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Does the internet generate economic growth, international trade, or both?

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Author Info

  • Meijers, Huub

    () (UNU‐MERIT/MGSoG, and Department of Economics, Maastricht University)

Abstract

Recent cross country panel data studies find a positive impact of internet use on economic growth and a positive impact of internet use on trade. The present study challenges the first finding by showing that internet use does not explain economic growth directly in a fully specified growth model. In particular openness to international trade variables seems to be highly correlated with internet use and the findings in the literature that internet use causes trade is confirmed here, suggesting that internet use impacts trade and that trade impacts economic growth. A simultaneous equations model confirms the positive and significant role of internet use to openness and the importance of openness to economic growth. Internet use has been shown to impact trade more in non-high income countries than in high income countries, whereas the impact of trade on economic growth is the same for both income groups.

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File URL: http://www.merit.unu.edu/publications/wppdf/2012/wp2012-050.pdf
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Bibliographic Info

Paper provided by United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology in its series UNU-MERIT Working Paper Series with number 050.

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Date of creation: 2012
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Handle: RePEc:dgr:unumer:2012050

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Web page: http://www.merit.unu.edu

Related research

Keywords: economic growth; internet; ICT; trade; panel data;

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References

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  1. Emad Abd Elmessih Shehata, 2012. "LMCOVREG3: Stata module to Compute Breusch-Pagan Lagrange Multiplier Diagonal Covariance Matrix Test after (3SLS-SURE) Regressions," Statistical Software Components S457411, Boston College Department of Economics.
  2. Bart van Ark & Mary O'Mahoney & Marcel P. Timmer, 2008. "The Productivity Gap between Europe and the United States: Trends and Causes," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 25-44, Winter.
  3. Freund, Caroline L. & Weinhold, Diana, 2004. "The effect of the Internet on international trade," Journal of International Economics, Elsevier, vol. 62(1), pages 171-189, January.
  4. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
  5. Jonathan D. Levin, 2011. "The Economics of Internet Markets," NBER Working Papers 16852, National Bureau of Economic Research, Inc.
  6. Ziesemer, Thomas, 2011. "What Changes Gini Coefficients of Education? On the dynamic interaction between education, its distribution and growth," UNU-MERIT Working Paper Series 053, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
  7. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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Cited by:
  1. Thomas H.W. ZIESEMER, 2012. "Worker remittances and government behaviour in the receiving countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 37-59, December.

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