Working Paper: NBER ID: w10686
Authors: Menzie D. Chinn; Robert W. Fairlie
Abstract: To identify the determinants of cross-country disparities in personal computer and Internet penetration, we examine a panel of 161 countries over the 1999-2001 period. Our candidate variables include economic variables (income per capita, years of schooling, illiteracy, trade openness), demographic variables (youth and aged dependency ratios, urbanization rate), infrastructure indicators (telephone density, electricity consumption), telecommunications pricing measures, and regulatory quality. With the exception of trade openness and the telecom pricing measures, these variables enter in as statistically significant in most specifications for computer use. A similar pattern holds true for Internet use, except that telephone density and aged dependency matter less. The global digital divide is mainly but by no means entirely accounted for by income differentials. For computers, telephone density and regulatory quality are of second and third importance, while for the Internet, this ordering is reversed. The region-specific explanations for large disparities in computer and Internet penetration are generally very similar. Our results suggest that public investment in human capital, telecommunications infrastructure, and the regulatory infrastructure can mitigate the gap in PC and Internet use.
Keywords: digital divide; computer penetration; internet penetration; human capital; regulatory quality
JEL Codes: O30; L96
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| income per capita (D31) | computer penetration (K24) |
| human capital (measured by years of schooling) (J24) | computer penetration (K24) |
| telephone line density (L96) | computer penetration (K24) |
| regulatory quality (L15) | computer penetration (K24) |
| income per capita (D31) | internet penetration (L96) |
| human capital (measured by years of schooling) (J24) | internet penetration (L96) |
| telephone line density (L96) | internet penetration (L96) |
| regulatory quality (L15) | internet penetration (L96) |