Does the internet generate economic growth, international trade, or both?
AbstractRecent 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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Bibliographic InfoPaper 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.
Date of creation: 2012
Date of revision:
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Web page: http://www.merit.unu.edu
economic growth; internet; ICT; trade; panel data;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
- F10 - International Economics - - Trade - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-30 (All new papers)
- NEP-FDG-2012-09-30 (Financial Development & Growth)
- NEP-ICT-2012-09-30 (Information & Communication Technologies)
- NEP-INT-2012-09-30 (International Trade)
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