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Bridging the digital divide: the growth implications of e-commerce for small and developing states

Research output: Working paper

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Abstract

The significant growth of the Information & Communication Technology (ICT) sector has created a widening gap in productivity between the leading industrialised and developing economies. The emergence of a digital divide constitutes a critical constraint on the potential for the future growth of many developing economies. This is because they lack of a critical mass of physical infrastructure to support dynamic e-commerce and capture some of the growth spillovers from these activities. ICT and the expansion of e-commerce is an opportunity for many developing economies to overcome the spatial barriers to international economic interaction that have, in the past, constrained growth because of their economic peripherality and isolation from key regional and global markets. This paper is concerned with potential of ICT to promote economic growth in developing countries. It makes particular reference to the impact of ICT on small states since the empirical literature highlights the critical role of human capital-intensive economic activities in their growth performance. The paper provides a synthesis of the disparate theoretical literatures on the growth implications of ICT and e-commerce with that on the growth of small states in order to derive critical growth policy implications with applications to developing countries generally. The paper also proposes an agenda for further research on this important area of investigation.