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The Conceit of Internet Control

The Wall Street Journal

Amid all the recent news from the Middle East, here's some you might have missed: Jordan last month amended its already restrictive press-and-publications law to include Internet firms and organizations. The move risks chilling business development in what had been a promising site of economic progress in a changing region.

Jordan's new legislation (passed by parliament and signed by the king) will, among other things, hold online news sites accountable for comments left by readers, require the sites to archive all such comments, and force them to obtain licenses from the government or risk being shut down. This for a tech sector that has grown 25% annually over the past decade (according to Jordan's Information and Communication Technology Association) and now accounts for 14% of gross domestic product—up from 2% in 2000. A leading regional news and research group, Sindibad, notes that in 2011 nearly half of all start-ups funded in the Arab world were based in Jordan.

Backlash against the strictures from Jordan's tech community was immediate. Hundreds of the most popular websites took themselves offline in protest (akin to protests in the U.S. earlier this year against the Stop Online Piracy Act then being considered by Congress). Twitter has been full of entrepreneurs warning that, as one wrote to me, "The government may be about to ensure one of the greatest brain drains in our history."

But will the ire of the tech sector change the government's policy? Internet restrictions are commonplace in countries where central control is paramount. China regularly wrestles with Google. Saudi Arabia and Russia have many restrictive laws—and even democratic Turkey and India have plenty of online restrictions. Last week the Philippines tried to severely restrict social-media use before the courts intervened. In the short term, these countries weather protest and business seems to move apace.

Clampdowns, however, present a larger and longer-term economic paradox for emerging nations. The Internet today isn't merely a mode of communication but the defining platform by which businesses innovate and transact around the world. How can governments restrict this platform when its very success is based on transparency, openness and access?

"More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense," wrote Internet pioneer and venture capitalist Marc Andreessen in this newspaper last year. "Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not."

Becoming a force in tech innovation or disruption has never been easier—but unimpeded access to the Internet is essential. New entrepreneurs world-wide are creating ways to collaborate and solve local, regional and even global problems. Governments should note that while these innovators are passionate about their homes and culture, they have also never been more mobile. If pushed, they can seek out other countries that embrace their talent.

In addition to losing their best and brightest, emerging nations will have trouble competing if their legal environments squelch innovation. Even in China, where stunning growth has seemed to suggest that the government is adept at managing technological transitions, the engine appears to be slowing. For newer economies in the early days of technological adoption and struggling for any growth at all, the damage could be much worse. Once behind, how can they hope to catch up?

History is a story of governments constraining capital to maintain political control, with the Soviet Union as the most egregious example. Oppressive regimes have survived for decades by allowing a select few to aggregate wealth and impeding others' access to capital. But this strategy hasn't been sustainable—as the Middle East has shown especially in recent years.

Emerging markets have a unique opportunity to embrace the Internet as their central business platform. Singapore, South Korea and Israel did so and became world-class technology players. These countries have had their own challenges with political liberalism, but their embrace of open, globally competitive access to technology has meant that businesses can grow and college students can dream of building new enterprises at home.

Machiavelli, in "The Prince," explained how the leaders of planned economies can convince themselves that the risk of embracing change outweighs the value of leading it: "The initiator has the enmity of all who would profit by the preservation of the old institutions, and merely lukewarm defenders of those who would gain by the new ones."

But in the digital age, leaders would be better off heeding a later caution from the Florentine student of power: "A man who is used to acting in one way never changes; he must come to ruin when the times, in changing, no longer are in harmony with his ways."

This originally appeared on The Wall Street Journal on October 10, 2012.

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