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Global Development Institute

The Economics of ICTs and Global Inequality: Convergence or Divergence for Developing Countries?

Richard Heeks and Charles Kenny

Abstract

"The potential of the modern information age seems overshadowed at every turn by the ancient forces that separate the rich from the poor."
(Dertouzos 1999)

If debate on ICTs and development has drawn from any discipline, it has tended to be sociology. This paper attempts to broaden the debate by drawing on economic evidence to ask: will ICTs support economic convergence or divergence between developing and industrialised countries?

In an overall sense, technology is fundamental to development. However, ICTs – while having an uncertain impact on growth – are currently a force for global economic divergence rather than convergence. They diffuse more slowly in developing countries than industrialised countries, and they bring fewer benefits and greater costs to developing countries than industrialised countries.

This does not present an argument against adoption of ICTs by developing countries. Rather, it presents an argument for focus on particular applications and investment priorities.

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Educator's guide

Synopsis questions

  1. What theories explain the relation between technology and growth?  What are the current and future trends in relative diffusion of ICTs between developing and industrialised countries?  [Part A]
  2. Why will ICTs have a divergent economic impact on developing and industrialised countries?  [Part B]
  3. What should be developing countries' ICT investment priorities, and why?  [Part C]

Development questions

  1. Do the ICT successes of countries like India and China undermine the paper's arguments?
  2. Would an approach to the question of convergence and divergence from a sociological or political perspective produce a different conclusion?
  3. Where do mobile phones fit into the picture painted by this paper?
  4. From studies of ICT projects in developing countries, can you identify key elements of the total factor productivity that enables technology to be used efficiently?
  5. Identify two or three recent economic studies on ICTs and development. Do they support or contradict the conclusions drawn in the paper?