Internet-based technologies are serving as a catalyst for economic growth and social advancement in the world’s developing economies, according to a paper released Monday, by the Economist Intelligence Unit.

These technologies reduce computing costs, improve transparency in government, make countries more competitive, and provide new ways to reach under-served consumers. Emerging countries that take advantage of the benefits of Internet-based technologies are more likely to help their citizens become richer, healthier, and better educated.

This transformation is detailed in Path to growth: the power of technology in emerging markets, a paper reported by the Economist Intelligence Unit and sponsored by Cisco Systems. From the delivery of public services to the way small businesses find new customers, high-bandwidth networks are helping remove barriers that previously had constrained developing countries.

“Internet-based technologies present an opportunity to help the emerging world move straight to Web 2.0,” said Nigel Holloway, Research Director for the Economist Intelligence Unit in North America. “The Internet protocol (IP) network has become the cornerstone of many applications, making collaboration more common and enabling some countries to develop whole new business sectors. Investment in IP-based technologies for contact centres, for example, has helped Romania develop a growing outsourcing industry. These technologies can lay the groundwork for new applications and business models, thereby helping emerging markets grow.”

Yet installing the infrastructure is insufficient by itself. Technology investment can be a waste of money if emerging countries lack the capability or institutional framework to use it effectively. What is crucial is the way in which Internet-based technologies are applied. One key to successful application is the adoption of a long-term view. The South African Municipality of Ekurhuleni, for example, plans to use the FIFA Soccer World Cup in 2010 as a catalyst for technological development. But over the longer term, the municipality is focusing on the legacy that will remain after the event is over: broadband connectivity for remote facilities and departments including medical centres, schools, fire stations, libraries and workshops. The aim is to increase the productivity of municipal employees and enhance the quality of life for the citizens they serve.

Path to growth contains case studies on a range of technologies and locations—from Internet protocol (IP) telephony in Chile, to telemedicine in Afghanistan, to networking in Cameroon. Some of the points covered in the report:

• Emerging markets can advance straight to the kind of collaborative, secure, peer-to-peer computing models now being rolled out in more advanced economies without bearing the associated development costs or the burden of traditional software licence models.

• As application development becomes cheaper and more accessible, new opportunities are opening up for local developers—both in their home markets and abroad.

• Effective skills transfer is central to sustainable Internet-based technologies, particularly when leading-edge technology is being deployed.