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The purpose of this paper is to argue that in spite of the widely optimistic held view on the effect of information and communication technologies (ICTs) in promoting the “knowledge society” in Europe and economic development elsewhere, evidence suggests that ICT's could be strengthening labour duality world wide.

The paper addresses these issues by presenting a brief assessment of the “Washington Consensus” and the emergence of ICTs in terms of trade, growth and inequality in different regions of our planet. The paper also describes the effects of globalisation and ICTs on European economies. Finally, the paper presents the key finding and raises some policy implications to exploit ICT potentialities to ensure welfare systems in advanced economies and development in emerging countries.

The lack of sufficient institutional mechanism of distribution in developing economies is not only making it more difficult for economic growth to translate into development but it is also favouring relocations of production, pressures to deregulate employment, control salaries and social expenditure in Europe. This feeds complex processes of social segmentation world wide. To meet this challenge Europe has no choice but to opt for the development of avant‐garde sectors. However, measures linked to the development of the knowledge society may not be sufficient to maintain our welfare states in the current context of globalisation. Europe must play a more internationally active role in the design of another model of globalisation that would encompass social policies at a global scale as one of its pillars.

There are very few studies of ICTs' role in the relationship between openness‐growth‐development‐inequality. What are ICTs responsible for? What are ICTs' effects on development and welfare state sustainability?