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The view that the Internet and the information and communication technology (ICT) revolution would deliver a frictionless economy without recessions is, at least for the time being, dead. This book takes stock of the ICT revolution, going well below the surface to ask and answer a few key questions: did the ICT revolution contribute to the divergence in the growth record? And if this is the case, how and why were some countries better equipped to exploit the potential of ICT? The naive approach to the Internet views e-commerce as a means to achieve a perfect world of competition. By making information cheap and readily available, it should allow the affluent consumer to raise competitive pressure on firms, help the firms themselves to put competitive pressure on their own suppliers and so on. For the poor countries, the story goes, the Internet should lower the barriers to entry to rich countries' markets and foster their inclusion in world markets. However, the theory of economic geography does not support the idea that geography becomes irrelevant as the cost of distance is reduced.
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