Working Paper
ICT Opportunities and Challenges for Development in the Arab World

This paper examines the status of ICT in the Arab world and the potential opportunities and challenges that ICT is expected to create for development in the region. The analysis shows that, despite the recent growth in the demand for ICT, it has a very limited market in the Arab region, as indicated by the lukewarm demand, limited supply and low investments in comparison to the world total. The diffusion of ICT is characterized by a market concentration in the richer Gulf countries and the wide difference between these and other Arab countries in terms of demand, supply, price and the intensity of the services. The analysis also shows that the diffusion of ICT in the Arab world significantly increases in relation to economic growth (as measured by GDP per capita). However, the influence of human capital development (as measured by average years of schooling) is somewhat doubtful. As highlighted by the study, ICT has the potential to impose the so-called ‘creative destruction’ process in the Arab world. On the one hand, ICT has the potential to induce productivity growth, employment, human resources, skills and capabilities, knowledge-based economy and hence economic development. On the other hand, ICT may introduce challenges with regard to intensified competition, inequality as well as the elimination of some unskilled jobs, thus negatively influencing the region’s development.