1270 The Fourth International Conference on Electronic Business (ICEB2004) / Beijing Digital Divide: Adoption of Internet in China Kanliang Wang, Qing Liu The School of Management, Xi’an Jiaotong University, Xi’an 710049, China [email protected] ABSTRACT With the development of information and communications technology (ICTs), Internet has been one of the major driving forces of the new economy. Nevertheless, access to the new technology remains extremely unequally distributed across and within societies, and there have a good deal of popular discussions about this “digital divide” in academia and business communities of every society. This study provides empirical evidence on China’s Internet development and diffusion in recent years. Findings show that there is a clear digital divide among the nation’s three economic zones, and while the growth rate for new Internet users is accelerating and the infrastructure of network is improving, the digital divide is growing narrower. In addition, by undertaking a set of regression analysis, the paper also finds that income and education play a critical role in shaping the divide. Based on the result, the paper offers some related policy suggestions to promote a wider diffusion of internet in poorer regions. Keywords: Digital divide, Internet, Gini coefficient 1. INTRODUCTION still do not see any positive role of ICTs in poverty alleviation. In his words, “the poor can’t eat high-speed Information technology is changing the way people Internet access, of course” [6]. Opportunity may be communicate, learn and work, and the competitive outweighed by considerable threat arising from their advantage enjoyed by those having Internet access is second-mover position on the adoption of new becoming increasingly obvious. However, not everyone technologies. Therefore, it is more difficult for an has access to this technology. The idea of the “digital entire nation to leapfrog other nations technologically divide” that put forward by NTIA firstly refers to the because of the infrastructure and human capital growing gap between those who have access to bottleneck [7]. What most important is that the computers or Internet and those who have not access, developed countries have an advantage of exploring new ranging from the global level, to nation states, to technologies. While the developing countries learn, communities, and to individuals [1]. Though these assimilate and understand original technologies, the applications have some common features, there are developed countries have already applied the advanced differences on the response of policy and the ones. Therefore, there is a widening digital divide composition of stakeholders. between the developed countries and the developing countries. Digital divide has been a continuing buzzword in public discourse and international agendas after it had been put Research on Internet diffusion is accompanied by the forward. However, existing studies have largely been evolution of Internet itself. With the increasing use of confined to the boundaries of national states. The Internet in developed countries, research about its explosive growth of information and communications applications has been on the rise. Most studies have technologies (ICTs) in recent years, particularly the rise taken place in OECD countries, especially the US, Japan of Internet and its related applications, has created and Western European countries. The Department of unprecedented opportunities, but also created threats for Commerce’s National Telecommunication and developing countries. From the opportunity aspect, Information Administration’s reports, generally entitled some believe that ICTs will be a lever that may advance Falling Through the Net, have been the primary and most developing counties to enter into “leapfrogging” consistent way to track computer ownership and network seedtime. This perspective is in line with Barlow’s (1998) access across broad demographic categories over a comment that Africa should skip industrialism entirely relatively long period of time (since 1995) [1]. Even and leap directly into the information era [2]. This though there is a deeper and wider digital divide, little conclusion is shared by Hudson (2001) who suggests that research has paid attention to how Internet access and the potential for “leapfrogging” lies in the use of wireless use fit into everyday life in developing countries, such as communication technology [3]. Nevertheless, According India and countries in Africa [8, 9]. These studies suggest to Braga (1998), some believe that ICTs have and will that digital divide has been one of the leading economic contribute to even wider economic divergence between and civil rights issues, and call for government action to developing and developed countries [4]. This view is ensure that all people are able to enjoy the competitive consistent with Brown’s (2001) argument that there is advantages gained by Internet participation. still a lot of skepticism with regard to whether ICTs can Widespread diffusion does not imply ubiquity, even reduce poverty in the developing countries [5]. This idea within developed countries. Digital divide appeared at is also evident in Chowdhury (2000) that some skeptics the very start of Internet [10]. There is the same The Fourth International Conference on Electronic Business (ICEB2004) / Beijing 1271 challenge in China too. Adoption and development of far outpace those of alternate class positions. Thus ICTs drives the development of new economy in China. income and education continue to be the variables that Meanwhile, there has always been great regional correlate most strongly with Internet access and variation in three zones: the eastern, the central and the computer ownership [17]. Whether there is similar western zones [11]. From 1990 to 2002, the percent of relation between these two factors and Internet digital GDP of the eastern zones contributed to the nation divide of China is an important factor in formulating increased from 51.5% to 57.86%. But this percentage in related policy to solve the problem. the central and the western zones decreased 3.14% and 3.23% respectively. GDP of the eastern zones was 2.0 China accesses firstly Internet by its CSTNET at April and 2.6 times than that of the central and the western 1994, which has been a great development in recent zones in 2002 respectively. The Gini coefficient in China, years. By reports on Internet development in China the important index measuring the income inequality, (CNNIC, 2004), the number of Internet users is more reached 0.41 in 2000, which was well beyond the normal than 79.5 million, and the number of computers that can level. These indicate the increase of regional gap in access Internet is more than 30.89 million. However, economic development. Moreover, the number of there is serious regional inequality on development and Internet users in the eastern zones was 1.95 and 3.03 diffuse of Internet. Recent report shows that the times than that of the central and the western zones number of Web sites in three regions (eastern China, respectively in 2003. There are some studies on digital northern China and Southern China) is 90% of all sites divide in China at present. But most of them focus on the across China. The digital divide is widening the gap of qualitative analysis [12, 13, 14]. In addition, there are among these regions, which could bring serious social also few studies on how Internet diffused in China [15]. problems. Some domestic studies find that there is a Empirical researches on digital divide in China are regional digital divide. There are great differences in scarce. Internet host and Internet users among these regions. In general, the number of Internet users in the rich regions By undertaking a set of regression analysis on is far excess that of the poor regions [13]. But to what Internet-related data in China, this paper aims to analyze extent is the gap in Internet? the status quo of Internet development and diffusion in China, and provides empirical evidence on the digital Computer and Internet use at home and work are divide of Internet adoption across China. Moreover, it increasing rapidly, but there is disagreement on whether discloses the relation between the development of access is increasing among all groups at similar rates. economy, education and Internet. These results may offer One analysis suggested that the divide may shrink in the some implications to the policies that may bridge the near future because the number of computer users with digital divide. lower incomes is increasing more rapidly than the total number of computer users overall [18]. In addition, 2. RESEARCH QUESTIONS Howard (2001) noticed the dynamics of digital divides, and he agreed that infrastructural access gaps are At present, digital divide not only exists in the narrowing, though narrowing in unequal ways [19]. development of information technology, but also in the However, other researches have found that the digital application of information technology. So, digital divide divide also continues to grow at an alarming rate. On the has multiple dimensions. This study focuses on the one hand, the connected ones - such as those with higher digital divides between users and non-users of Internet in income and better education - are adopting newer China. technologies faster and are connecting even more. On the other hand, groups with limited Internet and computer Early characterizations of the divide singled out income