Information Technology and Producer Services - A Source of Economic Development: The South African Case

This paper discusses one aspect of the somewhat discredited "new economy" namely the impact of information and communication technologies on the growth in volume and diversity of producer services. It provides an analysis of data on developments within transport, communications, finance and business services in South Africa and discusses the background of recent theoretical work regarding the impact of these developments on the economy as a whole. It is argued that thus far, very rapid development in the producer services sectors has had little impact on the rest of the economy. It is further argued that outsourcing of producer services combined with access to a broad variety of such services are important factors for reaping the full benefits of the observed developments in the producer services sectors. The paper also provides a discussion of the conditions under which extensive outsourcing will take place.