In recent decades, computer and communications technology has undergone a revolution and all indications are that technological advances and the use of information technology will continue at a sustained pace. The dramatic increase in the power and use of new information technologies has been accompanied by lower communications costs resulting from both technological improvements and increased competition. According to Moore’s Law, microchip processing power doubles every 18 months. These advances offer many important opportunities but also pose major challenges. Today, information technology innovations are having a significant impact in many areas of society and policy makers are working on issues such as economic productivity, intellectual property rights, privacy protection , affordability and access to information. The choices made now will have long-term consequences and special attention must be given to their social and economic impacts.
One of the most important results of advances in information technology is probably e-commerce on the Internet, a new way of conducting business. Although only a few years old, it can radically alter economic activities and the social environment. Already, it covers sectors as large as communications, finance and retail and could extend to areas such as education and health services. This involves the seamless application of information and communication technologies along the entire value chain of an electronically executed business.
Impact of information technology and electronic commerce on business models, trade, market structure, workplace, labor market, education, privacy and society as a whole.
1. Business Models, Trade and Market Structure
One of the important ways in which information technology affects work is to reduce the importance of distance. In many sectors, the geographical distribution of work is changing dramatically. For example, some software companies have discovered that they can overcome the small local market of software engineers by sending projects to India or other countries where wages are much lower. In addition, such arrangements can take advantage of time differences so that critical projects can be dealt with almost continuously. Companies can outsource their manufacturing operations to other countries and rely on telecommunications to keep marketing, research and development and distribution teams in close contact with manufacturing groups. Thus, technology can allow for a finer division of labor across countries, which in turn affects the relative demand for different skills in each country. Technology allows decoupling different types of work and employment. Businesses have greater freedom to locate their economic activities, which creates greater competition among regions in the infrastructure, labor, capital and other resource markets. This also opens the door to regulatory arbitrage: companies can increasingly choose the tax authority and other regulations to apply.
Computers and communication technologies also favor forms of production and distribution closer to the market. An IT and communications technology infrastructure providing low-cost, 24-hour access to almost any type of price and product information desired by buyers will reduce information barriers to effective market operation. This infrastructure could also provide the means to conduct real-time transactions and redundant intermediaries such as sales clerks, securities brokers and travel agents, whose function is to provide an essential link of information between buyers and sellers. sellers. The removal of intermediaries would reduce the costs of the value chain of production and distribution. Information technology has facilitated the evolution of the improved mail-order market, whereby goods can be ordered quickly using telephones or computer networks and then routed through suppliers through transportation companies. computer and communication technologies to control their operations.
