Someshwar Rao
Ron Hirshhorn
Economic consultant
Information and communications technologies (ICTs) have been a central force underlying the profound changes that are underway in the global economy. This paper explores the links between the development of ICTs, globalization and the emergence of know ledge-based economy, and examines the relevance and importance of these relationships for Canada. It has three objectives: (i) to understand the general processes through which the development of ICTs promotes global integration; (ii) to review eveidence that sheds light on Canada's participation in these processes; and (iii) to assess some of the more important aspects of Canada's experience with ICT-related globalization.
We find that the development of ICTs has been central to a process of globalization involving: (i) the growth of foreign direct investment (FDI) and the increasing internationalization of business; (ii) the growth of global trade including esepcially t rade in ICT products; and (iii) the increased use of ICTs by households and businesses to connect with residents of other countries and access information produced abroad. Countries have participated to varying degrees in these developments. Those economi es that have progressed in their evolution as information societies should be well positioned for growth in the new global economic order.
Canada has been a significant participant in each of the main processes through which the development of ICTs promotes globalization. In particular, Canada is: (i) a major host and an increasingly important home of FDI, (ii) a country with a significan t and rapidly growing ICT sector; and (iii) a country that ranks relatively high in terms of its use of ICTs and its overall connectedness.
Some, but not all, of the implications of these developments are considered. Canada's experience with those aspects of ICT-related globalization that are examined in the paper has largely been positive: (i) the evidence suggests Canada has benefited fr om growing inward and outward stocks of FDI. (ii) While this country has a deficit in ICT trade, the development of an internationally competitive ICT sector has led to increased employment, significant R&D spillovers, and a well-developed information infrastructure. (iii) While there are disparities in the adoption of ICTs and firms have had difficulty effectively integrating ICTs into their production system, the evidence suggests ICTs have increased performance without leading to the employment los ses some feared.
