UC Irvine

The issue of developed and developing country using a seemingly unrelated regression (SUR) model that focuses on factors that can be addressed by policy choices of both governments and international organizations are discussed. Investment in new technologies requires the availability of capital, either from external sources or from internal sources such as equity markets. The access to capital through the equity markets would also be important, as those countries have more well-developed stock markets that reward companies for making productivity-enhancing investments in IT. Wealth is the single most important factor influencing IT investment but other factors are significant as well. The factors driving IT diffusion are different for developing countries than for developed ones. The availability of investment resources, the level of complementary assets, and openness to foreign investment all play a role in driving IT investment in developing countries.