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Has the Internet Increased Trade? Developed and Developing Country Evidence

Author

Listed:
  • George R. G. Clarke
  • Scott J. Wallsten

Abstract

Developing countries export more to developed, but not other developing countries, when Internet penetration is higher. Although this could be because Internet penetration stimulates exports, it could also be because trade openness encourages Internet use. To test the direction of causation, we allow Internet use to be determined endogenously using countries' regulation of data services as an instrument. The results suggest that access to the Internet does improve export performance in developing countries, although not in developed countries. In other words, improving Internet access in a developing country will stimulate exports from that country to rich countries. (JEL F15) Copyright 2006, Oxford University Press.

Suggested Citation

  • George R. G. Clarke & Scott J. Wallsten, 2006. "Has the Internet Increased Trade? Developed and Developing Country Evidence," Economic Inquiry, Western Economic Association International, vol. 44(3), pages 465-484, July.
    • Handle: RePEc:oup:ecinqu:v:44:y:2006:i:3:p:465-484
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    File URL: http://hdl.handle.net/10.1093/ei/cbj026
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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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