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

40 Pages Posted: 12 Oct 2006

See all articles by Menzie David Chinn

Menzie David Chinn

University of Wisconsin, Madison - Robert M. La Follette School of Public Affairs and Department of Economics; National Bureau of Economic Research (NBER)

Robert W. Fairlie

University of California, Santa Cruz - Department of Economics

Multiple version iconThere are 4 versions of this paper

Date Written: September 2006

Abstract

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.

JEL Classification: O30, L96

Suggested Citation

Chinn, Menzie David and Fairlie, Robert W., ICT Use in the Developing World: An Analysis of Differences in Computer and Internet Penetration (September 2006). NET Institute Working Paper No. 06-03. Available at SSRN: https://ssrn.com/abstract=936474 or http://dx.doi.org/10.2139/ssrn.936474

Menzie David Chinn (Contact Author)

University of Wisconsin, Madison - Robert M. La Follette School of Public Affairs and Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Robert W. Fairlie

University of California, Santa Cruz - Department of Economics ( email )

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Santa Cruz, CA 95064
United States
831-459-3332 (Phone)

HOME PAGE: http://econ.ucsc.edu/~fairlie/

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