From Facebook to freedom: Does technology spur democracy?

September 06, 2011

Henry David Thoreau may have penned more than 9,300 words urging people to fight unjust governments in his essay on civil disobedience, but today's political dissidents have brought throngs to the streets with 140 characters or less. Such is the power of social media. In the wake of 2011's Arab Spring, many now think that information and communication technologies (ICTs) are a driving force behind increased levels of democracy. Are they?

Researchers at the W.P. Carey School of Business started to explore this question long before the 2009 Tunisian election protests spawned the term "Twitter Revolution" and before Facebook helped Egyptian rebels topple Hosni Mubarak's 30-year regime.

In 2005 the researchers began tracking ICT investments, such as cellular and broadband communications infrastructure. They also watched levels of democracy occurring in 50 nations between 2000 and 2007. At the same time, the scholars followed foreign investment that was poured into these countries to see if corporate players would be more likely to open facilities in the wake of ICT build-out.

They found that, indeed, there is a significant correlation between ICT investments, burgeoning democracy and rising foreign investment in emerging societies. In fact, foreign investment increased within a year following the jump in ICT investments, indicating that smart phones and cell towers might be some of the best infrastructure a developing nation can buy.

Changing currents

"When we first started this research, there weren't any large-scale revolutions happening in the world," says Daniel Soper, an assistant professor at Cal State Fullerton who had been a Ph.D. candidate at the W. P. Carey School when this investigation began. "Twitter and Facebook were still in their infancy, so those tools were not on our minds initially. We were considering a framework where change would happen over time."

This was prompted, in part, by musings of Haluk Demirkan, a W. P. Carey School professor of information systems who emigrated from Turkey to the U.S. some two decades past. "Ten years ago, Turkey was almost a third-world country, but now it is playing a major role in the European economy," Demirkan says. One reason is the ICT investments made around eight years ago, he added, pointing to ICT companies such as Turkcell, now the third largest 2G mobile carrier in Europe.

Demirkan's interest in his native land's transformation at first put the researchers on the path of examining social and economic impacts of ICT investments in Turkey. Quickly the team expanded their investigation to 50 countries and added two other W. P. Carey School IS department professors, Robert St. Louis and Michael Goul, to see if their findings could be generalized or were nation-specific.

How the World Wide Web turns

To that end, the team based their queries on theoretical frameworks borrowed from sociology, biology and other disciplines. One guiding concept for the research was "general systems theory," which maintains, according to Goul, that economies and societies are nested hierarchies of systems and subsystems, so changing one piece of an economy could very well have unintended consequences.

"The flash crash is an example," he notes, referring to the May 2010 Dow Jones dive and same-day recovery of some 900 points when computerized high-frequency trading systems triggered wild market fluctuation.

Or, as St. Louis says, "General system theory states that everything is inter-related. So thinking you can change technology and there won't be a change in culture, politics or the economy is being naïve. If there's a significant change in technology, it's going to ripple out. What causes it to ripple out is structuration theory."

"Structuration theory is a way of explaining how societies ultimately end up structuring themselves," says Soper. "Society reproduces itself on a daily basis, but it's rarely done with a hatchet. Structuration theory is about how our individual actions on a day-to-day basis are constrained by and simultaneously produce structures that guide our behavior."

To explain this, Soper says we should think about bell-bottom pants and other fads born because, "in order to stay profitable, the fashion industry has to convince us our clothes are out of date." As he explains it, a few people start wearing bell bottoms, and pretty soon the style spreads, like a YouTube video gone viral.

The scholars also used two other theories as research backdrops. First, they considered the theory of network society put forth by sociologist Manuel Castells, who maintains that people are nodes in a social system network, which both supports them and allows them to exert influence. Additionally, the team looked at political scientist Ronald Tamman's power transition theory, which holds that people will, to the extent that they can, exert influence and try to control resources and other people.

St. Louis summarizes this idea: "If people don't have information, they don't even have the opportunity to exert influence. But, once they have the opportunity, the desire soon follows."

That's why the researchers examined growth of institutionalized democracy, which they viewed as the extent to which a society guarantees civil liberties to its citizens. To measure democracy, the team used evaluations produced by the non-profit agency Freedom House, which measure democracy around the world using criteria such the citizenry's ability to participate in legitimate elections, exercise beliefs, assemble or live under equitable laws. Freedom House reports are considered some of the most definitive studies on democracy worldwide.

When ICT gets into the act

ICT investment does not require democracy to proliferate. It occurs when an AT&T, Verizon or Turkcell puts up cell phone towers and introduces smart phone service in an area, when a cable company spreads broadband, a Telco lays fiber or when any technology that facilitates communication gets deployed.

Foreign direct investment is corporate, St. Louis explains, and it follows ICT investment for the simple reason that ICT makes business easier and, presumably, more profitable to conduct.

"Companies today can't run without phones and internet," Demirkan notes. "They have to have reliable ICT."

St. Louis concurs, citing supply chain efficiencies as an example of why ICT is imperative. "To have an efficient supply chain, you may be ordering stuff from around the world and it needs to arrive exactly when you need it," he says. "If it comes before you need it, you're adding storage costs. If it comes after you needed it, you've had people sitting on their hands for days.'

So, while ICT may be a prerequisite for modern corporate life, it doesn't come without risk to the local despot.

"In an autocratic society where power is centralized and the flow of information is regulated from the central authority, citizens are often receiving nodes on the network. They have information pushed to them," Soper notes, referring back to Castell's theory of network society. "When a society has a reasonably high saturation level of ICT, the people become producers of information that other people are consuming."

Soper says he's not sure that societal power is a zero-sum equation but, if it is, the power gained by people expressing their opinions "has to come from somewhere. The debit comes from the power that is centrally located. That's one reason I think these technologies lead to political change."

The flow of information also influences changing views, Soper adds. "When people are able to access information from outside sources, it introduces new ideas and perspectives," he says. "Suddenly ideas that originate half a world away are part of dinner conversation. That's very different than just getting information from state-run media."

Not surprisingly, autocratic leaders are well aware of the dangers, say Soper and St. Louis. "It's a dictator's dilemma," St. Louis points out. "Does the dictator give people access or keep them in the dark? If you keep people in the dark, you may damn your economy."

What's more, trying to keep a lid on internet communications is a losing proposition, according to Soper. "In the case of countries like North Korea, China or Iran, there's a large state infrastructure in place to constrain what information flows into or out of the country via information networks," he says. "But there are too many holes in the dyke. You plug one, and another opens up."

It opens quickly, too. Demirkan thinks the sheer speed of information travel over ICT and social networks has played a major role in the technologies' power to spread democracy. "People know about things immediately. That's one of the things that contributed to the Arab Spring," he maintains.

Net gain

As noted, the research team found an increase in democracy following ICT investments from Y2K on. And, as Goul notes, the team also found correlations "between democratization and the ability to attract foreign investment."

In fact, the data show that countries with both high ICT investments and a high level of democracy receive four times more foreign direct investment than those with low democracy scores and low ICT investments. When it comes to attracting those foreign bucks, high levels of institutionalized democracy can, to a degree, mitigate low levels of ICT investment, but not as much as high ICT overcomes low democracy levels.

Demirkan and St. Louis think the reasons for these results are reduced risk. "The more investment in ICT, the more the investor knows about what's going on in the company and in the country politically," says St. Louis. "Greater transparency translates into less risk, which makes people more willing to invest." He also thinks investors perceive that they have more control and, therefore, less risk in a democracy than in an autocratic regime.

"What surprised us was that region and religion didn't have much impact," he continues. "The main thing that stood out was that, on average, ICT investments did affect levels of democracy and investment from other countries."

Remember, too, that this investigation covered only the years 2000 to 2007, and social media didn't have much sway for most of that time. Facebook came online in 2004, YouTube first broadcast in 2005, and Twitter didn't tweet until July 2006. "We only had access to all the data we needed through 2007," Demirkan admits. "Things probably got a lot more interesting as time went on."

Bottom Line

  • For the years 2000 to 2007, researchers at the W. P. Carey School of Business tracked investments in information and communications technology (ICT), as well as rising levels of democracy and levels of foreign investments poured into 50 countries.
  • On average, a rise in ICT investments corresponded with a rise in foreign investment within a year.
  • Rising ICT investment also is positively correlated with rising levels of democracy.
  • The impact of ICT investment on democratization and foreign investment predate Facebook, YouTube and Twitter by at least four years.