Internet Diffusion and Electronic Commerce: Prospects for Developing Countries

Expressing concern that the underdeveloped nations may get left behind in adopting Information Technology, this paper explores the following questions:

• Can developing-country businesses use this new resource effectively?
• Will the Net level the competitive playing field, or the converse?
• How will the Net affect absolute and relative income growth in rich and poor countries?
• How can policies promote more effective use of the Net by developing-country businesses?

The paper:

• Highlights the impact of policy reform on the growth of Internet use and discusses its probable impact on developing-country households and businesses, and conditions for firms' effective use of the Net;
• Considers the partial equilibrium impact of falling information and communications costs, along with the longer-run general equilibrium impact of this new technology;
• Discusses the likely impacts of Net expansion on more general patterns of development;
• Concludes by attempting to answer the four questions posed.