Globalization, Information Technology and Development

The impact of globalization and the development of information technology are two of the most important themes for understanding the international economy and the prospects of developing countries today. Jeffrey James assesses and develops the insights of the often separate literatures on these subjects, to show that globalization and information technology are mutually dependent. The central insight is the notion that globalization is mainly a technological phenomenon driven by influences exerted on international trade and foreign investment by various forms of information technology. Not only does this technology reduce the costs of communication and coordination in the trade of existing goods and services, but it also permits into international trade a number of products that were previously untraded. And whereas this technology serves on the one hand as an important source of comparative advantage in international trade, it is itself also an export sector that is and has been growing very rapidly. Developing countries, however, are not sharing equally in the gains from globalization thus induced by the new technologies. These gains tend to be concentrated among a narrow group of relatively advanced countries. Within some of those countries, moreover, information technology appears to exacerbate existing patterns of technological dualism and income inequalities, although in other countries a number of offsetting influences can also be discerned.