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Information Technology and Economic Development: An Introduction to the Research Issues

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  • Pohjola, Matti

Abstract

There is substantial evidence that new information technologies are in many ways transforming the operations of modern economies. More than half of employees use a computer at work in the most advanced industrial countries. About 10 per cent of the value of all private investment in fixed non-residential capital is devoted to computers and peripheral equipment in the United States and some other economies. This share goes up to 25 per cent when investment in information processing equipment is included. Nevertheless, all spending on information technology, including hardware, software and services, does not amount to more than 3-4 per cent of nominal GDP in these countries. The share is, however, increasing rapidly, indicating that a steady state has not yet been reached.Developing countries spend much less on information technology. The stark contrast in the penetration of information and communication equipment between the industrial and developing world is best summarized by the fact that more than half of humanity has never made a telephone call. The sharp decline in the price of computing and communication- about 20 per cent a year in the case of computers-is, however, bringing this technology within the reach of many, if not yet all, developing countries. The question about the costs and benefits arises naturally.Even in industrial countries, the impact of information technology has not been as deep or pervasive as the debate about the benefits of the global information society sometimes makes it appear. The literature review on the US experience shows that there is neither a 'productivity paradox' nor a substantial 'information payoff' associated with investment in computers or other forms of IT, but they seem to be 'pulling their weight'. This may, however, be a characteristic feature of the US economy in its present stage of development. Modern business information systems are being developed for the needs of large corporations in industrial countries. More research on other countries, developed and developing, is needed before firm policy conclusions can be drawn for economic development. This research should explore the role of information technology both as an intermediate input in production and as a final good in consumption. This paper prepares ground for such work.

Suggested Citation

  • Pohjola, Matti, 1998. "Information Technology and Economic Development: An Introduction to the Research Issues," WIDER Working Papers 295479, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:ags:widerw:295479
    DOI: 10.22004/ag.econ.295479
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    Cited by:

    1. Jeremy Grace & Charles Kenny & Christine Zhen-Wei Qiang & Jia Liu & Taylor Reynolds, 2003. "Information and Communication Technologies and Broad-Based Development : A Partial Review of the Evidence," World Bank Publications - Books, The World Bank Group, number 15053.
    2. K. J. Joseph, 2002. "Growth of ICT and ICT for Development: Realities of the Myths of the Indian Experience," WIDER Working Paper Series DP2002-78, World Institute for Development Economic Research (UNU-WIDER).
    3. repec:lan:wpaper:541200 is not listed on IDEAS
    4. Bedi, Arjun S., 1999. "The Role of Information and Communication Technologies in Economic Development: A Partial Survey," Discussion Papers 279848, University of Bonn, Center for Development Research (ZEF).
    5. Nirvikar Singh, 2003. "Information Technology as an Engine of Broad-Based Growth in India," Palgrave Macmillan Books, in: Frank-Jürgen Richter & Parthasarathi Banerjee (ed.), The Knowledge Economy in India, chapter 2, pages 24-57, Palgrave Macmillan.
    6. Charles J. Kenny, 2002. "The Internet and Economic Growth in Least Developed Countries: A Case of Managing Expectations?," WIDER Working Paper Series DP2002-75, World Institute for Development Economic Research (UNU-WIDER).
    7. Charles Bean, 2000. "The Australian Economic 'Miracle': A View from the North," RBA Annual Conference Volume (Discontinued), in: David Gruen & Sona Shrestha (ed.),The Australian Economy in the 1990s, Reserve Bank of Australia.
    8. Charles Kenny, 2003. "The Internet and Economic Growth in Less-developed Countries: A Case of Managing Expectations? 1," Oxford Development Studies, Taylor & Francis Journals, vol. 31(1), pages 99-113.

    More about this item

    Keywords

    International Development;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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