Modeling the Diffusion of Innovations for Extended Reach to ICT and Mobile Technologies: A System Dynamics Approach

Evidence shows that information and communications technologies (ICT), especially mobile telecommunications services, can lead to sustained economic growth and human development. Mobile technologies are increasingly used as a transformational tool to foster economic growth, accelerate knowledge transfer, develop local capacities, raise productivity, and alleviate poverty in a variety of sectors. In that respect, in the last decade, ICT development has become a key strategic area for policy engagement in emerging economies. However, the much celebrated breakthrough of mobile telephony in the developing world must not obscure the chasm between rich and poor nations in accessing ICT. The diffusion dynamics of new technologies across regions show a striking heterogeneity. For many emerging economies, the massive expansion of low-cost telecommunications networks and value-added mobile services remains a major development challenge. To support policy-makers in designing optimal ICT sector development strategies, this study aims to (i) identify the economic and socio-cultural determinants affecting the capacity of developing countries to adopt new technologies and innovations, and to (ii) define relevant policy principles likely to foster the diffusion of ICT solutions in emerging economies that are characterized by strong income inequality and uncertainty avoidance. The key findings of this research work are that: (1) Country-wide socio-economic heterogeneity and endogenous cultural drivers, such as risk and uncertainty avoidance, significantly influence the dynamics of diffusion across countries. For instance, emerging economies with strong income inequalities and social stratification face exacerbated challenges in the large-scale adoption of new technologies; (2) Well-targeted subsidies in the early stages of ICT diffusion can play a determinant role in their massive diffusion, helping to overcome initial confidence barriers, leveraging economies of scale, and, in the longer-term, triggering macroeconomic positive feedback mechanisms.