The global impact of information technology

The paper explores the impact of information technology on the worldwide distribution of income, employment and growth. A review of the empirical literature is used to quantify the impact of information technology on productivity in different sectors and groups of countries. An economic model of the global economy is then used to calculate the possible impact of information technology on international and domestic distribution and employment. A number of alternative possibilities are considered: (i) industrial countries are the most successful in introducing the new technology, (ii) the technology turns out to be capital-saving, rather than labor-displacing, (iii) the rate of diffusion to developing countries increases, (iv) the small-scale and decentralizing potential of information technology is exploited. The calculations suggest that indirect effects arising from international and intersectoral competition are at least as important as direct effects, and that the distribution of gains from information technology depends as much upon what technology is introduced as on where it is introduced.