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Effect of Enterprise Ownership and Foreign Competition on Internet Diffusion in the Transition Economies


  • George R G Clarke

    () (Development Research Group, MSN MC3-307, The World Bank, 1818 H Street, NW, Washington, DC 20433, USA.)


Using enterprise-level data from 21 low and middle income economies in Eastern Europe and Central Asia, this paper looks at factors that influence whether enterprises in these countries are connected to the Internet. The paper finds that foreign-owned enterprises are more likely to have Internet access than domestically owned enterprises and that employee-owned enterprises are less likely to have access than other domestically owned enterprises. Further, there is evidence of positive externalities from foreign investment, with foreign direct investment increasing Internet access among domestic enterprises other than the recipient firm. In particular, the paper finds evidence of ‘spillover effects’, where enterprises directly competing with foreign-owned enterprises and imports are more likely to have Internet connections than similar enterprises that compete mainly with domestically owned enterprises. The results are robust to the inclusion of country fixed effects to control for unobserved country-level characteristics that might affect Internet adoption. Comparative Economic Studies (2004) 46, 341–370. doi:10.1057/palgrave.ces.8100038

Suggested Citation

  • George R G Clarke, 2004. "Effect of Enterprise Ownership and Foreign Competition on Internet Diffusion in the Transition Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 46(2), pages 341-370, June.
  • Handle: RePEc:pal:compes:v:46:y:2004:i:2:p:341-370

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    Cited by:

    1. Clarke, George R.G., 2008. "Has the internet increased exports for firms from low and middle-income countries," Information Economics and Policy, Elsevier, vol. 20(1), pages 16-37, March.
    2. Gradzewicz, Michał & Hagemejer, Jan & Zbigniew, Żółkiewski, 2007. "Globalization and the Polish economy: stylized facts and simulations using a Computable General Equilibrium Model," MPRA Paper 28228, University Library of Munich, Germany.
    3. Paulo G. Correa & Ana M. Fernandes & Chris J. Uregian, 2010. "Technology Adoption and the Investment Climate: Firm-Level Evidence for Eastern Europe and Central Asia," World Bank Economic Review, World Bank Group, vol. 24(1), pages 121-147, January.

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