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Regulation and internet use in developing countries

  • Wallsten, Scott
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    Policymakers are simultaneously concerned about the consequences of a worsening"digital divide"between rich and poor countries and hopeful that information and computing technologies could increase economic growth in developing countries. But very little research has explored the reasons for the digital divide beyond noting that it is strongly correlated with standard development indicators, and no empirical research has explored the role of regulation. The author uses data from a unique new survey of telecommunications regulators and other sources to measure the effects of regulation in Internet development. He finds regulation strongly correlated with lower Internet penetration and higher Internet access charges. More specifically, controlling for factors such as income, development of the telecommunications infrastructure, ubiquity of personal computers, and time trends, countries that require formal regulatory approval for Internet service providers (ISPs) to begin operations have fewer Internet users and Internet hosts than countries that do not require such approval. Moreover, countries that regulate ISP final-user prices have higher Internet access prices than countries that do not have such regulations. These results suggest that developing countries'own regulatory policies can have large impacts on the digital divide.

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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2979.

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    Date of creation: 31 Mar 2003
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    Handle: RePEc:wbk:wbrwps:2979
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    1. Pohjola, Matti, 2002. "New Economy in Growth and Development," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    2. Clarke, George R.G., 2002. "Does Internet Connectivity Affect Export Performance? Evidence from Transition Economies," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    3. Clarke, George R.G., 2001. "Bridging the digital divide - how enterprise ownership and foreign competition affect Internet access in Eastern Europe and Central Asia," Policy Research Working Paper Series 2629, The World Bank.
    4. Kenny, Charles, 2002. "The Internet and Economic Growth in Least Developed Countries," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    5. Suma S. Athreye, 2005. "The Indian software industry and its evolving service capability," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 393-418, June.
    6. 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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