Some reflections on the determinants of ICT usage

Abstract

This paper sheds some light on the Networked Readiness Index (NRI) compiled by the World Economic Forum and discusses the sources of cross-country variations in the European Union based on the 2013–2014 period. The results based on NRI reveal that the highest variation – measured by standard deviation – is in Economic impacts, Business usage, Political and regulatory environment, and in Infrastructure. There is a clear endogeneity problem though as all the pillars that make-up the NRI are somewhat intertwined. The results seem to signal there is a substantial cross-country variation in both ICT usage and the resulting benefits, which goes against the assumptions that EU is a homogenous economic club with significant convergence criteria. The results also suggest that the catch up process in ICT usage require an improvement in building ICT infrastructure and effective use of ICT primarily by the business sector. This goes against the remarkable success EU has achieved in terms of real income convergence during the past 18 years or so.