Digital opportunities and the missing link for developing countries

The spread of digital information and communication technologies is enablin g firms to implement electronic commerce. Many expect that the implementati on of new means of trading internationally, especially using the Internet t o support electronic commerce, will facilitate the entry of firms in develo ping countries into international markets. This paper assesses this claim. The analysis shows that the capacity to gain from the availability of the n ew technologies involves more than a reduction of the technological divide between (and within) countries. The institutional foundations for building capabilities that enable firms to absorb the new technological systems must also be in place. It is imperative that measures to develop electronic com merce and to devise broader technological leap-frogging strategies are embe dded within the framework of appropriate institutions and development goals . Failure to do so is likely to produce enclaves of development that will p ersist.