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

  • Chinn, Menzie D.

    ()

    (University of Wisconsin-Madison)

  • Fairlie, Robert W.

    ()

    (University of California, Santa Cruz)

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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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2206.

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Length: 43 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2206
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  1. Sampsa Kiiski & Matti Pohjola, 2010. "Cross-country Diffusion of the Internet," Working Papers id:3204, eSocialSciences.
  2. Menzie D. Chinn & Robert W. Fairlie, 2004. "The Determinants of the Global Digital Divide A Cross-Country Analysis of Computer and Internet Penetration," Working Papers 881, Economic Growth Center, Yale University.
  3. Singh, Vik, 2004. "Factors Associated with Household Internet Use in Canada, 1998-2000," Agriculture and Rural Working Paper Series 28034, Statistics Canada.
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  6. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
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  8. 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.
  9. World Bank, 2003. "World Development Indicators 2003," World Bank Publications, The World Bank, number 13920, October.
  10. Estache, Antonio & Manacorda, Marco & Valletti, Tommaso M., 2002. "Telecommunication reforms, access regulation, and Internet adoption in Latin America," Policy Research Working Paper Series 2802, The World Bank.
  11. Sinai, Todd & Waldfogel, Joel, 2004. "Geography and the Internet: is the Internet a substitute or a complement for cities?," Journal of Urban Economics, Elsevier, vol. 56(1), pages 1-24, July.
  12. 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.
  13. 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.
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  19. Dasgupta, Susmita & Lall, Somik & Wheeler, David, 2001. "Policy reform, economic growth, and the digital divide - an econometric analysis," Policy Research Working Paper Series 2567, The World Bank.
  20. 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, March.
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  24. Hiroshi Ono & Madeline Zavodny, 2004. "Gender differences in information technology usage: a U.S.-Japan comparison," Working Paper 2004-2, Federal Reserve Bank of Atlanta.
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