Microelectronics, Information Technology and its Effects on Developing Countries

ABSTRACT The article argues that current technological change in microelectronics (information technology) differs substantially from past innovations. This assessment is based on the facts that the nature of information technology relates to the extension and replacement of human intelligence functions, which in turn explain its pervasiveness; the speed of diffusion and transition from invention to innovation; the fact that it is scientifically and technologically based and affecting all sectors and, lastly, that it requires a world market for its economic exploitation. These changes affect substantially the international division of labour and developing countries. For reasons of clarity, the article divides the effects on developing countries into external, i.e. produced from the outside, and internal, i.e. the effect of the diffusion of the technology within developing countries. The main external effect is considered to be the erosion of the competitiveness of cheap labour because of automation, and the point is illustrated with a brief discussion on textiles, garments and the electronic industry. The development of international networks for the processing of information (transborder data flows) could lead to the concentration of ‘information dense’ sectors in developed countries (R & D, science and consultancy services). In relation to internal effects, the question of employment and income distribution are examined.