Access (economics)

Access is a catalytic process that enables interactions, contact and exchanges among people, businesses and nations. An analytical framework to define the drivers and benefits of Access and to quantify the impact of Access on economic growth and personal well-being was created in 2006 by the Center for Science, Technology, and Economic Development at SRI International (formerly known as the Stanford Research Institute) in its study, “The Power of Access” (also titled, “How Greater Access Is Changing The World: A Landmark Study on the Relevance of Access to People, Businesses and Nations”). As outlined in the study, the Access framework consists of the Access Model, which expresses the function of Access as an econometric equation; the “Access Cycle”; and the "Access Index," which ranks 75 nations based on their performance in 22 metrics, including transportation infrastructure; telecommunications networks; trade policy; and news, media and information services.

SRI’s original study and subsequent research was sponsored by FedEx Corporation, which has incorporated the Access concept into its corporate thought leadership. In its broadest implications, Access is a framework that draws together and builds upon ideas found in the writings of varied theorists and commentators, including Thomas L. Friedman’s The World Is Flat and the work of Marshall McLuhan.

The study provides governments, businesses and investors with a diagnostic picture of the types of infrastructure available or needed to increase Access.

SRI’s Thesis

SRI released its first report on Access on May 23, 2006 in Washington D.C. The Executive Overview of the report describes Access as “a catalytic process that enables interactions, contacts, and exchanges among people, businesses, and nations. While markets represent platforms for transactions to take place, access provides the means for markets to operate. Access indicates ability – the ability to accomplish a broad range of actions, from attaining physical presence to communicating, and from acquiring to using.”

Advances in transportation and communication technologies, beginning with the steam-powered locomotive (1804) and telegraph (1835) and continuing through advanced logistics (1970s), overnight delivery (1973) and the Internet (1990s), have led to dramatic increases in Access. The report’s authors write that “this march toward continuously greater access is accelerating.” Furthermore, they assert that increases in Access inevitably lead to economic expansion, higher levels of personal fulfillment and satisfaction, and, most importantly, a growing hunger for connections and openness. The report explicitly declares that “Access is critical for economic survival and growth,” while implying that Access inevitably promotes openness and transparency if not held back by social or political factors.

The Access Function

Access can be written as a formula, in which the independent variables of time (T), space (S) and information (I) collectively establish the degree of Access (A):

f (T, S, I) = A Greater Access is generated by reducing the space between the entity seeking Access and the thing (physical or informational) being sought; by reducing the time needed for its transport or communication; and by increasing the amount of information available about it.

Access also conveys benefits through these variables: Greater Access increases available time by reducing the time needed for transport or communication; it increases the amount of usable space in which individuals or corporations can function (e.g., from local to global markets); and greater access to information aids in decision making by reducing the level of uncertainty.

Graphed over time, the amount of Access in the world has increased exponentially since the Industrial Revolution (the age of steamships and railroads) and the communications revolution of the 19th century (i.e. the telegraph, telephone, undersea cables, and radio). “Individuals once had access only to those things within walking distance,” the report states. “As a result, their choices and capabilities were severely constrained by lack of access. A major reason for the emergence and growth of villages and towns was the desire of inhabitants to gain access – access to others, to security, to specialized trades, and to other factors associated with human commerce and interaction.”

But, “as transportation systems, technologies, and communications capabilities evolved and networks expanded in breadth and sophistication, degrees of access continuously increased. These changes led to the creation of advanced civilizations and, eventually, to the integration of all societies into a global society.” In this respect, Access would seem to be a beneficiary of the network effect originally expressed as Metcalfe’s Law, which states that the value of a network increases exponentially with each new member.

The Impact and Beneficiaries of Access

SRI created another econometric equation to measure the impacts of Access as a function of participation by, choice available to, and improvement affecting human society. The beneficiaries of Access, as defined by the report’s authors, are

People, who desire access to personal wants and needs, such as education, jobs, health, food, consumer products, personal items, recreation, intellectual stimulation, etc., and the information to obtain them.
Businesses, which need access to markets, to information, and to inputs in order to remain viable and competitive. Their specific needs focus on various points in their value chains – logistics, distribution, marketing, etc.
Nations, and the smaller communities within them, must have access to resources and trade opportunities to sustain or improve standards of living and achieve economic growth.

The report outlines the benefits themselves as:

Participation, allowing each group to participate in activities and markets important to their well-being. For example, individuals with access to education and training can compete more effectively in the global job market.
Choice, which lies at the core of markets and open societies. The availability of different products or services to maximize utility or satisfaction will continue to change consumer and social behavior.
Improvement, allowing individuals, businesses, regions, and nations to link themselves together to reorder and improve business, economic, social, and cultural relationships. For example, people can interact with their families and friends, learn, conduct research, and obtain products on almost a virtual basis. Businesses can source and sell globally. Nations can increase rates of growth through international trade.

Using these variables, SRI then rendered the impact of Access as another equation, in which P stands for level of participation, C stands for amount of choice available, and _ stands for improvement in the status quo:

Impact = f people (P, C, _) + f businesses (P, C, _) + f nations (P, C, _)

The cumulative impact and benefits of Access is the sum of benefits delivered to each group. Those benefits include greater personal choice and empowerment; broader market reach, growth and competitiveness, innovation, a stronger supply chain; and greater national and international cohesion.

“While every generation has witnessed improvement in access,” the report states, “and future generations are expected to have even more access than we have now, people today benefit from a unique level of access to physical things, to information, and to each other. The expectations, behavior, and power of access are exerting profound changes in the ways in which people, businesses, communities, and nations operate, giving rise to both considerable challenges and major opportunities.”

The Access Index

To quantify the degrees and impacts of Access, SRI created the Access Index, a list of 75 nations ranked from the most accessible to the least, using a scoring system devised by SRI researchers and drawing upon publicly available information from sources including the World Bank, the International Monetary Fund, and the countries themselves.

In order to analyze and measure the potential impact of Access on nations, the research team selected 22 criteria, which they grouped under four headings:

Trade indicators that measure the “openness” of an economy from an international trade perspective (tariff revenues, hidden import barriers, etc.).
Transport indicators that measure the extent of Access supported by the existing transportation infrastructure (port infrastructure, air transport infrastructure, etc.) in each country.
Telecommunications indicators that measure hardware (main telephone lines, personal computers, etc.), service availability (number of mobile telephone subscribers, speed of Internet access, etc.), and costs of service (cellular connection charges, business and residential telephone monthly subscriber charges, etc.).
News, Media, and Information Services indicators that measure the ability to obtain information through various media (televisions, radios, newspapers, etc.).

Drawing upon empirical data that fell under each of these headings, nations were awarded a total point score and ranking for each nation reflecting their cumulative degrees of Access. The overall ranking is the one published here.

Three complementary indexes measure the opportunities Access provides to people, businesses and nations overall. These three “opportunity” indexes gauge the extent to which different groups of potential Access beneficiaries are able to leverage and use Access to improve their current condition and future prospects. Each of these categories was then broken down again into four sub-categories in which each nation was also ranked. (SRI notes: “In this series of reports, the terms ‘nation’ and ‘country’ are used to describe economies that are generally recognized by international organizations as operating autonomously. As used in these reports, neither term is meant to imply sovereignty or independence of a particular economy included in the reports.”)

For example, while Hong Kong tops the Access Index overall, it did not finish first in any of the three sub-categories. Those were:

Iceland. #1 in opportunities for its People, finishing #3 in the sub-category of “Empowerment,” #1 in “Connection,” #1 in “Well-Being,” #27 in “Choice & Expectations,” and #17 in the overall Access Index. Its high finish in this category “indicates that Icelanders, who are among the world’s most well-educated, are able to use their education to achieve a higher level of people-related opportunities from Access,” according to the report.
Germany. #1 in opportunities for Businesses, finishing #2 in “Supply Chain Strength,” #6 in “Innovation,” #24 in “Growth & Competitiveness,” #2 in Market Reach, and #7 in the overall Access Index.
Ireland. #1 in opportunities as a Nation, finishing #13 in “Broader Markets,” #16 in “Global Connections,” #8 in “National & International Cohesion,” #1 in “Growth & Prosperity,” and #23 overall.

The report’s authors correlated these rankings with each nation’s economic performance data and found that:

Higher levels of Access enable higher economic growth. The top 10 countries in the Access Index had an average GDP per capita growth rate of 22.6 percent from 1993–2003, whereas growth among the bottom 10 scorers was just 14.1 percent over the same period.
Greater Access relates strongly to higher levels of income. In addition, as nations develop, their citizens — both people and businesses — typically demand greater Access.
Physical and information Access are closely aligned for the countries studied. Countries with advanced economies tend to have very high levels of both physical and information Access, though the expansion of physical and information Access may not proceed in tandem.
Access is critical for economic survival and growth, especially for nations that have small internal markets, have limited domestic resources, and/or rely heavily on international trade for economic survival and growth — such as those that topped the Index: Hong Kong (#1), Singapore (#2), Denmark (#3) Switzerland (#4), Netherlands (#5), and Finland (#6).

Other nations worth noting include:

The United States (#12), falls behind Hong Kong, Singapore, and 10 Western European nations, but finished #1 in several sub-categories, including personal “Choice & Expectations,” corporate “Supply Chain Strength,” and the nation’s ability to connect with “Broader Markets.”
China (#52) finished surprisingly low, considering its very high GDP growth. While China scored high in sub-categories such as “Broader Markets” (#8) and “Choice & Expectations,” (#8), its overall score was dragged down by low rankings in categories such as “Empowerment,” (#49) and “Connection,” (#67) which reflect a society that is still largely closed.
OPEC nations, including invitee Mexico (#45), Indonesia (#60), Venezuela (#62), invitee Bolivia (#66), prospective member Ecuador (#71), and Nigeria (#74) all appeared in the bottom half of the Index. The low levels of Access in these nations may partially reflect what is alternately called the “resource curse” or “Dutch disease,” in which economies fail to diversify and compete globally due to a cushion of large oil reserves and high prices.

The Access Cycle

The SRI report expresses Access generation and expansion as a perpetual cycle.

As time, space and information converge toward perfect Access, people, businesses and nations derive increasing benefits, including greater participation and choice, and new levels of opportunities for participants.

The resulting growth, fulfillment and higher expectations heighten demand for greater Access, which in turn stimulate the investment and innovations that further increase Access.

Access, The “Flat World” and Related Theories

Many of the premises and conclusions of the Access framework encompass and build on the ideas of thinkers as varied as Marshall McLuhan and Thomas L. Friedman. Ranging far beyond the initial report and study, both SRI and FedEx have subsequently commissioned further research and interviews buttressing this concept, including those collected in an annual business publication, Access Review.

In its expanded form, Access incorporates a number of both competing and complementary theories that have attempted to explain globalization and information-based, post-industrial economies. Some of these theories include:

“The flat world,” advanced by New York Times op-ed columnist Thomas L. Friedman in his 2005 book The World Is Flat: A Brief History of the Twenty-First Century. Friedman’s list of “flatteners” includes digital technologies that spurred an exponential increase in instantly available information (e.g. “Netscape,” “Workflow software,” and the “steroids” of personal communication devices, including PDAs and mobile phones) and led to the creation of a “level playing field” offering new economic opportunities to individuals, corporations, and nation-states worldwide. To quote from page 11: “Because it is flattening and shrinking the world, Globalization 3.0 is going to be more and more driven not only by individuals, but also by a much more diverse — non-Western, non-white group of individuals. Individuals from every corner of the flat world are being empowered. Globalization 3.0 makes it possible for so many more people to plug and play, and you are going to see every color of the human rainbow take part.” Friedman concludes that the flat world is the result of a “triple convergence” of increasingly sophisticated communication technologies, horizontal collaboration between individuals and companies made possible by these technologies, and the liberalization of world politics. The Access framework also takes each of these phenomena into account as both the products and drivers of increasing levels of personal, corporate, and national Access.
The “global village.” Coined by Wyndham Lewis in his book America and Cosmic Man (1948) and adopted by Canadian philosopher Herbert Marshall McLuhan in his book The Gutenberg Galaxy: The Making of Typographic Man (1962), today the global village is mostly used as a metaphor to describe the Internet and World Wide Web. McLuhan’s book described how electronic mass media collapse space and time barriers in human communication, enabling people to interact and live on a global scale. In this sense, the globe has been turned into a village by the electronic mass media. McLuhan expanded upon this theme two years later in Understanding Media (1964), in which he discussed the evolution of the future of all media, using a definition of “media” that also included all forms of transportation. Just as the Access concept states that Access inevitably expands, thus in turn collapsing space and distance, so too, does McLuhan make similar claims in Understanding Media. For example, “the railway did not introduce movement or transportation or wheel or road into human society,” he wrote in one passage, “but it accelerated and enlarged the scale of previous human functions, creating totally new kinds of cities and new kinds of work and leisure.” Somewhat of a technological determinist, McLuhan believed that new media exert a gravitational effect on cognition, which in turn affects social organization (hence the global village). In that sense, McLuhan presciently described the effects of contemporary levels of Access – ongoing advances in telecommunications and transportation have led to social change and upheaval worldwide.
“The J Curve.” In his book The J Curve: A New Way to Understand Why Nations Rise and Fall (Simon and Schuster: 2006), political scientist Ian Bremmer describes the relationship between a country's openness and its stability; focusing on the notion that while many countries are stable because they are open (the United States, France, and Japan), others are stable because they are closed (North Korea, Cuba, Iraq under Saddam Hussein). The J-Curve itself is a graph on which the x-axis measures the “openness” (or freedom) of the state in question and the y-axis measures the stability of that same state. It suggests that those states that are “closed”/undemocratic/unfree (such as the Communist dictatorships of China and Cuba) are very stable; however, as one progresses right, along the x-axis, it is evident that stability (for a relatively short period of time in the lengthy life of nations) decreases, creating a dip in the graph, until beginning to pick up again as the “openness” of a state increases; at the other end of the graph from closed states are the open states of the West, such as the United States or the United Kingdom. Thus, a J-shaped curve is formed. The nations ranked in the Access Index map almost perfectly to the J-Curve as well. All of the nations in the top 20 of the Access Index possess broadly democratic governments, while the bottom 20 is mostly composed of closed and/or failing states such as Zimbabwe (#67), Nigeria (#74), Vietnam (#73), Egypt (#58), and Venezuela (#62). The Access framework suggests that the opening of these countries and the spread of individual economic opportunities (which are typically stunted or non-existent in resource-cursed nations) will lead to a turnaround in their political and economic fortunes.
“The Long Boom.” First advanced by futurist and Global Business Network chairman Peter Schwartz and journalist Peter Leyden in the July 1997 issue of Wired magazine, the “Long Boom” referred to a 40-year period of prosperity spanning approximately 1980 to 2020. Dismissed as an overly utopian forecast following the bursting of the Dot.com stock market bubble and the aftermath of 9/11, the Long Boom prescribed “openness” — social, economic and political openness — as the catalyst for economic expansion. Schwartz and Leyden expanded this into The Long Boom (Perseus, 1999), a book-length look at a future characterized by global openness, prosperity, and discovery. The Access concept prescribes an approach akin with the original article, which would seem to hold up in the face of economic growth data. To quote from the original Wired article: “In a nutshell, the key formula for the coming age is this: Open, good. Closed, bad. Tattoo it on your forehead. Apply it to technology standards, to business strategies, to philosophies of life. It's the winning concept for individuals, for nations, for the global community in the years ahead. If the world takes the closed route, it starts a vicious circle: Nations turn inward. The world fragments into isolated blocs. This strengthens traditionalists and leads to rigidity of thought. This stagnates the economy and brings increasing poverty. This leads to conflicts and increasing intolerance, which promotes an even more closed society and a more fragmented world. If, on the other hand, the world adopts the open model, then a much different, virtuous circle begins: Open societies turn outward and strive to integrate into the world. This openness to change and exposure to new ideas leads to innovation and progress. This brings rising affluence and a decrease in poverty. This leads to growing tolerance and appreciation of diversity, which promotes a more open society and a more highly integrated world.”

References

External sources

Center for Science, Technology, and Economic Development

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