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designers, and the demand for webmasters or web programmers

has risen. Economic and social gaps widen if economies do not

envisage mechanisms to help the labour force adapt to techno-

logical change.

The international context in which this new set of technologies

has been growing also reinforces its pervasiveness. Several interre-

lated trends in the world economy over the past decades have had

an impact on, and have been influenced by, the diffusion of ICT. The

most notable of these trends are the globalization of economic activ-

ity, tertiarization (increasing weight of services in world output) and

the increasing importance of knowledge in global production

processes. Indeed, services such as back office processes can now

be traded across ever widening geographical distances, increasing

employment opportunities in some places and reducing them in

others. This was simply impossible before the advent of ICT. Together,

the technologies not only enabled the rapid dissemination of ICT,

but have also contributed, via their effect on demand, to further

advances like the union between telecommunication and computer

technology, the dramatic decline in the price of information process-

ing, and the rapid growth in international electronic networking.

The recent report of the World Commission on the Social

Dimension of Globalization, entitled

A Fair Globalization: Creating

Opportunities for All

,

4

also identified ICT as one of the main drivers

of globalization through its impact on facilitating trade, invest-

ment and capital flows across national borders. The increasingly

footloose nature of international production is also to a large

extent enabled by ICT.

ICT enables globalization, but also transforms it. The digital

revolution made possible by the rapid advance of these technolo-

gies is affecting every aspect of the production process, thereby

transforming the economic structure and social dynamics in every

industry. Tasks can be automated to improve product quality and

consistency. The fall in processor prices and some standardization

in enterprise resource planning, computer aided design, inven-

tory and other process management strategies are simplifying the

integration of production throughout the world. To fully reap the

benefits of the adoption of ICT, major reorganizing and re-skilling

initiatives must be promoted. ICT boosts efficiency and produc-

tivity as long as it is accompanied by the right managerial

environment, the right process re-engineering, the right skills for

effective use and the right social learning processes. This must be

adopted in a climate where cooperation is possible – and this

requires effective social dialogue, perspectives for those who might

lose their employment because of structural change, and other

measures to promote mobility in labour markets.

ICT sets in motion a process of ‘creative destruction’. It make

jobs in certain production industries and locations redundant,

but creates more productive ones in others. There are serious

social adjustment costs involved in changing the fabric of job

distribution due to such restructuring. A strategy for effective ICT

implementation has to involve accommodating institutional and

industrial structures – as well as sound industrial relations – in

order to have a positive impact on competitiveness, growth and

decent employment. Institutional preparedness, especially of the

labour market, is crucial. Organization and voice, social dialogue,

fundamental principles and rights at work, as well as social protec-

tion, such as active labour market policies, are prime components

of such preparedness.

Institutions

As in products markets, the Internet is changing the working of

labour markets. It is doing so for exactly the same reasons that

markets for goods are changing. Search and transaction costs are

falling due to ICT. There are, however, additional factors that

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Internet café that also sells shoes, photocopies and long-distance calls, Bangalore

Photo: Crozet M