In the fast developing digital technological revolution even the newly industrialized economies (the NIEs) have found it hard to catch up and maintain the pace required for not falling behind. The developing economies are clearly at a great disadvantage in such a fast paced technological race. Thus there is a digital divide that is growing and through a cumulative causation the gap will widen further unless coordinated action is taken. This paper discusses some of the most important economic issues conceptually and offers some modest policy advice. The basic problem of adoption of a new technology system such as the ICT( information and communications technologies) is explored via the theory of a positive feedback loop innovation system (POLIS) in a nonlinear, path-dependent world where institutional structure and its evolution matter crucially. By investing strategically in physical, intellectual and other forms of human and organizational capital as well as building new institutions of cooperation the NIEs may be able to forge a path not only in the ICT sectors, but also create innovation systems of their own that can be extended to region-wide systems. Under the emerging globally competitive market environment this will be the best way to compete dynamically. However, creating comparative advantage in this way requires capabilities that many NIES in Asia will need to promote. Creative policy interventions with a mix of market promotion, good governance, relative openness, and promotion of sustainable development in an equitable manner are necessary if the NIEs are not to be left far behind. The theoretical approach developed here also allows to evaluate the state of the economy and society ethically by extending and incorporating Amartya Sen's capabilities approach within the POLIS.