In a market-based economy, prices transmit all of the information that participants in the economy require to make effective decisions. Producers need to know the prices of inputs they must buy and the prices of the outputs they wish to sell in order to decide what and how to produce. Consumers need to know the prices of the goods and services they might buy, and the going rate for their labor skills and other services they wish to sell, so that they can make appropriate decisions about household consumption and labor force participation. On both the production and consumption sides, market prices act as coordinating signals.

Thus, in a well-functioning economy, when there aren’t enough eggs to meet demand (in a given region), the price of eggs increases, and farmers, seeing opportunities for profit, breed more hens to produce more eggs. People want more eggs and, like magic, more eggs appear. Consumers and producers react to the evolution of prices through multiple iterations of this sequence. Whether Wall Street or West Africa, information makes markets work.

How challenging is the task of providing the information that enables markets to work? Little information would be required if prices stayed relatively constant from year to year. Farmers would know what to plant, laborers would know where to work, consumers would know what to pay for goods and farmers for inputs, just by relying on prices from the previous period. However, even in relatively underdeveloped economies, prices move considerably in response to such forces as weather, changes in taste and technology, and variation in supply and demand from outside the region.

In the developed world, markets perform well because the prices of goods are known or can be found with minimal effort. However, in developing nations, especially in rural areas, such signals flow sluggishly, if at all. As a result, farmers often produce the wrong mixture of crops, often using inefficient technologies, and consumers do not receive goods even though they are willing to pay the market price. The result is inefficiency.

Telephones offer a very basic means to communicate prices. According to one study (Bayes et al. 1999), close to half of all telephone calls involved economic purposes such as discussing market prices of commodities, employment opportunities, land transactions, remittances, and other business items. Research confirms that price dispersion will be diminished by the presence of communications infrastructure. Greater information flows reduce the variation in prices; as markets become more integrated, trade pushes toward price equalization.

More advanced technologies, such as Internet-enabled kiosks, could provide even greater benefits. For markets, a single mouse click could instantaneously and simultaneously reveal market prices in numerous locations, removing the need for contacting each directly, as with a telephone. Further, technologies such as Internet kiosks could provide numerous additional benefits.

The phone is where it all starts; the Internet is the end of all limits.

Internet gave birth to a new economic revolution called E-commerce. Is the world prepared for this new revolution. Read further..

Argentina

Argentina ranks first among Latin American nations in Readiness for the Networked World, and thirty-second overall.

Argentina is one of the dot-com leaders of Latin America, and the number of Argentine Internet start-ups is higher than in most of the region (Ranking in Prevalence of Internet Start-ups: 27). E-commerce is thriving: it is estimated that Argentines spent US$231 million online in 2001

Chile

There are increasing private and public efforts to help small and medium enterprises (SMEs) to adopt e-commerce, but problems such as lack of sophisticated management techniques and customer service culture and financial problems threaten the profitable adoption of Internet-based operations. Despite these challenges, B2B e-commerce totaled US$426 million in 2000, and B2C e-commerce rose to US$35.7 million in the same year (57 percent of which went to local online retailers). While almost all government agencies have websites, few offer sophisticated Internet based operations. The best-known e-government initiative is the online income tax system (http://www.sii.cl/). There are also such initiatives as a Web portal to reduce bureaucratic procedures and government websites oriented to the needs of SMEs and larger businesses (Ranking in Online Government Services: 14).

Costa Rica

In recent years, Costa Rica has become well known for its progressive policies toward high-tech investment. The country ranks fifth in Networked Readiness within Latin America and forty-fifth overall. Costa Rica’s high quality service industry, ICT workforce, and advanced investment policies have attracted Intel and others, which, in turn, has significantly increased and diversified the country’s export revenue.

Columbia

Despite economic problems, Internet users and domains continue to grow rapidly. Internet use has become more common around the country, but most users in 1999 were in Bogotá and Medellín. Medellín’s public utility company subsidizes up to 200,000 PCs and unlimited Internet access for $US30 per month,4 and the city boasts a major public access program (Ranking in Public Access to the Internet: 37).

Brazil

With Latin America’s largest consumer market, Brazil ranks fourth among Latin American nations in Readiness for the Networked World and thirty-eighth overall in this year’s Index. While the Brazilian ICT sector responds well to the needs of the country’s wealthy users, the challenge remains to extend the benefits of ICT to the majority of the population. Over the last decade, Brazil has been an attractive destination for foreign direct investment. Brazil also has a large, developed industrial sector, due in part to the size of its internal market and the sizeable presence of multinational corporations.

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