The Effect of Economic Factors on Internet Diffusion in Developing Countries

The purpose of this study is to investigate the effects of economic variables on the internet diffusion in thedeveloping countries. For this purpose a dynamic panel datamodel (GMM) has been estimated overthe period 1995- 2012 and among 123 developing countries. The results show that per capita income, the rate of urbanization, trade openness and human capital have a significant and positive effect on the internet diffusion. Moreover, the results indicate that the impact of ICT infrastructure on the internet diffusion is significant and positive. The results of a sensitivity analysis also reveal that increasing the share of the service sector of GDP increases the internet diffusion; while, an increase in the share of the agricultural sector has a negative effect on the internet diffusion.