Long Term Factors of Internet Diffusion in Sub-Saharan Africa: A Panel Co-Integration Analysis

By Murthy, Vasudeva N. R.; Nath, Ravi et al. | Journal of International Technology and Information Management, October 1, 2015 | Go to article overview

Long Term Factors of Internet Diffusion in Sub-Saharan Africa: A Panel Co-Integration Analysis


Murthy, Vasudeva N. R., Nath, Ravi, Soleimani, Mina, Journal of International Technology and Information Management


ABSTRACT

Identifying factors that influence the diffusion of the Internet is paramount for researchers as well as policy makers in articulating strategies to improve the availability and subsequent use of the Internet. Most existing empirical studies have focused on this problem by analyzing diffusion data for countries for one fixed year and identified variables affecting the Internet diffusion. These variables, generally, come from the economic, technological, policy, culture, and human capital realms. These results have provided a good "snapshot" of what factors are important towards the diffusion of the Internet and the results tend to vary for studies conducted in different time frames. This paper also addresses, the phenomenon of cross-country dependence--the economic, political, and technological environment of one country affecting other countries- into account in their analyses. This paper, for the first time in the literature, empirically identifies long-term determinants of the Internet diffusion in sub-Saharan African (SSA) countries by considering data for the period 1997-2013. It employs a recently-developed technique named "panel co-integration analysis" to model the diffusion of the internet among the SSA countries. The analysis reveals that in SSA countries, the number of telephones, the level of per capita real gross product and the extent of ruralization (conversely, the degree of urbanization) are the key long-term drivers of the diffusion of the Internet. Finally, the paper concludes with a discussion of policy implications.

Keywords: Long term factors, Sub-Saharan Africa, Internet diffusion

INTRODUCTION

In the contemporary global economy, for countries that aspire for better economic, business and social progress, rapid diffusion of the internet is highly beneficial and warranted. It is widely recognized that highly developed countries, especially the Organization for Economic Cooperation and Development countries (OECD) with a high level of the Internet usage and accelerating rate of Internet diffusion, on both extensive and intensive bases have reaped benefits in the areas of education, e-commerce, healthcare, communications, technology, social media and labor productivity (Hargittai, 1999; Kiiski & Pohjola, 2002). While these OECD countries have garnered substantial gains from greater diffusion of the internet, developing countries, especially, the sub-Saharan African (SSA) countries have generally lagged behind and hence, have experienced the effect of this digital-divide. Overall, in the SSA countries, the Internet diffusion rates remain relatively low with a wide variation among the diffusion rates of countries. According to ITU (2015) data, in 2013, the average Internet diffusion rate for SSA countries was about 13% with a median rate of 9%. South Africa had the highest diffusion rate of 46.5% (1) and over a dozen countries had rates below 10%. Figure 1 shows the Internet diffusion rates for the OECD and SSA countries over a period of several years. And, it clearly shows the relatively low level of the Internet penetration in SSA as well as the consequent widening digital gulf between the OECD and SSA.

[FIGURE 1 OMITTED]

Generally, it has been observed that the SSA countries tend to have inadequate telecommunications, low level of the internet infrastructure, low tele density, poor electricity infrastructure, rigid and monopolistic structure of telecommunications market, redundant regulations and finally, low levels of real per capita GDP. Thus, from the policy perspective of these countries, there is definitely, an imminent need to identify the long term factors that influence the diffusion of the Internet. Economists, telecommunications scholars and policy makers are interested in learning about the factors that drive Internet diffusion in the SSA. While there are many published studies on the diffusion of the Internet in the OECD and other highly developed countries, there is a paucity of such studies for the SSA countries. …

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