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Determinants and Social Dividends of Digital Adoption
Author:
Utkarsh Kumar
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,
David Amaglobeli
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Mariano Moszoro
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Series:
IMF Working Papers
Volume/Issue:
Volume 2023: Issue 065
Language:
English
Publication Date:
17 Mar 2023
DOI:
https://doi.org/10.5089/9798400237997.001
ISBN:
9798400237997
ISSN:
1018-5941
Pages:
39
Keywords:
Social Dividends; Digitalization; GovTech; Internet use; internet price; Internet adoption; Internet coverage; internet use; Labor force participation; Income; Women; Purchasing power parity; Sub-Saharan Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We identify key drivers of digital adoption, estimate fiscal costs to provide internet subsidies to households, and calculate social dividends from digital adoption. Using cross-country panel regressions and machine learning, we find that digital infrastructure coverage, internet price, and usability are the most statistically robust predictors of internet use in the short run. Based on estimates from a model of demand for internet, we find that demand is most price responsive in low-income developing countries and almost unresponsive in advanced economies. We estimate that moving low-income developing and emerging market economies to the levels of digital adoption in emerging and advanced economies, respectively, will require annual targeted subsidies of 1.8 and 0.05 percent of GDP, respectively. To aid with subsidy targeting, we use microdata from over 150 countries and document a digital divide by gender, socio-economic status, and demographics. Finally, we find substantial aggregate and distributional gains from digital adoption for education quality, time spent doing unpaid work, and labor force participation by gender.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund