Has the Internet Increased Trade? Evidence from Industrial and Developing Countries
If the Internet made it easier for firms to enter new markets by reducing communication and search costs, then it may also have made it easier to export goods and services. The authors find that higher Internet penetration in developing countries i...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/02/3208496/internet-increased-trade-evidence-industrial-developing-countries http://hdl.handle.net/10986/14774 |
| Summary: | If the Internet made it easier for firms
to enter new markets by reducing communication and search
costs, then it may also have made it easier to export goods
and services. The authors find that higher Internet
penetration in developing countries is correlated with
greater exports to industrial countries, but not with trade
between developing countries or with exports from industrial
countries. Interpreting the correlations is difficult
because causation may run from Internet use to exports or
from trade openness to Internet use. To test whether
Internet use affects export behavior, the authors endogenize
Internet use by using countries' regulation of data
services and Internet provision as instrumental variables.
The results are robust to endogenizing Internet penetration,
suggesting that access to the Internet does affect the
export performance of firms in developing countries. In
other words, Internet access appears to stimulate exports
from poor countries to rich countries. Moreover, the
analysis suggests that regulatory policies affecting
telecommunications and Internet development indirectly
affect trade, further emphasizing the importance of
deregulating potentially competitive services in the
telecommunications industry. |
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