Digitalization and Foreign Direct Investment: An Indian Case Study

The United Nations Millennium Summit in 2000 adopted eight development goals (MDGs) to help the people of the developing world overcome the problems of poverty, unemployment and illiteracy. The strategies to achieve the set goals, however, although not decided, recognized the potential contributions of information and communication technology (ICT) and emphasized the need to harness them to the advantage of the poor. In 1984, the Maitland Commission, in its report, The Missing Link, referred to the lack of telephone infrastructure in developing countries as a barrier to economic growth. The information technology (IT) revolution in the 1990s led to a renewed debate on the role of ICT in development. One school of thought propounded the unprecedented capacity of ICT to help developing countries ‘leapfrog’ the earlier stages of development but also warned that the inability of these countries to get connected would further widen the gap between the developed and developing countries (UNDP 2001). The other view asserted that the benefits of having and using a computer were secondary to a reasonable amount of health and a minimum level of education (Bernant 2001). In fact, the view was that the latter combined with the lack of required infrastructure hampered the tapping of ICT potentials to their favour in developing countries.