CONFERENCE PROCEEDINGS RAND The Global Course of the Information Revolution: Political, Economic, and Social Consequences Proceedings of an International Conference Richard O. Hundley, Robert H. Anderson, Tora K. Bikson, James A. Dewar, Jerrold Green, Martin Libicki, and C. Richard Neu National Defense Research Institute DTltf QUALITY INSPECTED 1 DISTRIBUTION STATEMENT A 20000M8 W Approved for Public Release Distribution Unlimited The conference papers described in this report were supported by the National Intelligence Council (NIC) and RAND's National Defense Research Institute. ISBN: 0-8330-2850-2 The RAND conference proceedings series makes it possible to publish conference papers and discussions quickly by forgoing formal review, editing, and reformatting. Proceedings may include materials as diverse as reproductions of briefing charts, talking points, or carefully written scientific papers. Citation and quotation is permitted, but it is advisable to check with authors before citing or quoting because of the informal nature of the material. RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND® is a registered trademark. RAND's publications do not necessarily reflect the opinions or policies of its research sponsors. © Copyright 2000 RAND All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 2000 by RAND 1700 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1333 H St., N.W., Washington, D.C. 20005-4707 RAND URL: http://www.rand.org/ To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Internet: [email protected] CONFERENCE PROCEEDINGS RAND The Global Course of the Information Revolution: Political, Economic, and Social Consequences Proceedings of an International Conference Richard O. Hundley, Robert H. Anderson, Tora K. Bikson, James A. Dewar, Jerrold Green, Martin Libicki, and C. Richard Neu National Defense Research Institute Approved for public release; distribution unlimited Preface The National Intelligence Council (NIC) is undertaking a systematic research and development program on broad, crosscutting issues for the next millennium; this constitutes the DCI's Strategic Estimates Program. One of these strategic estimates focuses on developing a better understanding of the future course of the information revolution throughout the world over the next 10-20 years. The NIC has asked RAND to take the lead in this effort to chart the future course of the information revolution. As the first major step in a multi-year program of research, RAND convened a major international conference in Washington DC in November 1999, focusing on the political/governmental, business/financial, and social/cultural dimensions of the information revolution, as they are unfolding in different areas of the world. This report presents the proceedings of that conference. This research is sponsored by the National Intelligence Council, and monitored by the National Intelligence Officer (NIO) for Science and Technology. It is being conducted by the Acquisition and Technology Policy Center of RAND's National Defense Research Institute (NDRI). NDRI is a federally funded research and development center sponsored by the Office of the Secretary of defense, the Joint Staff, the defense agencies, and the unified commands. Contents Preface iii Figures vii Tables ix Summary xi Acknowledgements xxi Section 1. INTRODUCTION 1 PART I. SOME INITIAL CONSIDERATIONS Section 2. SOCIAL AND ORGANIZATIONAL CONSEQUENCES OF THE INFORMATION REVOLUTION 5 Section 3. THE TECHNOLOGY UNDERPINNINGS FOR THE INFORMATION REVOLUTION 11 PART II. VARIOUS DIMENSIONS OF THE INFORMATION REVOLUTION Section 4. THE POLITICAL/GOVERNMENTAL DIMENSION OF THE INFORMATION REVOLUTION 19 Section 5. THE BUSINESS/ FINANCIAL DIMENSION OF THE INFORMATION REVOLUTION 25 Section 6. THE SOCIAL /CULTURAL DIMENSION OF THE INFORMATION REVOLUTION 35 PART III. HOW THE INFORMATION REVOLUTION MAY PLAY OUT IN VARIOUS REGIONS OF THE WORLD Section 7. THREE NATIONAL/REGIONAL SHAPSHOTS 43 Section 8. NORTH, CENTRAL, AND SOUTH AMERICA 57 Section 9. EUROPE 65 Section 10. THE ASIA PACIFIC REGION 75 Section 11. MIDDLE EAST, AFRICA, AND SOUTH ASIA 81 Part IV. CONCLUDING REMARKS Section 12. MAJOR CONFERENCE THEMES: AN INTEGRATION AND SUMMARY 93 Section 13. WHAT COMES NEXT 107 APPENDICIES Appendix A. CONFERENCE PARTICIPANTS HI Appendix B. CONFERENCE AGENDA 115 Bibliography 121 Figures Figure 9.1 Four Future Scenarios for Europe 73 Figure 10.1 Technology, Artifact, and Usage 75 Figure 11.1 Country Attributes May Have Differing Importance at Different Stages of Development 87 Figure 12.1 The Technology, Artifact, Roles/Usage Model 102 Tables Table 7.1 Characteristics of Japanese Society Which May Influence the Information Revolution in Japan 46 Table 7.2 The Three I's: Ireland, India, and Israel 52 Table 10.1 Driving and Stunting Factors 77 Table 10.2 Country-by-Country Assessment 79 Table 11.1 Assessment of Countries in Africa, Middle East, and South Asia 88 Table 12.1 Driving and Stunting Factors 103 Summary The information revolution is bringing about profound changes in many aspects of life. RAND has embarked on a three-year effort, sponsored by the National Intelligence Council, to chart the future course of these changes over the next 10- 20 years, all over the world. As a first step in this effort, RAND convened a conference on political/governmental, business/financial, and social/cultural trends driven by the information revolution, as they manifest themselves in various nations and regions. This conference was held in Washington, DC on November 16-18,1999, with participants from North America, Europe, and the Asian Pacific region, covering a broad cross section of intellectual disciplines. The Political/Governmental Dimension of the Information Revolution Regarding the political/governmental arena, conference discussions focused primarily on possible changes in the role of the nation state as a result of the information revolution. Such changes were seen as occurring for two general reasons: • Traditional mechanisms of governance (e.g., taxation, regulation and licensing, etc.) are becoming increasingly problematic, as the information revolution allows action beyond the reach of national governments. • The distribution of political power is changing, as new non-state actors are being empowered by the information revolution, in the business, social, and political realms, at the sub-national, trans-national, and supra-national levels. Governments will have to find mechanisms to deal with these changes and with these new actors. Different nations may take different approaches. How they do this will affect the future course of the information revolution in their regions and go to define the role(s) of the nation state in the information age. We elaborate on this theme in Section 4. The Business/Financial Dimension of the Information Revolution Conference discussions focused on two aspects of IT-driven changes in the business and financial world: the rise of electronic commerce, and new models for the internal organization and functioning of business enterprises and for their external interactions with customers, suppliers, and competitors. E-commerce is growing rapidly, in both the business-to-business and business- to-consumer segments. It demolishes many existing barriers to market entry. Stage one of e-commerce adoption usually focuses on cost reduction via increased efficiencies and effectiveness within existing business models. This often tends to attract companies "offshore," to suppliers in other countries with lower labor costs (yet a high standard of education), good (local) infrastructures with global connectivity, and tax breaks for exports. Stage two of e-commerce adoption involves revolutionary change in the business model. This requires skills in innovation and business change that are likely to be incompatible with foreign out-sourcing. Such skills are more likely to be found in "clusters": geographic concentrations of interconnected companies and institutions in a particular field. Besides its impact on business, e-commerce is also affecting governments and people in fundamental ways. It affects government by increasing efficiency and changing interactions with the outside world, affecting the speed and availability of information, and challenging existing regulatory frameworks. It affects people by reducing prices, creating new products and services and increasing choice, changing working methods, and, on the negative side, by creating possibilities of social exclusion. In parallel with the spread of e-commerce, new business models are emerging. These models are characterized by: • The centrality of the customer, the dominant factor in business today, and of competition, fundamental to the development and progress of a business enterprise. • A non-linear world defining business processes, in which businesses are driven by information from the real world, not the internal company world, and must operate in real time. • A customer services approach to developing everything, with technology and business closely integrated. • Globalization, in all its manifestations.