Question

Explain how ICT played a major role in decreasing the impact of
geographic distribution​

Answer 1

Answer:

This study examines the impact of Internet and e-commerce adoption on bilateral trade flows using a panel of 21 developing- and least-developed countries and 30 OECD countries. Given the commitment of East African Community (EAC) to become the frontrunner in export-led economy across the African continent, special attention is dedicated to analyse the role of ICT and e-commerce on EAC’s export performance. The empirical results indicate that better access to the modern ICT and adoption of e-commerce applications stimulate bilateral trade flows at various levels. The study notes that the efficient use of ICT equipped with highspeed internet and secured servers is a crucial milestone for unlocking the e-trade potentials for developing- and least-developed counties.

Introduction

It is widely acknowledged that trade is a crucial factor for economic growth. For developing and least-developed countries, earnings from exporting their goods and services to the Global North are considered as a vital source of foreign exchange that ease the pressure on the balance of payments and create employment opportunities (Thangavelu and Rajaguru 2004).

While technology transfer, international competition and economy of scales effects are seemingly related to exporting, several studies note potential benefits from importing as well. In particularly, studies indicate that imports of capital and intermediate goods from the Global North have a direct positive effect on firms’ productivity in the Global South through embodied high-level technology and advanced production methods (Grossman and Helpman 1991; McKinnon 1964; Thangavelu and Rajaguru 2004). Therefore, through the channel of bilateral trade between the South and North, firms in the developing and least-developed countries may learn to reproduce products or adopt high-level technology from their trading partners in the Global North, either for sale domestically or for the world market.

In an increasingly globalised environment, trade landscape has profoundly changed and reshaped by the Information and Communications Technology (ICT) based innovations that gives firms access to larger markets, allowing them to expand their customer base, increase their scale and raise profits. It also forces firms to confront world-class competitors, exposes them to new ideas and expertise, and encourages them to stay abreast of market trends (April and Cradock 2000; Clarke and Wallsten 2006; Freund and Weinhold 2002, 2004).