Digital Development: Challenges and Prospects

In the fast developing digital technological revolution even the newly industrialized economies (the NIEs) have found it hard to catch up and maintain the pace required for not falling behind. The so-called developing economies are clearly at a great disadvantage in such a fast paced technological race. Thus there is a digital divide that is growing and through a cumulative causation the gap will widen further unless coordinated action is taken. This paper discusses some of the most important economic issues conceptually and offers some modest policy advice. The basic problem of adoption of a new technology system such as the ICT( information and communications technologies) is explored via the Schumpeterian concept of creative destruction in a nonlinear, path-dependent world. By investing strategically in physical, intellectual and other forms of human capital economies may be able to forge a path not only in the ICT sectors, but also create innovation systems of their own. Under the emerging globally competitive market environment this will be the best way to compete dynamically. However, creating comparative advantage in this way requires capabilities that many developing countries lack at the moment. Creative policy interventions with a mix of market promotion, good governance, relative openness, and promotion of sustainable development in an equitable manner are necessary if the developing economies are not to be left far behind.