IDEAS home Printed from https://ideas.repec.org/a/eee/iepoli/v46y2019icp41-54.html
   My bibliography  Save this article

The effect of the internet on the margins of trade

Author

Listed:
  • Visser, Robin

Abstract

This paper investigates the effect of internet penetration in the form of broadband subscriptions on the extensive and intensive margins of differentiated exports, and assesses whether the internet bridges the linguistic gap in trade. Results tentatively indicate that there is a positive association between an increase in internet penetration and the extensive and intensive margins of differentiated exports. Splitting the sample into development levels, internet penetration may facilitate the extensive margin of exports between low and high income countries, but not within these groups. Lastly, an increase in internet penetration may decrease the effect of linguistic distance on the extensive and intensive margins of differentiated exports.

Suggested Citation

  • Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    • Handle: RePEc:eee:iepoli:v:46:y:2019:i:c:p:41-54
    DOI: 10.1016/j.infoecopol.2018.12.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167624517301580
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.infoecopol.2018.12.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Melitz, Jacques & Toubal, Farid, 2014. "Native language, spoken language, translation and trade," Journal of International Economics, Elsevier, vol. 93(2), pages 351-363.
    2. Teresa L. Cyrus, 2012. "Cultural Distance and Bilateral Trade," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 12(4), pages 1-25, November.
    3. Peter H. Egger & Andrea Lassmann, 2015. "The Causal Impact of Common Native Language on International Trade: Evidence from a Spatial Regression Discontinuity Design," Economic Journal, Royal Economic Society, vol. 0(584), pages 699-745, May.
    4. Gabriel J Felbermayr & Wilhelm Kohler, 2014. "Exploring the Intensive and Extensive Margins of World Trade," World Scientific Book Chapters, in: European Economic Integration, WTO Membership, Immigration and Offshoring, chapter 4, pages 115-148, World Scientific Publishing Co. Pte. Ltd..
    5. Santos Silva, J.M.C. & Tenreyro, Silvana & Wei, Kehai, 2014. "Estimating the extensive margin of trade," Journal of International Economics, Elsevier, vol. 93(1), pages 67-75.
    6. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    7. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    8. Olivier Cadot & Céline Carrère & Vanessa Strauss-Kahn, 2011. "Export Diversification: What's behind the Hump?," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 590-605, May.
    9. Lee, Jaehwa, 2012. "Network effects on international trade," Economics Letters, Elsevier, vol. 116(2), pages 199-201.
    10. Oliner, Stephen D. & Sichel, Daniel E. & Stiroh, Kevin J., 2008. "Explaining a productive decade," Journal of Policy Modeling, Elsevier, vol. 30(4), pages 633-673.
    11. 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.
    12. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    13. Clarke, George R.G., 2008. "Has the internet increased exports for firms from low and middle-income countries," Information Economics and Policy, Elsevier, vol. 20(1), pages 16-37, March.
    14. Martina Lawless, 2010. "Deconstructing gravity: trade costs and extensive and intensive margins," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1149-1172, November.
    15. Felbermayr, Gabriel J. & Toubal, Farid, 2010. "Cultural proximity and trade," European Economic Review, Elsevier, vol. 54(2), pages 279-293, February.
    16. Fink, Carsten & Mattoo, Aaditya & Neagu, Ileana Cristina, 2005. "Assessing the impact of communication costs on international trade," Journal of International Economics, Elsevier, vol. 67(2), pages 428-445, December.
    17. Faqin Lin, 2015. "Estimating the effect of the Internet on international trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(3), pages 409-428, April.
    18. Dutt, Pushan & Mihov, Ilian & Van Zandt, Timothy, 2013. "The effect of WTO on the extensive and the intensive margins of trade," Journal of International Economics, Elsevier, vol. 91(2), pages 204-219.
    19. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    20. Egger, Peter H. & Lassmann, Andrea, 2012. "The language effect in international trade: A meta-analysis," Economics Letters, Elsevier, vol. 116(2), pages 221-224.
    21. Lirong Liu & Hiranya K. Nath, 2013. "Information and Communications Technology and Trade in Emerging Market Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(6), pages 67-87, November.
    22. Blum, Bernardo S. & Goldfarb, Avi, 2006. "Does the internet defy the law of gravity?," Journal of International Economics, Elsevier, vol. 70(2), pages 384-405, December.
    23. Andreas Lendle & Pierre-Louis Vézina, 2015. "Internet Technology and the Extensive Margin of Trade: Evidence from eBay in Emerging Economies," Review of Development Economics, Wiley Blackwell, vol. 19(2), pages 375-386, May.
    24. Osnago,Alberto & Tan,Shawn Weiming, 2016. "Disaggregating the impact of the internet on international trade," Policy Research Working Paper Series 7785, The World Bank.
    25. Jeffrey R. Brown & Austan Goolsbee, 2000. "Does the Internet Make Markets More Competitive?," NBER Working Papers 7996, National Bureau of Economic Research, Inc.
    26. Huub Meijers, 2014. "Does the internet generate economic growth, international trade, or both?," International Economics and Economic Policy, Springer, vol. 11(1), pages 137-163, February.
    27. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    28. David Roodman, 2006. "How to Do xtabond2," North American Stata Users' Group Meetings 2006 8, Stata Users Group.
    29. Baskerville, Rachel F., 2003. "Hofstede never studied culture," Accounting, Organizations and Society, Elsevier, vol. 28(1), pages 1-14, January.
    30. Allen Dennis & Ben Shepherd, 2011. "Trade Facilitation and Export Diversification," The World Economy, Wiley Blackwell, vol. 34(1), pages 101-122, January.
    31. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    32. Niru Yadav, 2014. "The Role of Internet Use on International Trade: Evidence from Asian and Sub-Saharan African Enterprises," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 14(2), pages 189-214, June.
    33. Gust, Christopher & Marquez, Jaime, 2004. "International comparisons of productivity growth: the role of information technology and regulatory practices," Labour Economics, Elsevier, vol. 11(1), pages 33-58, February.
    34. Boisso, Dale & Ferrantino, Michael, 1997. "Economic Distance, Cultural Distance, and Openness in International Trade : Empirical Puzzles," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 12, pages 456-484.
    35. Linghui Tang, 2006. "Communication Costs and Trade of Differentiated Goods," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 54-68, February.
    36. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 441-487.
    37. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1095-1131.
    38. Maureen Lankhuizen & Henri L. F. de Groot & Gert‐Jan M. Linders, 2011. "The Trade‐Off between Foreign Direct Investments and Exports: The Role of Multiple Dimensions of Distance," The World Economy, Wiley Blackwell, vol. 34(8), pages 1395-1416, August.
    39. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    40. Yadav Niru, 2014. "The Role of Internet Use on International Trade: Evidence from Asian and Sub-Saharan African Enterprises," Global Economy Journal, De Gruyter, vol. 14(2), pages 189-214, April.
    41. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    42. repec:hal:spmain:info:hdl:2441/6apm7lruv088iagm4rv2c33jtg is not listed on IDEAS
    43. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    44. Luca De Benedictis & Luca Salvatici (ed.), 2011. "The Trade Impact of European Union Preferential Policies," Springer Books, Springer, number 978-3-642-16564-1, July.
    45. Caroline Freund & Diana Weinhold, 2002. "The Internet and International Trade in Services," American Economic Review, American Economic Association, vol. 92(2), pages 236-240, May.
    46. Hrushikesh Mallick, 2014. "Role of technological infrastructures in exports: evidence from a cross-country analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(5), pages 669-694, September.
    47. Choi, Changkyu, 2010. "The effect of the Internet on service trade," Economics Letters, Elsevier, vol. 109(2), pages 102-104, November.
    48. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," Post-Print hal-03579844, HAL.
    49. Choi, Changkyu, 2003. "Does the Internet stimulate inward foreign direct investment?," Journal of Policy Modeling, Elsevier, vol. 25(4), pages 319-326, June.
    50. Melitz, Jacques, 2008. "Language and foreign trade," European Economic Review, Elsevier, vol. 52(4), pages 667-699, May.
    51. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, September.
    52. Choi, Changkyu & Hoon Yi, Myung, 2009. "The effect of the Internet on economic growth: Evidence from cross-country panel data," Economics Letters, Elsevier, vol. 105(1), pages 39-41, October.
    53. repec:lmu:muenar:20646 is not listed on IDEAS
    54. 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.
    55. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    56. 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.
    57. Joshua J. Lewer & Hendrik Van den Berg, 2007. "Estimating the Institutional and Network Effects of Religious Cultures on International Trade," Kyklos, Wiley Blackwell, vol. 60(2), pages 255-277, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michele Imbruno & Joel Cariolle & Jaime de Melo, 2022. "Digital connectivity and firm participation in foreign markets: An exporter-based bilateral analysis," Discussion Papers 2022-02, University of Nottingham, GEP.
    2. Saka Jimoh Olakunle, 2023. "Digital Technology and Trade Performance in Sub-Saharan Africa," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 22(3), pages 480-496.
    3. Raphaël Chiappini & Cyrielle Gaglio, 2024. "Digital intensity, trade costs and exports' quality upgrading," The World Economy, Wiley Blackwell, vol. 47(2), pages 709-747, February.
    4. Zhang, Jiaping & Cheng, Mingwang & Yu, Ning, 2020. "Internet Use and Lower Life Satisfaction: The Mediating Effect of Environmental Quality Perception," Ecological Economics, Elsevier, vol. 176(C).
    5. Lynda Sanderson & Garrick Wright-McNaughton & Naomitsu Yashiro, 2022. "Does high-speed internet boost exporting?," Working Papers 2022/02, New Zealand Productivity Commission.
    6. To Trung Thanh & Le Thanh Ha & Hoang Phuong Dung & Tran Thi Lan Huong, 2023. "Impacts of digitalization on energy security: evidence from European countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11599-11644, October.
    7. Joël Cariolle & Michele Imbruno & Jaime de Melo, 2020. "Bilateral digital connectivity and firm participation in export markets," Working Papers hal-03182438, HAL.
    8. Gnangnon, Sèna Kimm, 2022. "Internet, Participation in International Trade, and Tax Revenue Instability," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 267-315.
    9. Shetewy, Nsreen & Shahin, Ahmed Ismail & Omri, Anis & Dai, Kuizao, 2022. "Impact of financial development and internet use on export growth: New evidence from machine learning models," Research in International Business and Finance, Elsevier, vol. 61(C).
    10. Vu, Khuong & Amann, Juergen, 2024. "An analysis of ICT hardware manufacturing in industrialized economies: Growth patterns, productivity performance, and driving Forces," Telecommunications Policy, Elsevier, vol. 48(1).
    11. Lilia Patrignani, 2024. "Understanding digital trade," Questioni di Economia e Finanza (Occasional Papers) 841, Bank of Italy, Economic Research and International Relations Area.
    12. Ha, Le Thanh, 2022. "Effects of digitalization on financialization: Empirical evidence from European countries," Technology in Society, Elsevier, vol. 68(C).
    13. Lin Zhu & Xiaoming Li & Yao Huang & Fangyuan Liu & Chengji Yang & Dongyang Li & Hongpeng Bai, 2023. "Digital Technology and Green Development in Manufacturing: Evidence from China and 20 Other Asian Countries," Sustainability, MDPI, vol. 15(17), pages 1-20, August.
    14. Wim Naudé & Martin Cameron, 2021. "Export-Led Growth after COVID-19: The Case of Portugal," Notas Económicas, Faculty of Economics, University of Coimbra, issue 52, pages 7-53, July.
    15. Phuc Nguyen, Canh & Dinh Su, Thanh & Doytch, Nadia, 2020. "The drivers of financial development: Global evidence from internet and mobile usage," Information Economics and Policy, Elsevier, vol. 53(C).
    16. Sun, Meng, 2021. "The Internet and SME Participation in Exports," Information Economics and Policy, Elsevier, vol. 57(C).
    17. Marinella Boccia & Anna Maria Ferragina & Stefano Iandolo, 2022. "Follow the cloud! The impact of ICT on Italian provinces’ trade," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(4), pages 667-690, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gnangnon, Sèna Kimm, 2022. "Internet, Participation in International Trade, and Tax Revenue Instability," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 267-315.
    2. Abeliansky, Ana Lucia & Barbero, Javier & Rodriguez-Crespo, Ernesto, 2021. "ICTs quality and quantity and the margins of trade," Telecommunications Policy, Elsevier, vol. 45(1).
    3. 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.
    4. Melitz, Jacques & Toubal, Farid, 2014. "Native language, spoken language, translation and trade," Journal of International Economics, Elsevier, vol. 93(2), pages 351-363.
    5. Getachew Magnar Kitila & Fuzhong Chen, 2021. "Multilateral Trade Resistance, International Competitiveness and African International Exports: A Network Perspective," International Journal of Science and Business, IJSAB International, vol. 5(10), pages 111-126.
    6. Gnangnon, Sèna Kimm, 2020. "Internet and tax reform in developing countries," Information Economics and Policy, Elsevier, vol. 51(C).
    7. Lapatinas, Athanasios, 2019. "The effect of the Internet on economic sophistication: An empirical analysis," Economics Letters, Elsevier, vol. 174(C), pages 35-38.
    8. Gnangnon, Sèna Kimm & Brun, Jean-François, 2018. "Impact of bridging the Internet gap on public revenue mobilization," Information Economics and Policy, Elsevier, vol. 43(C), pages 23-33.
    9. Joël Cariolle & Michele Imbruno & Jaime de Melo, 2020. "Bilateral digital connectivity and firm participation in export markets," Working Papers hal-03182438, HAL.
    10. Margherita Scoppola & Valentina Raimondi & Alessandro Olper, 2018. "The impact of EU trade preferences on the extensive and intensive margins of agricultural and food products," Agricultural Economics, International Association of Agricultural Economists, vol. 49(2), pages 251-263, March.
    11. Shuzhong Ma & Zengxi Hu, 2023. "Internet penetration and multi‐product exporters: Firm‐level evidence from China," The World Economy, Wiley Blackwell, vol. 46(5), pages 1444-1470, May.
    12. Raphaël Chiappini & Cyrielle Gaglio, 2024. "Digital intensity, trade costs and exports' quality upgrading," The World Economy, Wiley Blackwell, vol. 47(2), pages 709-747, February.
    13. 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.
    14. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2015. "The Role of Foreign Networks for Firm Export of Services," Working Papers 2015:6, Örebro University, School of Business.
    15. Sun, Meng, 2021. "The Internet and SME Participation in Exports," Information Economics and Policy, Elsevier, vol. 57(C).
    16. Carl Gaigné & Lota D. Tamini, 2021. "Environmental Taxation and Import Demand for Environmental Goods: Theory and Evidence from the European Union," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(2), pages 307-352, February.
    17. Anderson, James E. & Yotov, Yoto V., 2020. "Short run gravity," Journal of International Economics, Elsevier, vol. 126(C).
    18. Bastos, Paulo & Silva, Joana, 2012. "Networks, firms, and trade," Journal of International Economics, Elsevier, vol. 87(2), pages 352-364.
    19. Carl Gaigné & Lota D. Tamini, 2018. "Environmental regulation and eco-industry trade: Theory and evidence from the European Union," Working Papers SMART 18-09, INRAE UMR SMART.
    20. Peter H. Egger & Andrea Lassmann, 2015. "The Causal Impact of Common Native Language on International Trade: Evidence from a Spatial Regression Discontinuity Design," Economic Journal, Royal Economic Society, vol. 0(584), pages 699-745, May.

    More about this item

    Keywords

    Internet; Gravity model; Exports; Extensive margin; Intensive margin; Linguistic distance;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:46:y:2019:i:c:p:41-54. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505549 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.