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Digital Divide among Selected Industrialized States in India: Myth or Reality? Digital Divide Export

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Information and Communication Technology (ICT) can be viewed as a general purpose technology causing radical shifts in the production functions of a large array of goods, often with a significant labor saving bias. When a new technology is biased in favor of the more abundant (and hence less expensive) factor of production, the effects in terms of productivity growth of the abundant factor will be stronger. Naturally, therefore, the adoption of labor saving ICT in a labor abundant developing country will result in quite a different productivity growth trajectory vis-à-vis its developed counterpart. Such asymmetric effects are reinforced and amplified by the changes in relative prices. Indeed, the introduction of ICT world-wide, with its absolute superiority and yet a distinct labor saving bias, can engender new asymmetries among regions not only with respect to the pace of diffusion but also in terms of the capability of each region to extract appropriate economic benefits from ICT adoption. 1 In the early stages of introduction of new ICT, higher levels of skills are crucially important because of the risks and complexities of the learning process. Eventually, however, the adoption of more advanced ICT becomes easier and the skill requirements decline along with the premium on skills. Therefore, early adopters of ICT will be more capable of adopting advanced technologies faster and move on rapidly to higher technological trajectories compared to the late adopters. This results in a clear divide between the ICT rich and ICT poor, with


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