The Mechanics of Internet Growth: A Developing-Country Perspective

Amitava Dutta and Rahul Roy
International Journal of Electronic Commerce,
Volume 9, Number 2, Winter 2004-05, pp. 143.

Abstract: The uneven diffusion of the Internet across countries reinforces social and economic inequalities. Correlation studies associate its uneven diffusion with such factors as competition, telephone infrastructure, literacy, economic development, access charges, and network reliability, but they do not reveal the mechanics of Internet diffusion because it is the interplay of different factors, not any factor in isolation, that generates diffusion behavior. This paper uses the system dynamics (SD) methodology to develop a causal model of Internet diffusion in a developing country. The SD methodology was selected because its basic construct, the feedback loop, is well suited to represent the mechanics driving dynamic processes. The proposed causal model is validated using Internet subscriber data from India. The technique of dominant loop analysis identifies the feedback loops that have the most influence on diffusion behavior. The model can be used to evaluate diffusion patterns resulting from different policy alternatives intended to foster Internet diffusion in developing countries.

Key Words and Phrases: development policies, economic development, Internet diffusion, system dynamics.