Searching for the determinants of IT investment - Panel data evidence on European countries 

Searching for the determinants of IT investment - Panel data evidence on European countries

The reader is first presented with an analysis of the dynamics of IT investment expenditure in 15 European countries from 1992 until 2001. By means of a cluster analysis, a picture of IT diffusion in Europe can be drawn. By clustering the European countries according to their shares of IT spending over GDP, three fairly stable groups of fast, medium and slow adopters are identified. An econometric equation of the determinants of IT investment can then be built to use with panel data in estimations for five European economies over the period of 1980 to 2001. aggregate IT investment as well as separate investment in hardware or software are considered. Findings show that financial conditions, income growth and comparative advantage turn out to affect IT investment, but that the determinants of hardware investment only partially overlap with those of software.

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