Id.
Inform.
63 Libr.
Rev.
(1992)
24,
119-126
International Market Goods and Services
for Information
JO BRYSON*
ABSTRACT Scope of document: Traditionally, information has been given an ethical context in its description of being a “good”. It has been perceived that access to information is morally good in that it contributes towards personal growth. Whilst this will continue to be true, it is the economic aspect of information goods and services which will have the greatest impact upon governments, not only in financial and economic terms, but also in social and legal aspects.
INTRODUCTION Information is a commodity or economic good ofworldwide significance in that it contributes directly and indirectly to national economies. In many countries, future export potentials lie not with primary industry and manufactured goods of old, but with the services sector, of which information is part.
INFORMATION
AND THE ECONOMY
Information has been one of the last aspects of international and domestic economic activity to be explored, despite frequent acknowledgements of its importance. Mainstream economic analysis has generally avoided information issues, even though information is implicit to many established economic concepts. Four reasons may be suggested for this neglect up until now. (i)
*Visiting of W-tern
Mainstream economic analysis is essentially a product industrial era. The foundations of the discipline have developed from the industrial production of physical and services; information activities in this era accounted relatively small fraction of the economy. Research Fellow, Policy Studies Institute, Australia under “Management Development
London on secondment Programme”.
from
of the been goods for a
Government
120 (ii)
(iii)
(iv)
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BRYSON
The second reason for neglect is that the role played by information in the economy is more complex than that of physical commodities. Information output is not independently measurable and, as a consequence, neither is productivity in many information industries. A significant amount of information output is never sold in markets but rather is used directly within organisations for competitive advantage, including firms inside and outside the information sector. It is only since the late 1970s that acceleration in the internationalisation of world economies led to increased international and domestic competition and increased demand for information. Information and information technology were recognized as assisting organisations to achieve competitive advantage. Finally, satellites, fibre optic communications, and other relatively recent developments in technology and information standards have transformed the economics and accessibility of telecommunications and information technology and in its turn, the international information sector of the economy. Countries are now realising that the ability of the economy to handle information efficiently and utilise it effectively will be a major factor in determining the rate of economic growth.
Economists customarily divide goods into two broad categories: free goods and economic goods. The former are goods which either exist in such abundance that, at a given time and place, they may be obtained without cost. In the information world, directional signs or the public telephone directory are examples of free goods. Economic goods, on the other hand, are useful, scarce and marketable; they have economic value. Information is increasingly being regarded as having economic value. Economic goods may be further divided into two: (i) consumer goods and services and (ii) productive services, or producers’ goods and services. Consumer goods are those which are consumed in their final form. They are used directly in the satisfaction of human wants. In the information world, a newspaper can be regarded as a consumer good. A consultant report is also a consumer good in that it incorporates skilled judgement and knowledge which has been commissioned and presented in a form which theoretically satisfies the consumer or person initiating the consultancy. Productive services, or producers’ goods and services satisfy wants indirectly, for they are used to produce consumer goods and services. Information is increasingly being used as a productive good to tailor
INTERNATIONAL
INFORMATION
121
MARKET
consumer goods and services to client needs. It is in this area that the international use of information has lead to social, legal and technical complexities which are attracting the attention of governments.
THE
USE
OF
INFORMATION
IN
CREATING
BUSINESS
OPPORTUNITIES
The airline, finance (banking, insurance, commodity trading), manufacturing, trade and transport industries are all intensive users of information to deliver their goods and services. They have recognised that readily available information is a key strategy in achieving commercial advantage over their competitors. Information has been the key to American Airlines’ successful computerised reservation system. Its A Advantage program for the frequent flyer not only gained short term market share, but also accumulated data on the fewer than 400000 people who accounted for 70% of full fare travel. SABRE (Semi Automated Business Research Environment), not only gave them a reservation system with direct links into other systems, but also provided them with information, in the form of a customer relationship database upon which to base their services for 70% of their captive market and therefore increase their competitive advantage. Therefore when a frequent flier checked in, the reservation system already allocated his or her favourite seat and the flight crew had already been alerted to their specific needs during the flight. In the finance industry, banks and insurance companies have realised the need to restructure their information systems away from individual accounts towards a customer focus, allowing them to tailor their services to the individual. This results in better customer services and the identification of new services which can be targeted at specific consumer groups. In both examples, from two very different industries, the increased dependency upon personal information for strategic purposes raises social questions of privacy of the individual versus the economic value of client information in an open information market for consumer group profiles for use in target marketing. The information market has also assisted the finance industry to diversify its services. For example, banks no longer view themselves solely as institutions for lending monies. They are in the financial information products business, bringing international information to their clients’ offices. The integrated work-station, which allows companies to trade in commodities on a 24-hour and universal basis, automatically authorise payments by Electronic Funds Transmission (EFT)
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for international goods and services generated through Electronic Data Interchange (EDI), and develop sophisticated cash management systems is now a reality. However, these developments have also added to the complexities of world finance so that no country can now be protected from economic forces which prevail on an international scale. Electronic Data Interchange is another information-based application which is set to change the way the business community and governments do business on a global scale. ED1 is the standards-based computer to computer exchange of inter-organisational business documents and information. It is being used extensively in the retail, manufacturing and international trade industries, with new applications being developed continuously. Its take-up rate is considerable. In the United States it is anticipated that expenditure for ED1 network and processing services will rise from US$2*5 million in 1988 to US$220 million in 1992. In creating new business opportunities for those participating in such schemes, ED1 has also changed relationships between trading partners. Information is no longer regarded as having to be protected from others; in fact distinct commercial advantage can be obtained through sharing information with trading partners. Just-in-time systems, which become an integral part of ED1 in the production systems, necessitate the sharing of hitherto commercially sensitive information between trading partners. Industry groups and lawyers around the world are now considering the legal implications of EDI. Issues such as control, ownership of information and legal liability are of immediate concern. For instance, the UK still requires a trading agreement to be in paper form. The provision of value-added information products is a largely untapped area of the information economy. However it is likely to emerge as a significant factor in the next few years, particularly in the area of market analysis. In this area, the combination of land, demographic and socio-economic information can provide powerful commercial information which many organisations are prepared to pay for. There has been considerable investment by both the public and private sectors in innovative uses of information and the supporting information technologies to deliver better products and services to their clients. Information technologies can also enhance the value of information by making it more accessible, accurate, complete and timely. Access to accurate, timely and relevant information is also critical for effective internal decision-making and strategic planning for organisations.
INTERNATIONAL THE
IMPACT
OF
INFORMATION INTERNATIONAL AVAILABILITY
MARKET
122
INFORMATION
Need for International Standards International access to, sharing and integration ofinformation products and services can only be achieved if there are common standards for both information and information technologies. The global interoperability and portability of information and information systems can be enhanced through the widespread adoption of “Open Systems” standards as opposed to proprietary standards, and in the development of internationally recognised information or data standards in such diverse areas as product code numbers or spatial data transfer standards. Privacy International access to information also requires consideration of major social issues (privacy, transborder dataflow, public access and quality standards), as well as the legal considerations for copyright, authenticity and security. The privacy issue relates to the individual’s right to: (i) privacy of his or her personal data in information systems, (ii) have access to his or her personal data and (iii) to have corrected any inaccurate personal data. The ease by which information technologies and telecommunications facilitate the manipulation and merging of databases makes it difficult for the individual to be kept informed as to how and where their personal information is used in order to ensure that their rights are protected. This is particularly difficult in cases where personal information is stored in international information systems such as those of the major credit card organisations, which are accessible in many countries. A second dimension to the privacy issue is that the value of the information is appropriated by the owner of the database; not the individual involved. If, in the absence of appropriate privacy legislation, personal information is used as an economic good to support commercial activities such as marketing profiles, then perhaps the individual has a right to some form of financial reward, commensurate with the use and value obtained from the information. Copyright Technological developments and lowering costs in international telecommunications have considerably eased the way in which information can be shifted or communicated between nations. The rights to foreign
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interests in copyright and privacy protection do not extend automatically across national boundaries. Therefore information protected by copyright and privacy legislation in one country may not be given those same rights overseas unless a bilateral agreement exists between the countries concerned, or the country is a signatory to the Berne or Universal ‘Copyright Convention. In Europe there are strong feelings about the rights to information about an individual held in one country being passed to another country, particularly where that country does not have information protection legislation Traditional intellectual property safeguards (patent and copyright law) are proving inadequate for electronically stored and distributed information. The increasing globalisation of markets is creating problems of enforceability, particularly since existing intellectual property conventions do not cover broadcasting by satellite. The current Uruguay Round of General Agreement on Tariffs and Trade (GATT) is considering this, AS an example, broadcasting by satellite across national boundaries through footprints which cover more than one country raises issues of -copyright clearance for the broadcast, i.e. for only the country originating the broadcast, or for all those countries covered by the footprint, -unauthorised rebroadcasting or use by countries located in the footprint, but not party to the broadcast agreement.
Protection of Information Held Of-shore The strategic use of systems integration, facilities management and outsourcing is growing in importance for the information systems industry. There is an increasing trend for large organisations to contract out the management of their information systems to allow them to concentrate on their primary business purpose. Contract organisations, in their turn, are finding that lowering international telecommunications costs and disparities in wage levels in the international labour market are making developing countries attractive venues in which to site their database operations. The protection of information stored off-shore in countries which are not signatory to international conventions is debateable. Furthermore, organisations providing large on-line database facilities or information services are also vulnerable to take-over bids by trans-national corporations. Consequently, whilst initial negotiations and agreements may be purposefully made with a nationally-based organisation, a future take-over
INTERNATIONAL
may result in ownership being off-shore.
INFORMATION
MARKET
of the service, and potentially,
125 the information,
Political Impact In the event of changes in political circumstances, the long-term accessibility and/or security ofinformation stored overseas may not be guaranteed. .There remains the possibility of one country interrupting physical access to another’s information, or in actually changing or destroying it. National security or other strategic issues can also prevent information from leaving or being exported from certain countries. The United States, for example, controls the international distribution of high-tech products and scientific and technical information for national security reasons. Given that the USA has 29o/o of the world market this has implications across national barriers.
Integrity and Accuracy of Information The principle of vendor liability for the quality and performance of physical goods is well established. This principle has not generally been extended to information, and often disclaimers are attached to the information when it is supplied. The question which must be resolved is whether the) buyer or seller should bear the risk that the information is wrong. This is particularly necessary in the case of value-added information products which only have a limited life span.
Preservation of Cultural Records It is the accepted function of the State to maintain the cultural record of the country. The explosion of the information sector has put physical and financial strains on this function. As information is increasingly treated as a commodity rather than a resource, acquisition of material will become more costly. Information products are also becoming more transient, maintained on databases only as long as they are commercially viable products, which may lead to the demise of cultural records. The globalisation of information flows may also lead to domination of information production by one or a few countries, with consequent cultural implications for consuming nations. This can lead to increased government protection of cultural industries. The danger being that protection of cultural industries will interfere with access to foreign sources of information by citizens.
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Employment is also a major consideration in the problems and opportunities inherent in the international information market. Despite the fact that offshore processing and storage operations may benefit those countries offering cheap labour, the economic advantages of the information economy will accrue to dominant information market areas. This will have implications for employment, value-added production and the balance of payments; dominant areas will gain at the expense of others.
CONCLUSION
The development and acceptance of international information technology and data standards, transborder dataflows and privacy issues, quality standards relating to information accuracy and integrity, preservation of cultural records and cultural sovereignty and, the legal implications associated with control and ownership of information are significant issues for debate in the international arena. It is hoped that the lack of international procedures for dealing with some of these issues will not seriously hinder developments in the international market for information goods and services.