Pakistan Institute of Development Economics



Globalisation, Information Technology, and Economic Development

Author: Seema Farhat

The decrease in coordination and transaction costs on account of information technology creates more opportunities for firms to make production “footloose”; it allows firms to base different parts of their business in different countries and connect them by real time information networks. The rapid growth in information services is thus facilitating the integrated international production of goods and services. This paper discusses the linkages between information technology and economic globalisation, and examines the reality of developing countries in relation to the perceived benefits of information technology and globalisation to these countries. Moreover the issues involved in furthering the information technology effort in Pakistan are also discussed in the paper. While the usefulness of additional resources to further the establishment of an information technology base in developing countries cannot be denied, the paper argues that substantial headway can also be made with the existing resources given a more considered approach to the problem. Basic to a higher level of information technology involvement and interaction in the economy is that policy-makers at the government and organisational levels develop an understanding of the impact of technology in their objective of improved economic welfare. The paper therefore discusses the set of policies, short-term and long-term, needed to help draw the country into the integrated international production system reflective of the current trends of economic globalisation.

Seema Farhat