Internet diffusion in India and China - comparison based on feedback loop dominance

Many developing countries have recognized the need to enhance their Internet infrastructure to participate competitively in the global economy. However, these countries have distinctive socioeconomic characteristics that impact the assimilation of any new technology, including the Internet. Their interactions are complex, making it difficult to deduce the underlying mechanics informally. This, in turn, makes it hard to assess the impact of efforts to stimulate Internet diffusion. To get more formally grounded insights, this paper compares the mechanics of Internet diffusion in two developing countries - India and China - using the system dynamics methodology. The results show a basic similarity in the underlying mechanics, in that the behavior of major feedback loops is similar in the two cases. Specifically, infrastructure capacity shortage and absorption of the technology in different industry sectors drive two counteracting diffusion mechanisms in both countries. However, it also appears that policy actions can impact the timing and duration of dominant behavior. Based on this comparison, we surmise that developing countries, despite the different specific circumstances, do share some common mechanics for Internet diffusion. Moreover, policy actions need to be designed to stimulate sectoral absorption of the technology in parallel with expansion of the physical network infrastructure.