Network Economics and the Digital Divide in Rural South Asia

The concept of a ‘global digital divide’ is now common, and many cross-country studies of determinants of differences in computer and Internet penetration have been performed. The main conclusions and policy implications from these studies are relatively blunt - get richer, have more telephones, and regulate telecommunications better. In this paper, we examine an alternative approach to bridging the digital divide, through organizational innovations that provide low cost Internet access in developing countries, within the existing conditions of income levels, telecommunications infrastructure and regulatory environment. We use survey data from 500 individuals in three South Asian countries, Bangladesh, Nepal and Sri Lanka, to examine factors influencing patterns of computer and Internet use. These individuals were in situations where computer and Internet access has been provided by a developmental agency (government or non-government). We estimate logit and multinomial logit models, using explanatory variables such as income, household size, education, and occupation, as well as infrastructure factors such as quality of electricity supply, and availability of telephones and televisions. Thus we are able to go beyond simple analyses of penetration at the country level, to understand the microeconomics of computer and Internet use in rural South Asia.