ICT and sustainable development in an outermost region

Abstract

The aim of this research project is to understand the link between the adoption of ICT tools and the economic development of a peripheral region. This study is focused on the current status of adoption of ICT tools by a sample of SMEs operating in a peripheral island, the Autonomous Region of Madeira, Portugal. The overt optimism propagated by supra-national organisations such as the EU, stresses that the adoption of ICT tools constitutes one of the key strategic weapons in overcoming the peripheral/remote character and competitiveness problems of less-favoured regions. This argument is based on evidence (core region based) that suggests a causal link between investment in ICTs and economic growth. However, there is no evidence to prove such a linkage in peripheral regions. The argument developed in this thesis is that a large scale adoption of ICT tools may have neutral or even negative effects on regional development prospects, in the specific context of remote island economies. The development of this new line of reasoning assumes that the examination of the potential contribution of ICTs in increasing growth prospects should be based on: an indepth analysis of the territorial dynamics of the region under analysis; the growth options available in such a specific territory; the degree of preparedness to embrace ICT tools; and the local firms' response to the on-going technological revolution. It is concluded, in line with the expectations developed in the thesis, that the large scale adoption of sophisticated ICT tools - namely, the adoption of complex e-commerce platforms - has not occurred in Madeira. It is also evident that the widespread adoption of ICT tools cannot provide a short term answer to island development problems. The current growth path is strongly conditioned by geographical constraints and by specialisation in traditional sectors, which cannot be reversed overnight. However, although the adoption of ICT tools such as the Internet has not impacted upon the macro-economy level, it does have consequences at the micro (firms) level for those firms making intensive use of Internet functionalities. This study, although based on quite a specific geographical and economic context, may provide interesting theoretical insights to be explored further. In fact, it is suggested that the traditional EU approach focused on increasing levels of general awareness should be reoriented towards a more promising focal point such as increasing the levels of

effective use of ICT tools. Finally, this research project provides evidence to suggest that in the absence of a favourable macroeconomic environment, the adoption and use of ICT tools only increases the 'selection mechanism' at work (ie which firms survive, and which fail). As larger firms have the greater capacity to adopt complex ICT tools, any advantage arising from the adoption of such technologies will be concentrated on those firms already at an advantage. In the end it can be asserted that the traditional development strategies (personified by investments in transport and other 'hard' infrastructures) should continue to be pursued for the time being, in order to avoid the negative consequences of reduced income transfers in the period until a new cycle of development can be established in islands such as Madeira.