Information and Communication Technologies, Markets, and Economic Development
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There is great optimism over the potential for information and communication technologies (ICT’s) to promote economic development and alleviate poverty. Currently, however, there is neither a solid theoretical basis nor convincing empirical evidence to support such optimism. This chapter identifies the economic underpinnings of the argument for a significant role for ICT’s in the development process. The basic premise is that information and communication are valuable commodities that can enhance the functioning of markets that are critical for the well-being of the poor. Recent advances in ICT’s can bring these benefits to even the poorest of the poor in the developing world. This chapter is organized as follows. We begin with a theoretical discussion of markets and economic efficiency, highlighting the desirable outcomes that result from well functioning markets. Next, we discuss the critical role of information in generating efficient market outcomes. We then examine the extent of information flow, or lack thereof, in developing countries, and the consequences for market functioning. In doing so, we pay particular attention to the benefits well-functioning markets bring to even the poorest persons in the poorest nations. Finally, we evaluate the limited evidence to date on how bringing ICT’s to information-isolated communities can promote welfare, and provide new evidence based on analysis of household data from China.
JOUR
Eggleston, Karen N.
Jensen, Robert T.
Zeckhauser, Richard J.
2002
Discussion Papers Series, Department of Economics, Tufts University
203
1442