Investment and Enterprise

This publication has been compiled by the UNECE

MARKET RESPONSE AND QUALITY: THE ROLE OF E-SERVICES

Dr. Orio Giarini, Special Adviser, ASEC/Geneva Association

Mr. Eric Fiechter, Partner, Law Firm, Secretan Troyanov

Mr. Nic De Maesschalck, Director, World Federation of Insurance Intermediaries

Mr. Mike Smith, International Organization for Standardization (ISO)

Mr. Gerardo Patacconi, Industrial Development Officer, Quality, Technology and Investment Branch, United Nations Industrial Development Organization (UNIDO)

Are the emergence of new technologies and their revolutionary impact on popularity an event unique to the end of the 20^th century? No, Dr. Giarini said, new technologies and innovations have always been the driving force behind progress, and economies have eventually integrated them at all levels. However, what is new and unique is the emergence of technologies linked to a service-based industry, that is services that have a horizontal orientation and involve all parts of the economy. Today, older economic and newer and more innovative systems are constantly being integrated.

Products and services are no longer separate entities. Services represent today the biggest share of the value of goods. Services have also obtained an immense importance as a cost component of any good: thus operating and maintenance costs (service costs) outweigh by far initial purchasing prices. They often demand higher investments than initially required for the acquisition of the goods. Therefore, the demand for services and, with the emergence of new technologies, for e-services is constantly on the rise.

The new service economy

"We would suggest the idea that the present dichotomy between the old economy and the new economy (based on new technologies) does not help to really understand the fundamentals of the present economic situation and developments. In practice, older systems and new systems are constantly being integrated to obtain more efficient economic solutions, and this is the real final criterion for success. This also means that e-services inevitably have to fit within a great variety and complexity of economic situations."

(Dr Orio Giarini, Special Adviser, ASEC/Geneva Association)

This has resulted in an unprecedented complenentarity between trade and investment. The development of a sector in any given country will therefore strongly depend on high enough investment levels to support the service economy.

Complementary between investment and trade

"A global business strategy whatever the sector today is, and because of the logic of the service economy, tends to combine investment with trade (through acquisitions or other means) developing local human capital and resources: this is a fundamental issue to understand, and which directly concerns the ideas that we can have on global economic policies. The word becomes without frontiers, but in a situation, which goes much deeper than a simple increase because the investment side of its creates a much more articulate and compelling situation. It also stimulates autonomy.

In the service economy the issue is the optimisation of scale. The very logic of the service economy implies that a better economic appreciation of pluralism, articulation and complementary of systems can be envisaged. The road is probably open in this direction to a more constructive future.

(Dr. Orio Giuarini, Special Adviser, ASEC/Geneva Association)

How the economy responds to new technologies will also determine how the introduction of e-services will eventually improve the performance and quality of markets and individual companies on the micro level. Mr. Fiechter in his description of the set-up of a partner office in a transition country provided such an example. Integrating the latest technologies into business processes, Mr. Fiechter stressed was a huge advantage. Another major factor, however, is the training of human resources and the use of readily available and IT trained young persons (often students), especially in transaction economies. Using these invaluable resources in the right and coherent way can foster and accelerate the development and use of e-services even more. This is a particular opportunity for SMEs fro whom the synergies created by close cooperation with for instance, the academic sector might entail big advances. For Mr. Fiechter, "e-services are not only a pre-condition to be in business but also a response to a specific demand of the market".

The implementation, spread and more specifically trade of e-services on the global level will to a large extent depend on their quality. And quality can eventually only be assured by internationally applicable standards elaborated by international organisations such as ISO, represented by Mr. Smith. These standards, he explained, dealt with many aspects including security or corporate management which all encourage trust, ethical behaviour and customer orientation, cornerstones of market response and quality.

Low quality and productivity levels are some of the features which characterize many companies in transition countries. Using e-services can provide solutions to may of the problems that SMEs in particular face.

However, as Mr. Patacconi, the representative of UNIDO, outlined, these SMEs are also the ones that have neither the money nor the knowledge to take full advantage of e-business opportunities. Online consultancy and information services can help these companies to make their goods marketable, i.e. to help them reach the quality level required to be internationally competitive. At a later stage online or mobile e-services can be used to actually market these goods, export them and eventually encourage the integration of SMEs into international supply chains.

Above all, Mr. De Maesschalck commented, it should not be forgotten that e-services are delivered to real people in a real economy. Therefore the interaction between the two, i.e. the "virtual" and "real" side of business transactions must continually be encouraged. The two scenarios are in fact not only tightly related but also not that different from each other and thus an e-services environment too requires a fair and transparent regulatory environment to enable trade to prosper.

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