, 1999), low-end IT-enabled services have been targeted as a strategic priority by many developing countries or regions. Low-end IT-enabled services are increasingly footloose, and any country with a serviceable telecommunications infrastructure and suitably qualified labor can compete for them. However, entry barriers are relatively low: investment requirements are not great, the services are labor-intensive, cycle times are short, and many kinds of IT-enabled services do not require high levels of technical expertise. Therefore competition is intense. Here we briefly review the factors that condition the ability of a country to supply IT-enabled service exports. The legal and regulatory environment for international trade in services is complex. The General Agreement on Trade in Services (GATS) recognizes four modes of service delivery: 1) supply across borders (as when services are delivered remotely: these are typically IT-enabled services); 2) consumption abroad (as when customers travel from abroad to consume services delivered locally); 3) commercial presence (as when the service provider establishes a physical presence in an export market); and 4) travel by natural persons to an export market to deliver services (UNCTAD, 1998). Although these modes are linked, each mode is regulated by a different set of policies, incentives, and business practices. For example, mode 4 2

3 is regulated by immigration policies while mode 3 is regulated by investment policies; some mode 2 services such as health services are regulated by practices regarding portability of health insurance. International rules of trade in services are sensitive to ongoing negotiations concerning movement of persons, definitions of subsidies, government procurement practices, taxes on electronic commerce, and market access. The elements of a national regulatory environment that affect development of tradable IT-enabled services are equally complex. They include cyberlaws regarding digital signatures, information privacy, encryption, and intellectual property; labour laws permitting contingent, twenty-four hour labour employment; regulations affecting the availability, cost, and quality of telecommunications services; taxation laws; and domestic, inward, and outward investment policies. Because of the complexity of international and national regulatory environments it is not a simple matter to provide a clear policy prescription for the development of IT-enabled services, other than to say that any factors that diminish price-competitiveness and quality, or create rigidities in the services sector, will affect the competitiveness of that sector. Nevertheless, there are certain easily-identifiable general legal and business environment factors that influence location decisions by potential investors in IT enabled service firms. Research evidence summarised in Duncan, Suthbertson and Bosworth, (1999), shows that investors prefer to establish new enterprises in countries that offer: Transparent, consistent, and predictable commercial laws and business environment; sound macroeconomic management of the economy, with low inflation and relatively stable foreign exchange rates as well as easy repatriation of profits and capital; safety and security of persons and property; protection of property rights and enforcement of contracts; and political and economic stability. Also recent research by Serven (1997) and Burnetti et al. (1997a, 1997b) confirm that private investment was adversely affected by unpredictable changes in government policies that are perceived to have a negative effect on the profitability of investment. Burnetti et al surveyed 3,600 enterprises in 69 countries to assess the critical factors that influenced private investment. Their research found that firms are deterred from investing in long-term business ventures if they cannot be sure which business regulations will apply in the future or how they will be interpreted by government officials. Also, foreign investors need to be certain that the law courts will enforce contracts and protect their property rights. The investors perception of the degree of political stability, predictability of judicial enforcement and corruption very much affect decisions to invest. Generally speaking, IT-enabled services (mode 1) substitute to some extent for other modes of service delivery, enabling the development of service markets to proceed faster than policy-enabled liberalization of service trade in other modes. Although developing countries enjoy a cost advantage to supply IT-enabled services internationally, the key enablers of competitiveness are not as much the regulatory environment as marketing and infrastructure quality (Riddle, 2000). The cost and quality of the national telecommunications infrastructure is an obvious factor, as is the ability to find workers with the requisite skills to supply services. Beyond these factors, firms must establish and maintain their credibility as service providers by maintaining quality and by using websites as proxies for quality. They must develop visibility and recognition, including possible national branding for service quality. They must learn to adopt culturally appropriate behaviour for customers, including meeting self-service and satisfaction expectations of customers, which may involve empowering staff in ways that are culturally unfamiliar. They must have the administrative skills and infrastructure capability to bid on contracts, purchase, and receive and make payments in ways that customers prefer. National export promotion policies must adopt new services for exporters, including website promotion, business education, and electronic directories (ibid.). National SME-support policies must accelerate e-business enablement and ensure SME service exporters can have recourse to an effective local technical supplier industry. One can only speculate about the extent to which markets for IT-enabled services will develop. Although the cost advantages are overwhelming, technological advances may reduce the need for some kinds of lowskilled outsourced services. For example, smart products and optical recognition may reduce the need for data keyboarding, and voice recognition and artificial intelligence technologies may reduce the need for low-skilled customer service representatives. Furthermore, data security concerns may make it risky to locate IT-enabled services outside a national or regional perimeter. Finally, the development of intelligent systems will allow firms to selectively route tasks on the basis of cost, opportunity, or skill, resulting in virtual service networks in which individual service providers can be located practically anywhere. In the North, an ample contingent workforce may be found for these jobs among younger people who have not been able to enter a career track in stable institutions, among older people with insufficient retirement income, or even among prisoners. Policymakers may find it 3

4 appealing to offer incentives to locate virtual jobs in lagging regions within the national or regional economy. For these reasons the ease with which suppliers of lowend IT-enabled services may move up the value chain and learn or win their way into higher value-added segments cannot be taken for granted. Fiji s Potential in the Development of the IT-enabled Service Industries Taking these research findings into consideration, how does the Republic of the Fiji Islands compare as a preferred locale for placing outsourced IT-based services? In our assessment, it has potential to develop a niche market in this rapidly expanding global industry. The high bandwidth capacity of the Southern Cross Optical Cable, which was launched in November 2000, has given Fiji the fast reliable connection to the Internet that IT-enabled services need. Moreover, Fiji s location in a time zone 12 hours ahead of GMT gives it the added advantage of being able to process overnight for the global markets. Fiji is a small island economy in the South Pacific that promotes itself to international tourists as a tropical paradise of beautiful sun drenched islands with white sandy beaches lined with swaying coconut trees and with some of the best coral reefs and marine life in the world. It has population of 790,000 and it comprises 332 islands with a land area of 18,333 sq km. The current GDP per capita is about US$1200 per annum and it has a high level of food security (Asian Development Bank, 1999). Fiji s economy is dominated by the services sector which accounts for 70% of employment and income. Tourism is the major employer in the services industry. The sugar industry is its single most important export industry followed closely by tourism that has been its main source of growth. The emergence of a substantial garment industry in the 1990s and more recently a mineral water industry have helped diversify the economy. However, Fiji possesses the basic conditions to take advantage of IT-enabled services out-sourced by firms and industries in high-wage countries. It has an English speaking, comparatively well-educated population, and a substantially lower wage cost structure than developed countries. The lower wage cost is the major factor that makes Fiji an attractive choice as a supplier of ITenabled services. Fiji has a market-friendly business environment, sound macroeconomic management with low inflation, a relatively stable foreign exchange rate and a modern set of commercial and contract laws. It offers safety and security of persons and property, and enforcement of commercial contracts by the judiciary. The only critical condition for which it has not met investor expectations is in the matter of political stability (TARPnz Strategic Methods Limited, 2001). However, after an uncertain period following the May 19, 2000 coup, Fiji is now firmly on the pathway to democracy and political stability with a general election to take place in August In terms of foreign investment, Fiji has mainly attracted investment from family owned companies from Australia and New Zealand. A recent survey by the Fiji Islands Trade and Investment Board (FTIB) has found that the majority of investors over the last decade have been owner/managers who are seeking a relaxed island lifestyle in a unpolluted healthy environment with good quality schools, hospitals and a modern regional university with satellite network to 12 country members. The FTIB advertises in its webpage that Fiji offers to investors: Easy repatriation of capital and profits. An adaptable, productive, industrially disciplined and English speaking labour force with low wage rates. An attractive package of financial and other incentive schemes including a 13-year tax holiday and total freedom from import duties. Reasonable air and sea links with overseas markets Sophisticated telecommunication links with the rest of the world A well developed infrastructure, including electricity, water supplies and internal communications Availability of factory land and buildings at reasonable rates. Well-developed banking and financing institutions providing full ongoing financial services. Under the Foreign Investment Act, the FTIB issues business certificates to all new proposals within 15 days of receiving complete proposals. As indicated earlier, the ready availability of welleducated employees is a key factor for IT enabled firms. Each year about 17,000 school graduates enter the labour market in search of employment. The school system strongly orientates students towards employment in the service industries that offer the largest opportunity for employment. Past governments have placed high priority on private sector investment and development that is seen as the engine of growth. In contrast, public sector employment has been static over the last decade and past governments have commenced public sector reform programs that have involved slimming down government employment and privatising some public enterprises. The Fiji Government has already recognized the potential for the development of the IT-enabled services and is keen to quickly establish a niche in this rapidly expanding market. The Government considers that Australia and New Zealand are most likely to be the 4

5 main markets of IT services because of their closeness to Fiji. FTIB has already approved three projects in this industry and the investments are expected to commence in The implementation of these projects will provide employment for 420 people. In its 2001 budget, the Government introduced some new incentives to assist in the development of IT services. Also, it funded the jointly sponsored TARPnz consulting study in 2000 on A policy Framework for Developing IT Enabled Industries with FTIB, Ministry of National Planning, FINTEL (Fiji International Telecommunications Limited) and Telecom Fiji (TARPnz Strategic Methods Limited, 2001). A series of Project Profiles and a Policy Framework has been prepared through this study. An action team comprising of Telecom Fiji, FINTEL, Ministry of National Planning and FTIB representatives is now being assembled to fully review the recommendations of the study, agree on final strategies and then commence implementing them. Policy Recommendations To attract IT-enabled services, the Government must be willing to consider and implement a range of policies specifically designed to promote Fiji as an efficient, technology-driven and wired economy. This approach will require focusing on some of the broader knowledge economy and IT policy issues with which many economies are already grappling and some are succeeding (TARPnz Strategic Methods Limited, 2001). The IT-enabled industries are unlikely to develop spontaneously in Fiji. The Government will need to play a major role in promoting Fiji as an ideal location for the industry. It will also need to ensure that political stability is achieved following the August 2001 elections and that the new government has in place appropriate policy measures. We recommend that Fiji adopt a proactive, investor-focused approach in which the Government would identify potential investors who are examining alternative locations and invite them to Fiji to personally assess the attractiveness of Fiji as a location for their investment. The Fiji Government has a specialized agency, the Fiji Islands Trade and Investment Bureau (FTIB) whose sole function is the promotion of trade and investment. It aims to provide investors with a one-stop-shop service and guide them through the complex array of approvals required for establishing new enterprises in Fiji. FTIB played a major role in the establishment of the garment industry that developed rapidly in the 1990s, largely as a result of a new incentive package including a 13-year tax holiday combined with preferential trade agreements with Australia and USA. To assist foreign investors to set up production quickly, FTIB established Kalubo industrial estate comprising standard factory buildings in the capital city, Suva. It rents factory space directly to investors thus saving them from the risks and delays associated with acquiring industrial land and constructing purpose-built factories. This estate, funded by a grant from the European Union, has proved very attractive to investors and FTIB has built additional factories to meet the demand. FTIB has identified the IT-enabled industries as the next major new industry in Fiji and jointly commissioned consultants to prepare a marketing plan to guide them in promoting the industry. FTIB is considering the creation of a specialised IT Services Promotion Unit for handling all IT-enabled marketing and investment inquiries and assisting investors through all procedures required for Foreign Investment Certification and the establishment of operations. We recommend that this IT Services Promotion Unit should be responsible for: establishment of a Fiji IT-enabled Industry Web Site which provides information on investment opportunities; development of an international network of contacts of firms engaged in back office services and the establishment and maintenance of a data base; the data base should contain details of the leading firms in this industry; production and distribution of a high quality brochure on IT-enabled industries development opportunities; the conduct of international promotional seminars on IT-enabled industries development to be held in Sydney, Australia, Auckland, New Zealand, Los Angeles, U.S. and in Europe; identification of land and office space in the Nadi/Lautoka area suitable for IT-enabled industries operations; the development of strong relations with the National Processing Company to use it as a show case model to attract other companies; the development of a skills training program for ITenabled industries employees through the Fiji National Training Council; monitoring of software and hardware development which supports back office and call centre development; monitoring the development of IT-enabled industry developments world-wide and providing advice to government on its development strategy. In addition to the above-listed recommendations, we support the main findings of the TARPnz report (TARPnz Strategic Methods Limited, 2001). TARPnz s recommendations cover five broad areas, including: education and training; technological infrastructure; 5

6 business regulations; financial support; and marketing and service performance standards. TARPnz report is very strong in its recommendation to bring education and training in Fiji in line with the requirements of a knowledge-based economy. First of all, urgent action should be taken to bring IT exposure and training to secondary schools in Fiji. This will require a substantial commitment of funds for equipment and teacher training programmes. Such commitment is essential if Fiji is to make a meaningful attempt at developing a knowledge economy. It is also essential if Fiji intends to exploit the opportunities for participating in higher value ITenabled service industries in the future. Fiji must address the seriously low level of access to IT in schools and homes through much more innovative approaches and strategies for capital investment in education and telecommunications services pricing. Second, the Government, through FTIB, should also work with private training providers and IT- enabled industry investors to establish preparatory training facilities and capabilities for IT-enabled service industry workers. In terms of technological infrastructure, the TARPnz report recommends the development of an IT business park in Fiji, specifically for IT-enabled services, as a means of engendering and sustaining new performance standards in the industry. The park could be owned and operated by a joint venture consortium involving Telecom, FINTEL and private sector investors. The IT training facilities proposed above might be developed in conjunction with this technology park. In the area of business regulations, the TARPnz report contains several key recommendations aimed at building investor confidence in the long-term security of the location. Specifically, the report recommends removal of most exchange rate controls and restrictions on repatriation of profits, unrestricted expatriate entry, and adoption of a low corporate tax rate for all companies. In the financial support area, the report recommends the establishment of a small venture capital fund to promote IT-based research and development in Fiji based on local or regional needs, specialisations and opportunities. Such a fund could be established in partnership with financial sources such as Fiji National Provident Fund. It could be linked to the development of the technology park and involve a small, tightly packaged, R&D programme to incubate/grow three or four IT-based specialisations. Finally, the report advocates mounting an international marketing programme aimed at attracting investment in back office enterprises in Fiji. In support of this international marketing programme, relevant international benchmarks should be established against which to continuously measure and improve the performance of Fiji IT-enabled service industries. TARPnz recommends that as these are new industries for Fiji, the opportunity should be taken to develop various codes of conduct within the different services that provide an assurance of quality and consistency of service (TARPnz Strategic Methods Limited, 2001). Conclusions Advances in ICTs have been driving the expansion of the service sector over the last decade or so and making many business services increasingly tradable internationally. The diffusion of inter-networked multimedia technologies within the business sector has lowered the costs of transacting and communicating among firms, allowing specialized slivers of the value chain to be located far from the client base. This has led to global outsourcing of many IT-enabled services to developing countries by firms based in developed countries. The fastest growing areas of this outsourcing lie in business process of back office functions, the trend being driven mostly by the lower costs of critical labor inputs. Although IT-enabled services are increasingly footloose and labor cost sensitive, developing countries ability to attract such services should not be taken for granted. Certain conditions and standards must be met in order for a country to become a successful locale of such services. We have identified both general and ITservices specific factors conditioning the development of IT-enabled services. The general ones include: transparent, consistent, predicable and enforceable commercial laws; sound macroeconomic management of the economy; favourable investment climate; safety and security of persons and property; and political and economic stability. The most important IT-servicesspecific factors can be grouped into the following three categories: high quality and moderate costs of telecommunications infrastructure and services; educated labour force with requisite skills; favourable IT-regulatory environment, including cyberlaws, information privacy, encryption, intellectual property, labour and taxation laws. Meeting the above conditions is necessary but not sufficient for a country to be a preferred destination for outsourced IT-enabled services. Research points to a group of business skills as key enablers of competitiveness in the industry, including marketing and customer service the service provider s ability to build its credibility by effectively promoting its services, establishing brand recognition and maintaining a high and consistent level of customer service. Several developing countries have succeeded in ttracting a substantial amount of outsourced IT-enabled services, and many others have the potential to follow 6

7 suit. Fiji is one of the latter. This country s advantages include mastery of the English language; a comparatively well-educated population; relatively low wage cost structure; market-friendly business environment; sound macroeconomic management and relatively stable currency; safety and security of persons and property; enforcement of commercial contracts; sophisticated telecommunication links, strengthened by a recent access to the high bandwith capacity of the Southern Cross Optical Cable; a favourable location in a time zone 12 hours ahead of GMT; a favourable FDI climate, allowing for easy repatriation of capital and profits; and well-developed banking and financial institutions. The only negative factor in Fiji s environment is the perceived political instability stemming from the last year s attempted coup d etat. However, the country seems to be now firmly on the pathway to democracy and political stability. Given the favourable conditions Fiji possesses with respect to IT-enabled services, we conclude that the country has a strong potential to become a magnet for such services outsourced by companies from specifically targeted developed regions. We recognize however that the IT-enabled service industries are unlikely to develop spontaneously in Fiji. The Government will need to play a major role in promoting Fiji as an ideal location for these industries. It will need to actively prospect for investors. It will also need to ensure that political stability is maintained and that appropriate policy measures, such as those laid out in the TARPnz report, are in place. Finally, it will need to identify and nuture ways in which Fijians can add value to the IT-enabled services that they export. References Anonymous. (2001). Management Trends in Outsourcing, Outsource2India.com, /management_trends.asp [retrieved 3 June 2001]. Asian Development Bank. (2000). Republic of Fiji Islands 1999 Economic Report, Manila, Philippines. Burnetti, A., Kisunko, G. & Weder, B. (1997 a). Credibility of Rules and Economic Growth: Evidence from a Worldwide Survey of the Private Sector. Policy Research Working Paper Washington, DC: World Bank. Burnetti, A., Kisunko, G. & Weder, B. (1997 b). Institutional Obstacles to Doing Business. Region by Region Results from a Worldwide Survey of the Private Sector. Policy Research Working Paper Washington, DC: World Bank. Casson, M., & Wadeson, N. (1998). Communication Costs and the Boundaries of the Firm, International Journal of the Economics of Business 5(1), Coombs, R., & Battaglia, P. (1998). Outsourcing of Business Services and the Boundaries of the Firm. CRIC Working Paper No. 5, University of Manchester. Corbett, M. A., & Associates. (2001a). Outsourcing s Global Marketplace. Firmbuilder.com, [retrieved 2 June 2001]. Corbett, M. A., & Associates (2001b). Taking the Pulse of Outsourcing Data and Analysis from the 2001 Outsourcing World Summit. Firmbuilder.com, [retrieved 2 June 2001]. Corbett, M. A., & Associates. (1999). Outsourcing Set to Explode in Asia, Firmbuilder.com, [retrieved 2 June 2001]. The Economist. (2001). Outsourcing to India. Back office to the world. May 5 th. Duncan, R., Suthbertson, S., & Bosworth, M. (1999). Pursuing Economic Reform in the Pacific. Asian Development Bank. Evans, P., & Wurster, T. H. (2000). Blown to Bits: How the New Economics of Information Transforms Strategy. Cambridge, Mass: Harvard Business School Press. Kobrin, S. J. (1999). Development After Industrialization: Poor Countries in an Electronically Integrated Global Economy. In N. Hood & S. Young (eds.), The Globalization of Multinational Enterprise Activity and Economic Development. Chapter 6. London: Macmillan. McMaster, J. & McGregor, A. (1999). The Fiji Service Sector: Opportunities for Growth. A consulting report prepared for the Ministry of Commerce, Fiji Government. Suva, Fiji Islands. Primo Braga, C., (1996). The Impact of the Internationalization of Services on Developing Countries. Finance & Development, March, Quinn, J. B., (2000). Outsourcing Innovation: the New Engine of Growth. Sloan Management Review, Summer, Quinn, J. B., (1992). Intelligent Enterprise. New York: Free Press. Riddle, D., (2000). Export Development in the Digital Economy. A Focus on Business and Professional Services, htm [retrieved 1 June 2001]. Serven, L. (1997). Uncertainty, Instability, and Irreversible Investment: Theory, Evidence, and Lessons from Africa. Policy Research Working Paper 1722.Washington,DC: World Bank. 7

8 TARPnz Strategic Methods Limited. (2001). A Policy Framework for Developing IT Enabled Industries in Fiji. A consulting report for the Fiji Government. UNCTAD. (1998). Scope for Expanding Exports of Developing Countries in Specific Services Sectors Through All GATS Modes of Supply, Taking Into Account Their Interrelationship, the Role of Information Technology and of New Business Practices. United Nations Conference on Trade and Development, note by Secretariat, document TD/B/COM.1/21, 24 July. Table 1. Types of IT-enabled Business Services Skill level and knowledge intensity Administrative Customer service Technical Low Data entry; clerical Call centre; routine queries; order taking; direct mail order processing Transcription; indexing and abstracting Intermediate Secretarial; data capture and processing; mailing lists; credit card application processing Account queries; after sales support; insurance claim processing, processing of warranty card and claims Website design and management; medical records management; medical transcription High Accounting; payroll; electronic publishing; facilities management; management consultancy; legal services Problem and dispute resolution Software development; R&D; application hosting; technical writing; computer aided design; telemedicine; engineering design; education Source: Adapted from McMaster and McGregor (1999) 8