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E-Commerce for Development: Prospects and Policy Issues




In this paper we analyse the potential contribution of the Internet and its commercial application to the development process in poor countries. In historical perspective, the Internet has diffused at a far faster rate than earlier generations of communications technology: from 1990 to early 2000, the estimated number of Internet users grew more than tenfold to roughly 300 million, affecting the way in which people communicate with each other, acquire information, learn, do business, and interact culturally. Our particular focus is on the opportunities e-commerce offers to small-scale entrepreneurs in developing countries and the challenges they face in exploiting e-commerce's potential.


There is a risk that a "digital divide" will emerge, reinforcing existing income and wealth inequalities within and between countries. Yet, a major potential benefit of globalisation is the freer movement of technology, including information and communication technology (ICT), across borders.  In principle, ICT can have a levelling effect, giving poor countries and poor people access to markets, information, and other resources that would otherwise have been inaccessible.


The evidence of real benefits is still scattered and anecdotal and the obstacles to affordable access remain formidable, but e-commerce does present real opportunities to small entrepreneurs in developing countries. The need to overcome infrastructural bottlenecks in telecommunications, transport, and logistics must be addressed in parallel with the governance aspects of e-commerce, including consumer protection, security of transactions, privacy of records, and intellectual property. While as far as possible the extension of the telecom and Internet infrastructure in developing countries can be left to private investors, official development assistance (ODA) may be able to leverage private investments. With respect to legal and regulatory issues, capacity building via ODA can assist the participation of developing countries in negotiations and discussions that are shaping global rules and protocols governing e-commerce. Finally, thinking "outside the envelope" is needed with ODA, just as it is with private ventures in this age of e-novation. There may, for example, be scope for initiatives targeted specifically at small e-ntrepreneurs in poor countries, as with support for their individual or collective participation in Web-based online rating schemes or with publicly-sponsored portals for small producers' wares to overcome barriers to trust. Information asymmetries persist in the information age.