The Internet and Economic Growth in Less-developed Countries: A Case of Managing Expectations? was published in Oxford Development Studies 31, 1, 2003. A discussion of the theory of technology and economic growth suggests potentially negative implications for the impact of the Internet on developing countries. Technology in general is undoubtedly central to the growth process, but economists define technology in very broad terms. The impact of any particular, invented, technology is likely to be small. This theoretical perspective is supported by the empirical evidence on the limited impact of past "information revolutions" on less-developed countries (LDCs) and the present impact of the Internet on advanced economies. Furthermore, LDCs appear ill-prepared to benefit from the opportunities that the Internet does present--they lack the physical and human capital, along with the institutions required, to exploit the e-economy. Finally, even optimistic forecasts of the Internet's global economic impact are small in scale compared with the challenge of development. This has significant implications for development policy.
The paper was previosuly issued as a WIDER discussion paper, it will be published as a chapter in A. D'Costa (ed) The New Economy in Development (London: Palgrave).
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