What Explains the ICT Diffusion Gap Between the Major Advanced Countries? An Empirical Analysis

Over the last few years, a large body of literature has shown that the level of information and communications technology (ICT) diffusion, and, as a result, the favorable effects of this diffusion on productivity, differ greatly between the major advanced countries, with the United States the country where ICT diffusion is strongest. This study aims to explain empirically this gap. Annual macroeconomic panel data are used for the period 1981-2005 and cover eleven OECD countries: Austria, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Spain, the United Kingdom and the United States. The estimates obtained provide insight into the factors determining ICT diffusion and the gaps in this diffusion visà-vis the United-States. Compared to the United States, the lower ICT diffusion in the other major advanced countries can be explained by a smaller share of the population with a higher education and/or a higher level of rigidity in labour and product markets. IN RECENT YEARS , A LARGE BODY of literature