The Political Economy of Informational Development: A Normative Appraisal

Abstract

The rapid advances in information and communications technologies (ICTs) during the past three decades, acting in tandem with the globalisation of trade and investment, have brought about unprecedented changes in the global economy. The discovery of ‘knowledge’1 as the most important ingredient of all modern economies, surpassing land, labour and capital, has profoundly affected the modes of global economic production as well as consumption. Unleashing an array of new products and services for which usability was mostly invented, and reviving the productivity potential inherent in several advanced sectors of the economy by the deployment and diffusion of ICTs, represents the key factor behind this transformation. In advanced countries where ICTs have become part of the economic infrastructure, firms and business organisations, regardless of their size or spatial-temporal location, have experienced steep decline in transportation, communication, search and distribution costs (Guha, 2003). That is, the development and diffusion of ICTs have become a source of comparative advantage of nations (James, 2001). The assumption, until now, that the standard Heckscher-Ohlin model of international trade where comparative advantages in factor and resource endowments held sway has been replaced by the comparative advantage driven by international differences in production functions due to innovation and rapid technological change (Krugman, 1995). The advances in ICTs and related technologies have given rise to a new form of comparative advantage and international division of labour in the global economy. These economic changes may be collectively identified as ‘informational development’ because of the centrality of knowledge as codified information through the mediation of ICTs. Informational development is a complex and uneven process of economic change due to the dialectical relationship between the global–local forces and factors that underpin its shaping. It has spawned a host of normative and equity questions.