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Information Technology Policy and the Digital Divide

Lessons for Developing Countries

Edited by Mitsuhiro Kagami, Masatsugu Tsuji and Emanuele Giovannetti

The proliferation of new information technologies throughout the world has raised some important questions for policymakers as to how developing countries can benefit from their diffusion. This important volume compares the advantages and disadvantages of the IT revolution through detailed studies of a variety of developed and developing nations and regions: Argentina, Estonia, the EU, India, Japan, Korea, Mexico, South Africa, Thailand and the USA.
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Chapter 9: Internet and Telecommunications Outlook in Latin America

Andrew B. Whinston and Soon-Yong Choi


Andrew B. Whinston and Soon-Yong Choi 1. INTRODUCTION The telecommunications industry in Latin America entered a new age during the 1990s as most countries opened up their telecommunications markets, privatized government-owned monopolies, and liberalized regulatory policies relying more on market forces than decrees. Such reforms coincided with the introduction of the Internet and the World Wide Web, offering them an opportunity to participate in the new information age as a full-fledged member. Still, Latin America as a region lags far behind North America, Europe and Asia/Pacific in terms of Internet penetration. User estimates in 2001 showed that Latin American users accounted for only 5 per cent of the world total (25 million out of 513 million users) (Figure 9.1). Nevertheless, by most accounts, Latin American Internet users are projected to grow steadily at a high rate (Figure 9.2). In this chapter, we focus on the current status of the telecommunications market, Internet access and e-business in Latin America, and investigate pricing, telecommunications policies and technological factors that affect current and future growth rates in Internet penetration. Throughout our discussion, economic situations (and unequal income distribution) appear as an underlying reason that severely limits future potential in many countries. Nevertheless, policy initiatives and market reforms are beginning to take effect in a few cases. The outlook for future telecommunications market will be summarized and, in the next chapter, we focus on two case studies, of Mexico and Argentina. 2. CURRENT STATUS OF INTERNET DEVELOPMENT By far, the best developed country in...

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