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In recent research, Dewan, Ganley and Kraemer examined a panel of 40 countries over the period 1985-2001 based on data from three distinct generations of

information technology (IT): mainframes, personal computers, and the internet61. In terms of the empirical framework they use for measuring the Digital Divide, they argue that:

The most common characterization of the global Digital Divide is in terms of the dispersion of in IT penetration across countries, under the premise that if there were no Divide then there would be no differences in IT penetration across countries62.

To measure the Digital Divide they use per capita measures (IT penetration per capita) and also IT penetration per GDP, arguing that the latter measurement illustrates the tight association of digital access with income levels, and the co linearity of income with other factors such as education and telephone penetration. Within this framework, they also use a number of different variables classed into three different categories: (i) Economic which incorporates the income and cost factors that affect technology adoption decisions; (ii) Demographic which includes factors that affect the value of access to technology, such as the size of the urban population (population residing in urban areas) and also the stock of human capital, characterized by the average education level of the population in terms of years of schooling; and (iii) Environmental, which includes telephone infrastructure measured in terms of density of telephone main lines and also the importance of trade in the economy (the larger the trade sector the greater the pressures to conform to technology norms and practices of the network of global trading partners). In including these various variables in their survey, Derwan et al produce a very comprehensive view of the Digital Divide not just in terms of conventional measures (such as the number of internet hosts), but also a measure of the socio-economic impact of the divide. Before conducting their own research, they review fairly extensively existing econometric

61 _{Dewan S., Ganley D., and Kraemer K., Across the Digital Divide: A Cross-Country Analysis of the} Determinants of IT Penetration, 2004, PCIC, Graduate School of Management, University of

California, Irvine at: www.pcic.gsm.uci.edu, date accessed November 2010.

studies on the Digital Divide, hoping to build on such work, some of which the Author discusses further below. Derwan et al’s results are quite revealing indicating:

To the extent that the Digital Divide is a concept that relates IT adoption to national income, the quantile regression results for the GDP per capita variable are fundamental to illuminating the mechanisms behind the Divide. We find that not only is the association between GDP per capita and IT penetration positive and significant, but it is stronger at higher levels of IT penetration. This ―feedback effect‖ between GDP per capita and IT penetration drives a wedge between developed and developing countries, reinforcing the Digital Divide63.

The results do not indicate whether the relationship works the other way around i.e., by increasing GDP, IT penetration also increases. They also find that DCs get

disproportionate benefits to lowering their infrastructure costs, improving their human capital and increasing the participation in the global economy. Recognising that none of these can be achieved quickly, they suggest that long-term investments in these particular areas will ―offer the best levers to the developing countries for closing the Digital Divide over time.‖64

The report indicates that the Digital Divide appears to have largely stabilized and that although developed countries continue to have access to more digital resources than DCs, penetrations relative to the mean have shrunk and continue to do so at a slow pace. To help reduce the Digital Divide they urge policy makers in DCs and LDCs to reduce tariffs and taxes on IT products and services, encourage deregulation of telecommunication services and accelerate the pace of technology transfer from technology exporting countries65.

Although Derwan et al acknowledge that future research would involve expanding the data set to allow for coverage of emerging countries that were underrepresented in their study, factors such as human capital and the size of the trade sector are having a stronger impact on encouraging internet use in DCs than they did with previous technologies: ―If internet use is the most important marker we have to date of the

63

Ibid, p. 19.

64 _{Ibid, p.20.} 65 _{Ibid, p.21.}

Digital Divide, as many currently believe, then this is the opportunity that developing countries have been waiting for to catch up to their more advanced neighbours.‖66

As with internet diffusion what is the significance of this link between IT Penetration and the digital divide? The research shows that the association between GDP per capita and IT penetration is both positive and significant, and is stronger at higher levels of IT penetration. Further that this ―feedback effect‖ between GDP per capita and IT penetration is maintaining the divide between developed and developing countries. Again, internet use appears to be an important marker for the digital divide.

The important factors therefore that could influence our definition must include a reference to the disparity between countries in appropriating Information Technology Products (which presumably covers also internet use).