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A Dynamic Flexible Partial-Adjustment Model of International Diffusion of the Internet

The paper introduces a dynamic, flexible partial-adjustment model and uses it to analyze the diffusion of Internet connectivity. It specifies and estimates desired levels of Internet diffusion and the speed at which countries achieve the target levels. The target levels and speed of adjustment are both country and time specific. Factors affecting Internet diffusion across countries are identified, and, using nonlinear least squares, the Gompertz growth model is generalized and estimated using data on Internet users for 59 countries observed over the years 1995 to 2002. The empirical results show that infrastructure variables such as personal computer ownership and telephone service increase the equilibrium level of internet diffusion. The speed of adjustment toward a target level decreases over time. Regarding model performance, the generalized dynamic Gompertz model that accounts for unobserved country heterogeneity effects outperforms other, simpler and static model specifications.

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Paper provided by The Ratio Institute in its series Ratio Working Papers with number 99.

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Length: 28 pages
Date of creation: 19 May 2006
Date of revision:
Handle: RePEc:hhs:ratioi:0099
Contact details of provider: Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
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  1. Meade, Nigel & Islam, Towhidul, 1995. "Forecasting with growth curves: An empirical comparison," International Journal of Forecasting, Elsevier, vol. 11(2), pages 199-215, June.
  2. Henrekson, Magnus & Edquist, Harald, 2006. "Technological Breakthroughs and Productivity Growth," Working Paper Series 665, Research Institute of Industrial Economics.
  3. 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.
  4. World Bank, 2004. "World Development Indicators 2004," World Bank Publications, The World Bank, number 13890.
  5. 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).
  6. Hubert Gatignon & Jehoshua Eliashberg & Thomas S. Robertson, 1989. "Modeling Multinational Diffusion Patterns: An Efficient Methodology," Marketing Science, INFORMS, vol. 8(3), pages 231-247.
  7. Heshmati, Almas, 2001. "The Dynamics of Capital Structure: Evidence from Swedish Micro and Small Firms," SSE/EFI Working Paper Series in Economics and Finance 0440, Stockholm School of Economics.
  8. Dixon, Robert J, 1980. "Hybrid Corn Revisited," Econometrica, Econometric Society, vol. 48(6), pages 1451-61, September.
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