Determinants and Social Dividends of Digital Adoption
IMF Working Papers, March 17, 2023
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Bibliographic details
- Authors: Utkarsh Kumar, David Amaglobeli, Mariano Moszoro
- Published: March 17, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400237997.001
Key findings on drivers of digital adoption
- Digital infrastructure coverage, internet price, and usability are the most statistically robust predictors of internet use in the short run.
- Using cross-country panel regressions and machine learning, these three factors emerge as primary determinants of internet use.
Demand elasticity and heterogeneity
- Demand for internet is most price responsive in low-income developing countries and almost unresponsive in advanced economies.
- Microdata from over 150 countries document a digital divide by gender, socio-economic status, and demographics.
Fiscal cost estimates for subsidies
- Moving low-income developing economies to the levels of digital adoption in emerging economies will require annual targeted subsidies of 1.8 percent of GDP.
- Moving emerging market economies to the levels of digital adoption in advanced economies will require annual targeted subsidies of 0.05 percent of GDP.
Social dividends and distributional effects
- Substantial aggregate and distributional gains from digital adoption are found for:
- Education quality.
- Time spent doing unpaid work.
- Labor force participation by gender.
Methods and data sources
- Analysis combines cross-country panel regressions, machine learning, and a model of demand for internet.
- Microdata spanning over 150 countries are used to analyze within-country heterogeneity and to aid subsidy targeting.
IMF Working Paper — Utkarsh Kumar, David Amaglobeli, Mariano Moszoro; March 17, 2023.
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