OECD chief warns against creation of digital divide

A leading economist has warned that the digital divide between information-rich countries and their technologically under-developed counterparts is set to widen.

Speaking on the second day of the Organisation for Economic Coordination and Development's (OECD) Forum 2000 in Paris, Ignazio Visco, chief economist at the OECD, predicted the creation of an economic gap as developing countries struggle to participate in the e-economy.

He said: "There are a number of developing countries that unfortunately do not participate in the world economy effectively in trade and the transfer of technology. They do not have the resources to provide internet connection to citizens or promote IT skills or lower the cost of access to the web."

Visco added: "It is evident that these countries can close the gap by an increased involvement in the new high-tech economy. There is a risk of the digital divide but there are also other divides. These include divides in communications, transport and phone distribution."

Martin Baily, chairman of the council of economic advisers for the OECD, claimed that the internet is not the only factor driving the development of the new economy.

He said: "To a great extent the old economy is driven by the new economy. For example, London has never been a very big software centre but it has a lot of strengths - particularly software associated with the city of London."

He added: "The internet is still too young to have a major impact. For most industries, it promises that their revenue grows as it makes it more likely they will have productivity growth. But I would not say so far that the new economy can be attributed to the internet."

Clive Longbottom, analyst at Strategy Partners, claimed the OECD had good reason to worry, as the internet causes shifts in revenue cycles.

He said: "The OECD needs to be worried as the internet can destablise the whole economy."