Policy Reform, Economic Growth, and the Digital Divide : An Econometric Analysis

Policy Reform, Economic Growth, and the Digital Divide : An Econometric Analysis

Rapid growth of Internet use in high-income economies, has raised the specter of a "digital divide" that will marginalize developing countries, because they can neither afford Internet access, nor use it effectively when it is available....

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Bibliographic Details
Main Authors:	Dasgupta, Susmita, Lall, Somik, Wheeler, David
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCESS TO TELEPHONES CAPITAL CITIES CITIES COMMUNICATION TECHNOLOGIES COMMUNICATION TECHNOLOGY COMPETITION POLICY COMPUTER TRAINING DATA TRANSMISSION DEMOCRACY DIGITAL DIVIDE DSL E-COMMERCE ECONOMIC INCENTIVES EMPLOYMENT FAMILIES HEALTH SERVICES INCOME INFORMATION ECONOMICS INFORMATION TECHNOLOGY INHIBITION INNOVATION INSTRUCTION INTERNET ACCESS INTERNET CONNECTIVITY INTERNET CONTENT INTERNET SERVICES INTERNET USE INTERVENTION ISDN LEARNING LITERACY LOW- INCOME COUNTRIES LOW-INCOME COUNTRIES MEDIA NETWORKS POLICY RESEARCH PRIVATE SECTOR PROGRAMS PUBLIC SECTOR RURAL TELECENTERS RURAL TELECOMMUNICATIONS SERVICE DELIVERY TELECOM SERVICES TELECOMMONS TELECOMMUNICATION TELECOMMUNICATIONS TELECOMMUNICATIONS ACCESS TELECOMMUNICATIONS COMPANY TELECOMMUNICATIONS INFRASTRUCTURE TELECOMMUNICATIONS POLICY TELEPHONE CONNECTIVITY TELEPHONE SERVICE TELEPHONE SERVICES TELEPHONES UNIVERSAL ACCESS WAP WORKERS
Online Access:	http://documents.worldbank.org/curated/en/2001/03/1047445/policy-reform-economic-growth-digital-divide-econometric-analysis http://hdl.handle.net/10986/19692

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Summary:	Rapid growth of Internet use in high-income economies, has raised the specter of a "digital divide" that will marginalize developing countries, because they can neither afford Internet access, nor use it effectively when it is available. Using a new cross-country data set, the authors investigate two proximate determinants of the digital divide: Internet intensity (Internet subscriptions per telephones mainline), and access to telecom services. Surprisingly, they find no gap in Internet intensity. When differences in urbanization, and competition policy are controlled for, low-income countries have intensities as high as those of industrial countries. While income does not seem to matter in this context, competition policy matters a great deal. Low-income countries with high World Bank ratings for competition policy, have significantly higher Internet intensities. The authors' findings on Internet intensity implies that the digital divide is not really new, but reflects a persistent gap in the availability of mainline telephones services. After identifying mobile telephones as a promising new platform for Internet access, they use panel data to study the determinants of mobile telephone diffusion during the past decade. Their results show that income explains part of the diffusion lag for poor countries, but they also highlight the critical role of policy. Developing countries whose policies promote economic growth, and private sector competition, have experienced much more rapid diffusion of mobile telephone services. Simulations based on the econometric results, suggest that feasible reforms could sharply narrow the digital divide during the next decade for many countries in Africa, Asia, and Latin America. The authors' review of the literature, also suggests that direct access promotion would yield substantial benefits for poor households, and that cost-effective intervention strategies are now available.

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