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Using panel data for 161 countries, the authors explore the determinants of cross-country disparities in personal computer and Internet penetration. They 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. Estimates from Blinder - Oaxaca decompositions comparing rates in the developed-country total to developing countries (Total, Brazil, China, Indonesia, India, Mexico, and Nigeria) 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, the results indicate fairly rapid reversion to long-run equilibrium for Internet use, and somewhat slower reversion for computer use.
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