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

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Author Info

  • 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. Chinn, Menzie David & Fairlie, Robert W, 2004. "The Determinants of the Global Digital Divide: A Cross-Country Analysis of Computer and Internet Penetration," Santa Cruz Department of Economics, Working Paper Series qt2r80c4t3, Department of Economics, UC Santa Cruz.
  2. Erik Brynjolfsson & Lorin M. Hitt, 2003. "Computing Productivity: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 793-808, November.
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  7. Beck, T.H.L. & Demirgüç-Kunt, A. & Levine, R., 2000. "A new database on financial development and structure," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125518, Tilburg University.
  8. Hargittai, Eszter, 1999. "Weaving the Western Web: explaining differences in Internet connectivity among OECD countries," Telecommunications Policy, Elsevier, vol. 23(10-11), pages 701-718, November.
  9. W. Edward STEINMUELLER, 2001. "ICTs and the possibilities for leapfrogging by developing countries," International Labour Review, International Labour Organization, vol. 140(2), pages 193-210, 06.
  10. Todd Sinai & Joel Waldfogel, 2003. "Geography and the Internet: Is the Internet a Substitute or a Complement for Cities?," NBER Working Papers 10028, National Bureau of Economic Research, Inc.
  11. Wallsten, Scott, 2005. "Regulation and Internet Use in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 53(2), pages 501-23, January.
  12. Catherine L. Mann & Sue E. Eckert, 2000. "Global Electronic Commerce: A Policy Primer," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 318.
  13. Diego Comin & Bart Hobijn & Emilie Rovito, 2006. "Five Facts You Need to Know About Technology Diffusion," NBER Working Papers 11928, National Bureau of Economic Research, Inc.
  14. 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.
  15. Oyelaran-Oyeyinka, Banji & Lal, Kaushalesh, 2003. "The Internet Diffusion in Sub-Saharan Africa: A cross-country Analysis," UNU-INTECH Discussion Paper Series 5, United Nations University - INTECH.
  16. Chinn, Menzie David & Ito, Hiro, 2005. "What Matters for Financial Development? Capital Controls, Institutions, and Interactions," Santa Cruz Center for International Economics, Working Paper Series qt5pv1j341, Center for International Economics, UC Santa Cruz.
  17. Chong, Alberto & Micco, Alejandro, 2003. "The Internet and the ability to innovate in Latin America," Emerging Markets Review, Elsevier, vol. 4(1), pages 53-72, March.
  18. Kiiski, Sampsa & Pohjola, Matti, 2001. "Cross-country Diffusion of the Internet," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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Cited by:
  1. Yusuf, Shahid & Nabeshima, Kaoru & Wei Ha, 2007. "What makes cities healthy ?," Policy Research Working Paper Series 4107, The World Bank.
  2. Corrado Benassi & Marcella Scrimitore, 2013. "Income Distribution in Network Markets," Working Paper Series 13_13, The Rimini Centre for Economic Analysis.
  3. Grazzi, Matteo & Vergara, Sebastián, 2012. "ICT in developing countries: Are language barriers relevant? Evidence from Paraguay," Information Economics and Policy, Elsevier, vol. 24(2), pages 161-171.

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