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Thoughts from ITIF Event on Cloud Computing in Developing Economies

Peter Cowhey

Yesterday, ITIF hosted a great event with Peter Cowhey and Michael Kleeman of UC San Diego on the impact of cloud computing on developing economies. Peter and Michael recently completed a three country study that examined how cloud computing is changing how businesses and government work in India, Mexico and South Africa. In particular, they noted the important role of cloud computing in creating high value-added commerce, strengthening small and medium enterprises, and promoting job growth in developing economies by leveling the playing field for technology suppliers in the Global South.

For example, Peter described how in 2011 the Mexican government doubled the capacity of its e-government portal while overall lowering costs. And now, Mexico is moving its largest social welfare systems all into the cloud “because you can’t build out government services in an effective cost structure in rural Mexico without this.” Or consider South Africa, where SMEs have been able to scale rapidly by using cloud-based CRM products like Salesforce. These types of savings add up, and Peter estimated that the cost savings for IT capacity (which is a significant cost in these firms) is being cut by one-third to one-half on average. As a result, there is significant opportunities for job growth in these businesses.

There are other benefits from the cloud as well. Cloud computing depends on a robust technology infrastructure. This means that the growth of cloud computing also is having a positive impact on developing countries by increasing the demand for broadband which leads to additional broadband network build out. As these countries build more data centers, they are investing in the fiber optic networks necessary to meet the demand for fast and cheap digital communication.

Peter’s main point was that the benefits of cloud computing are here today—they are not hypothetical and they are not coming at some abstract point in the future—these are changes and benefits that researchers like him are directly observing in these countries right now. But to realize these benefits countries need to put in place smart policies that allow cloud computing, and related technologies, to flourish. When I testified about cloud computing earlier this year, I argue that it is critical that countries resist mercantilist policies that limit the growth of cloud computing and restrict the free flow of data. In particular, these are important priorities right now, as these issues and related one are surfacing in important international policy discussions, such as at the World Conference on International Telecommunications (WCIT) or as part of the dialogue on the Trans-Pacific Partnership (TPP). Peter’s work is important because it shows that the benefits of cloud computing, much like the benefits from IT, are global and distributed, but effective government leadership is needed to usher in these opportunities.

Watch the event below:

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