Does the Digital Divide Matter? The Role of Information and Communication Technology in Cross-country Level and Growth Estimates?

The bulk of Information and Communication Technology is made of weightless, implementable and infinitely reproducible knowledge products (such as software and databases). These products are transferred by telephone lines, accessed through internet hosts and processed and exchanged through personal computers. In this work, the coefficient of the labor augmenting factor in the aggregate production function has been estimated using proxies of variables crucially affecting the diffusion of (non rivalrous and almost non excludable) knowledge products. This specification provides interesting answers to some of the open issues in the existing growth literature. The most recent information, even though available for a limited period, shows that telephone lines, personal computers, mobile phones and internet hosts significantly affect levels and growth of income per worker across countries. The result is robust to changes in sample composition, econometric specification and estimation approach.