The Impact of Internet Access Charges on Economic Activities : A Cross-country Analysis

There is a considerable gap in the level of the Internet access charges among countries because of the history of the Internet use, current status of the Internet infrastructure, the Internet penetration rate, and so on. Low Internet access charge increases the number of the Internet users and the Internet penetration rate, which boosts economic activities. This paper empirically explores the impacts of the internet access charges on economic activities using a cross-country analysis based on data from 76 countries for the year 1998-2001. To this end, several versions of the neoclassical growth models, explicitly including the internet access charges, are estimated with the GDP used for a proxy for economic activities and the level of Internet access charges considered as an input to production. Subject to the appropriate caveats, the results show that the level of the Internet access charges make a significantly negative effect on economic activities. In other words, it is concluded that low Internet access charges of a county increase economic activities and the increased economic activities in turn raise the real income of the county.