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Transaction Costs, Information Technology and Development

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Author Info
Nirvikar Singh (University of California, Santa Cruz)

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Abstract

This paper explores potential channels through which information technology (IT) affects economic development. The channel emphasized here is the reduction of transaction costs through the use of information technology. We discuss the nature of transaction costs, their possible impacts on economic outcomes, and the impacts of IT on transaction costs. We provide a theoretical discussion of how a reduction in transaction costs may affect the number of intermediate goods that are produced, and in turn how that number may affect the development path of the economy. We then draw on our fieldwork in rural India that examined the economics of rural Internet kiosks, and relate this multifaceted case study to the theoretical discussion of transaction costs. We conclude with a broader discussion of the potential impact of IT on developing economies.

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File URL: http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1027&context=ucscecon
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Paper provided by Department of Economics, UC Santa Cruz in its series Santa Cruz Department of Economics, Working Paper Series with number 1027.

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Date of creation: 01 Oct 2004
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Handle: RePEc:cdl:ucscec:1027

Note: oai:cdlib1.org:ucscecon-1027
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Keywords: transaction costs information technology Internet development India

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ralf Ruhwedel & Michael Funke, 2004. "Trade, Product Variety and Welfare: A Quantitative Assessment for the Transition Economies in Central and Eastern Europe," Quantitative Macroeconomics Working Papers 20401, Hamburg University, Department of Economics. [Downloadable!]
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  2. Nirvikar Singh, 2004. "Information Technology and Rural Development in India," Santa Cruz Department of Economics, Working Paper Series 1016, Department of Economics, UC Santa Cruz. [Downloadable!]
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  3. David Hummels & Peter J. Klenow, 2002. "The Variety and Quality of a Nation's Trade," NBER Working Papers 8712, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Romer, Paul, 1994. "New goods, old theory, and the welfare costs of trade restrictions," Journal of Development Economics, Elsevier, vol. 43(1), pages 5-38, February. [Downloadable!] (restricted)
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  5. Ciccone, Antonio & Matsuyama, Kiminori, 1996. "Start-up costs and pecuniary externalities as barriers to economic development," Journal of Development Economics, Elsevier, vol. 49(1), pages 33-59, April. [Downloadable!] (restricted)
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  6. Foley, Duncan K., 1970. "Economic equilibrium with costly marketing," Journal of Economic Theory, Elsevier, vol. 2(3), pages 276-291, September. [Downloadable!] (restricted)
  7. Kaushik, P. D. & Singh, Nirvikar, 2004. "Information Technology and Broad-Based Development: Preliminary Lessons from North India," World Development, Elsevier, vol. 32(4), pages 591-607, April. [Downloadable!] (restricted)
  8. Hahn, F H, 1971. "Equilibrium with Transaction Costs," Econometrica, Econometric Society, vol. 39(3), pages 417-39, May. [Downloadable!] (restricted)
  9. Robert J. Barro, 2001. "Human Capital and Growth," American Economic Review, American Economic Association, vol. 91(2), pages 12-17, May. [Downloadable!] (restricted)
  10. Martin L. Weitzman, 1998. "Recombinant Growth," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 331-360, May. [Downloadable!] (restricted)
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  11. Timothy J. Kehoe & Kim J. Ruhl, 2003. "How important is the new goods margin in international trade?," Staff Report 324, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  1. Singh, Nirvikar, 2006. "Services-Led Industrialization in India: Assessment and Lessons," MPRA Paper 1276, University Library of Munich, Germany, revised Dec 2006. [Downloadable!]
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