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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. World Bank, 2003. "World Development Indicators 2003," World Bank Publications, The World Bank, number 13920.
  2. Menzie D. Chinn & Robert W. Fairlie, 2007. "The determinants of the global digital divide: a cross-country analysis of computer and internet penetration," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 16-44, January.
  3. Kiiski, Sampsa & Pohjola, Matti, 2002. "Cross-country diffusion of the Internet," Information Economics and Policy, Elsevier, vol. 14(2), pages 297-310, June.
  4. Francesco Caselli & Wilbur John Coleman II, 2001. "Cross-Country Technology Diffusion: The Case of Computers," NBER Working Papers 8130, National Bureau of Economic Research, Inc.
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  6. 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.
  7. Hiroshi Ono & Madeline Zavodny, 2004. "Gender differences in information technology usage: a U.S.-Japan comparison," FRB Atlanta Working Paper 2004-2, Federal Reserve Bank of Atlanta.
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  9. 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.
  10. Chinn, Menzie D. & Ito, Hiro, 2006. "What matters for financial development? Capital controls, institutions, and interactions," Journal of Development Economics, Elsevier, vol. 81(1), pages 163-192, October.
  11. 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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  15. 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.
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  17. 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.
  18. Daiji Kawaguchi, 2006. "Are Computers At Home A Form Of Consumption Or An Investment? A Longitudinal Analysis For Japan," The Japanese Economic Review, Japanese Economic Association, vol. 57(1), pages 69-86.
  19. Singh, Vik, 2004. "Factors Associated with Household Internet Use in Canada, 1998-2000," Agriculture and Rural Working Paper Series 28034, Statistics Canada.
  20. 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.
  21. 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.
  22. Oecd, 2001. "Understanding the Digital Divide," OECD Digital Economy Papers 49, OECD Publishing.
  23. 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.
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