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Goods Follow Bytes: The Impact of ICT on EU Trade

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  • Anselm Mattes
  • Philipp Meinen
  • Ferdinand Pavel

Abstract

This paper empirically assesses whether the deployment and use of Information and Communication Technology (ICT) infrastructure at the national level affects trade flows within the European Union (EU) and between the EU and its main trading partners. The analysis tests the hypothesis that availability and use of ICT enhances trade by reducing transaction costs and through network effects that materialize when both trading partners are advanced users of ICT. The empirical analysis is based on the application of gravity equations in various robust specifications. The results suggest that ICT does have a significant impact on EU trade. In particular, we find trade to be enhanced if both trading partners reveal advanced ICT endowments, which supports the expected network effects. Additionally, we observe trade diversion effects from less to highly ICT developed countries.

Suggested Citation

  • Anselm Mattes & Philipp Meinen & Ferdinand Pavel, 2012. "Goods Follow Bytes: The Impact of ICT on EU Trade," Discussion Papers of DIW Berlin 1182, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1182
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    Cited by:

    1. Gnangnon, Sèna Kimm & Iyer, Harish, 2018. "Does bridging the Internet Access Divide contribute to enhancing countries' integration into the global trade in services markets?," Telecommunications Policy, Elsevier, vol. 42(1), pages 61-77.
    2. Abeliansky, Ana L. & Hilbert, Martin, 2017. "Digital technology and international trade: Is it the quantity of subscriptions or the quality of data speed that matters?," Telecommunications Policy, Elsevier, vol. 41(1), pages 35-48.
    3. Boniface Ngah Epo & Ronie Bertrand Nguenkwe, 2020. "Information and Communication Technology and Intra-Regional Trade in the Economic Community of West African States: Ambivalent or Complementary?," Economics Bulletin, AccessEcon, vol. 40(2), pages 1397-1412.
    4. Jonathan Timmis, 2012. "The Internet and International Trade in Goods," Discussion Papers 12/08, University of Nottingham, GEP.
    5. Burcu Ozcan, 2018. "Information and communications technology (ICT) and international trade: evidence from Turkey," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(1), pages 93-113, April.
    6. Ibitoye J. Oyebanji & Dayo B. Olanipekun & Ewert P. J. Kleynhans, 2022. "The Potential of Information and Communication Technologies to Generate International Trade in Africa," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 20(3 (Fall)), pages 237-257.
    7. Nath, Hiranya K. & Liu, Lirong, 2017. "Information and communications technology (ICT) and services trade," Information Economics and Policy, Elsevier, vol. 41(C), pages 81-87.
    8. Evgeniya Yushkova, 2014. "Impact of ICT on trade in different technology groups: analysis and implications," International Economics and Economic Policy, Springer, vol. 11(1), pages 165-177, February.
    9. Burcu Ozcan & Hiranya Nath, 2016. "Information and Communication Technology (ICT) and International Trade: Evidence from Turkey," Working Papers 1609, Sam Houston State University, Department of Economics and International Business.
    10. Jonathan Timmis, 2012. "The Internet and International Trade in Goods," Discussion Papers 12/03, University of Nottingham, School of Economics.
    11. Mahdi Ghodsi, 2021. "Impact of Technical Barriers to Trade on the Trade in Goods in the Information and Communications Technology Sector: Differentiating by Aim of the Regulatory Measure," wiiw Working Papers 208, The Vienna Institute for International Economic Studies, wiiw.

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    More about this item

    Keywords

    Exports; ICT; gravity model; international trade; network effects;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • D2 - Microeconomics - - Production and Organizations

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