Globalization and Information, Communication Technology

Globalization and telecommunication are intertwined in the sense that telecommunications promote globalization and globalization plays a vital role in the growth of telecommunication industry. This paper looks at this symbiotic relationship between the two in terms of a simple theoretical model and empirical study. In a model of simultaneous determination of export, foreign investment and outsourcing this paper introduces the communication cost and gets the result that fall in communication cost promotes more global business. It also shows that change in communication cost can change the pattern of global business by affecting the profit configuration under investment, export and outsourcing. The empirical study shows that although there is a high correlation between globalization rank and ICT rank, it is not essential that high rank in ICT index invariably needs high globalization.