A Fund for Building Capacity
and Promoting the Industry
In industrial and knowledge-based economies, the ICT industry has been playing a leading role in boosting productivity and improving the ability of other industries to compete globally. The ICT industry and associated services also constitute one of the largest, fastest-growing, and most globalized sectors in the world economy. So, not surprisingly, where the ICT industry is concerned, industrial policy is alive and well in most OECD and East Asian countries (Rodrik 2004a).
As chapter 4 concludes, Sri Lanka has the potential to develop a competitive advantage in attractive niches of the ICT industry. That does not argue for protecting this industry nor for providing excessive support. But the market failures that abound in the ICT industry—as a result of externalities, scale economies, and information asymmetries—can make a strong case for promoting and selectively supporting the industry.
The private sector should play a key role as both an early adopter and a significant beneficiary of ICT. Yet businesses, especially small and mediumsize enterprises, face barriers to adopting ICTs. Moreover, as a fast-changing, general-purpose technology, ICT demands continual technological learning by user firms of all sizes, a need particularly difficult for smaller firms to meet. These challenges have prompted many OECD countries to develop