Ratio Working Papers
A Dynamic Flexible Partial-Adjustment Model of International Diffusion of the Internet
() and Almas Heshmati
Abstract: The paper introduces a dynamic, flexible
partial-adjustment model and uses it to analyze the diffusion of Internet
connectivity. It specifies and estimates desired levels of Internet
diffusion and the speed at which countries achieve the target levels. The
target levels and speed of adjustment are both country and time specific.
Factors affecting Internet diffusion across countries are identified, and,
using nonlinear least squares, the Gompertz growth model is generalized and
estimated using data on Internet users for 59 countries observed over the
years 1995 to 2002. The empirical results show that infrastructure
variables such as personal computer ownership and telephone service
increase the equilibrium level of internet diffusion. The speed of
adjustment toward a target level decreases over time. Regarding model
performance, the generalized dynamic Gompertz model that accounts for
unobserved country heterogeneity effects outperforms other, simpler and
static model specifications.
Keywords: technology diffusion; Internet; panel data; technology adoption; Gompertz model; (follow links to similar papers)
JEL-Codes: C23; L86; L96; O33; O57; (follow links to similar papers)
28 pages, May 19, 2006
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