The economic performance of the European Union has taken on a new dimension in regard to the emerging "digital economy". Usually, it is argued that the EU lags behind the United States in most aspects of the use and diffusion of information and communication technologies (ICT). This paper argues that there are serious challenges confronting the EU in dealing with the digital economy, especially in respect to education issues, consumer confidence and the avoidance of a "digital divide". On the other hand it is pointed out that there has been tremendous progress in respect to the economic significance of electronic commerce, the development of (self-)regulatory mechanisms and the creation of a modern policy framework.
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