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ICT Use in the Developing World: An Analysis of Differences in Computer and Internet Penetration

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  • Menzie D. Chinn

    () (University of Wisconsin, and NBER)

  • Robert W. Fairlie

    () (University of California, Santa Cruz)

Abstract

Computer and Internet use, especially in developing countries, has expanded rapidly in recent years. Even in light of this expansion in technology adoption rates, penetration rates differ markedly between developed and developing countries and across developing countries. To identify the determinants of cross-country disparities in personal computer and Internet penetration, both currently and over time, we examine panel data for 161 countries over the 1999-2004 period. We explore the role of a comprehensive set of economic, demographic, infrastructure, institutional and financial factors in contributing to the global digital divide. We find evidence indicating that income, human capital, the youth dependency ratio, telephone density, legal quality and banking sector development are associated with technology penetration rates. Overall, the factors associated with computer and Internet penetration do not differ substantially between developed and developing countries. Estimates from Blinder-Oaxaca decompositions reveal that the main factors responsible for low rates of technology penetration rates in developing countries are disparities in income, telephone density, legal quality and human capital. In terms of dynamics, our results indicate fairly rapid reversion to long run equilibrium for Internet use, and somewhat slower reversion for computer use, particularly in developed economies. Financial development, either measured as bank lending or the value of stocks traded, is also important to the growth rate of Internet use.

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Bibliographic Info

Paper provided by NET Institute in its series Working Papers with number 06-03.

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Length: 40 pages
Date of creation: Sep 2006
Date of revision: Sep 2006
Handle: RePEc:net:wpaper:0603

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  1. Quibria, M. G. & Ahmed, Shamsun N. & Tschang, Ted & Reyes-Macasaquit, Mari-Len, 2003. "Digital divide: determinants and policies with special reference to Asia," Journal of Asian Economics, Elsevier, vol. 13(6), pages 811-825, January.
  2. Chinn,M.D. & Fairlie,R.W., 2004. "The determinants of the global digital divide : a cross-country analysis of computer and internet penetration," Working papers 10, Wisconsin Madison - Social Systems.
  3. Chinn, Menzie David & Ito, Hiro, 2005. "What Matters for Financial Development? Capital Controls, Institutions, and Interactions," Santa Cruz Department of Economics, Working Paper Series qt5pv1j341, Department of Economics, UC Santa Cruz.
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Cited by:
  1. Corrado Benassi & Marcella Scrimitore, 2013. "Income Distribution in Network Markets," Working Paper Series 13_13, The Rimini Centre for Economic Analysis.
  2. Yusuf, Shahid & Nabeshima, Kaoru & Wei Ha, 2007. "What makes cities healthy ?," Policy Research Working Paper Series 4107, The World Bank.

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