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Wednesday, May 20, 2009

Emerging Economies Taking A Technical Lead

Recently, I have been working with entrepreneurs from emerging economies and have developed a new respect for the products and services they are producing. These products and services are not clever knock offs or replicas of of products from developed countries. People in developed economies rarely think of developing countries as places to find innovative high tech solutions for business and consumer demand in sophisticated economies. It appears things are changing.

I conducted research on the growth of technical development in emerging countries to ascertain the root cause of what I have been observing. The research revealed that there are several speculative reasons why developed countries have begun to produce advanced and innovative high tech products and services.

Technology Transfer "The Consequence Of Outsourcing" - Most of the documentation on this subject addresses the unintentional transfer of knowledge as an inevitable consequence of outsourcing. Technical and operational acumen follow outsourcing. Places like India, China, Malaysia, Philippines, etc. are classic examples of developing countries that have created impressive technology centers as an outcome of outsourcing of product development to developing countries.

Creating Demand For High Technology Products In Developed Countries - Tech companies like Cisco and Intel have worked hard to create markets for their products in developing countries. This has resulted in the establishment of IT infrastructure that is being used by government, business and schools in developing countries. The population's interaction with these systems results in the development of technical competency and high tech operational proficiency.

Encouraging Technology Development - Government and charitable organizations have funded technology oriented programs designed to provide access to technology and to educate segments of the populations on the use of technology. These programs have been designed to address segments of the populations that would normally not be exposed to high tech products and services.

Government Focus On High Tech Solutions - There are progressive governments in emerging countries that are developing information systems to address specific socio ecomonic challenges. The governments are not looking for help from outside organizations. They are initiating the programs by leveraging existing human and IT resources within their countires.

These initiatives have contributed to the proliferation of technology in developing countries. However, they do not fully account for the unique characteristics of the products, services, ideas and companies that I am seeing. I am witnessing very creative ways of leveraging reasonably advanced platforms and product ideas that I do not see in the developed world.

A deeper dive revealed that there are key categories of development that are standouts. My experience has identified mobile and payment processing systems are yielding the largest amount of impressive application development.

It appears that the reason these areas are seeing more creative offerings is that the developing countries have different usage models and challenges in these areas as compared to developed countries.

Mobile Computing Platforms - In developing countries the mobile device is the only computing and information sharing device. These devices are proliferating at an astounding rate giving entrepreneurs incentives to figure out ways to deliver applications specifically and exclusively for this environment. Combine this with an increased technical proficiency of the population and you begin to see unique products and services for mobile devices you do not see in developing countries.

In contract, developing countries have alternate dominate computing platforms. Laptops, desktops and in some cases digital TV platforms provide good mechanisms to deliver information content. Mobile platforms are also in this category. However, the operative word is "also". The mobile devices is not the only option and in many cases not the preferred information access point for the majority of the population.

Payment Processing - In developing and emerging economies the credit card is not a common or even reliable form of transacting. Combine this fact with the proliferation of applications that requires some form of payment and you understand the demand for innovative payment and transaction systems. The really interesting products being developed in Africa, China and Malaysia combine some form of basic deposit system with an online transaction system completely divorced from traditional credit card and traditional banking institutions.

The notion of virtual currency and its exchange is more prolific in China then it is in the developed world. People in developed countries may consider virtual currency to be the exclusive domain of gamers engaged in the trade and acquisition of virtual goods. In China the populations has taken virtual currency to a new level exchanging and redeeming virtual currency for conventional currency. It could be argued that the rise in popularity of online games in China may be a direct result of people realizing that the online game world is an economy that allows the population to transact, exchange and accumulate currency. It provides people with a wealth creation option that only exists in an electronic and virtual information world.

These is not doubt other areas of development will experience a creative surge in the introduction of new and interesting applications. Alternative energy, is one that should spawn an entirely new set of products and services resulting from the need to craft solutions that uniquely address energy challenges in the developing world.

The importance of emerging economies taking the lead in providing innovative and creative high tech solutions lies in the associated investment opportunities within these economies and the export of the products and services to developed countries. Investors within the developing world as opposed to financial institutions in the developed world may be more likely to take advantage of this opportunity. This dynamic could create interesting changes in the sources of wealth creation and distribution throughout the world.

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