IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-03182438.html
   My bibliography  Save this paper

Bilateral digital connectivity and firm participation in export markets

Author

Listed:
  • Joël Cariolle

    (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)

  • Michele Imbruno

    (UNIROMA - Università degli Studi di Roma "La Sapienza" = Sapienza University [Rome], Nottingham Center for Research on Globalisation and Economic Policy (GEP))

  • Jaime de Melo

    (UNIGE - Université de Genève = University of Geneva, FERDI - Fondation pour les Etudes et Recherches sur le Développement International)

Abstract

This paper studies how bilateral digital connectivity resulting from telecommunications submarine cable (SMC) deployment affects firm participation in export markets. Using an unbalanced panel of bilateral trade data from 48 countries during the period 1997-2014, we find that a SMC connection between two countries is associated with an increase in the number of bilateral exporters in developed countries, but also with a reduction in the number of bilateral exporters in developing countries. This negative association between bilateral connectivity and firm participation in export markets appears to be stronger in the poorest developing areas: Middle East and North Africa, South Asia and Sub-Saharan Africa. The growth in world connectivity spurred by SMCs deployment has therefore had a heterogeneous effect on firm decision to export, pushing more firms from high-income countries to enter export markets, and some incumbent exporters from lower-income countries to exit them.

Suggested Citation

  • Joël Cariolle & Michele Imbruno & Jaime de Melo, 2020. "Bilateral digital connectivity and firm participation in export markets," Working Papers hal-03182438, HAL.
    • Handle: RePEc:hal:wpaper:hal-03182438
    Note: View the original document on HAL open archive server: https://hal.science/hal-03182438
    as

    Download full text from publisher

    File URL: https://hal.science/hal-03182438/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ian William Marsh & Ana Rincon-Aznar & Michela Vecchi & Francesco Venturini, 2017. "We see ICT spillovers everywhere but in the econometric evidence: a reassessment," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(6), pages 1067-1088.
    2. Avi Goldfarb & Catherine Tucker, 2019. "Digital Economics," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 3-43, March.
    3. Christopher Foster & Mark Graham & Laura Mann & Timothy Waema & Nicolas Friederici, 2018. "Digital Control in Value Chains: Challenges of Connectivity for East African Firms," Economic Geography, Taylor & Francis Journals, vol. 94(1), pages 68-86, January.
    4. Danielle Galliano & Pascale Roux, 2008. "Organisational motives and spatial effects in Internet adoption and intensity of use: evidence from French industrial firms," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(2), pages 425-448, June.
    5. Fernandes, Ana M. & Mattoo, Aaditya & Nguyen, Huy & Schiffbauer, Marc, 2019. "The internet and Chinese exports in the pre-ali baba era," Journal of Development Economics, Elsevier, vol. 138(C), pages 57-76.
    6. Michael J. Dickstein & Eduardo Morales, 2018. "What do Exporters Know?," Working Papers 18-19, New York University, Leonard N. Stern School of Business, Department of Economics.
    7. Dennis Weller & Bill Woodcock, 2013. "Internet Traffic Exchange: Market Developments and Policy Challenges," OECD Digital Economy Papers 207, OECD Publishing.
    8. Joel Cariolle, 2018. "Telecommunication Submarine-C able Deployment and the Digital Divide in Sub-Saharan Africa [fondation pour les études et recherches sur le développement international Telecommunication Submarine- C," Post-Print hal-01938451, HAL.
    9. Michael J Dickstein & Eduardo Morales, 2018. "What do Exporters Know?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(4), pages 1753-1801.
    10. Andreas Lendle & Marcelo Olarreaga & Simon Schropp & Pierre‐Louis Vézina, 2016. "There Goes Gravity: eBay and the Death of Distance," Economic Journal, Royal Economic Society, vol. 126(591), pages 406-441, March.
    11. Jacques Crémer & Patrick Rey & Jean Tirole, 2000. "Connectivity in the Commercial Internet," Journal of Industrial Economics, Wiley Blackwell, vol. 48(4), pages 433-472, December.
    12. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    13. Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2016. "Exporter behavior, country size and stage of development: Evidence from the exporter dynamics database," Journal of Development Economics, Elsevier, vol. 119(C), pages 121-137.
    14. 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.
    15. Choi, Changkyu, 2010. "The effect of the Internet on service trade," Economics Letters, Elsevier, vol. 109(2), pages 102-104, November.
    16. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    17. Dasgupta, Kunal & Mondria, Jordi, 2018. "Inattentive importers," Journal of International Economics, Elsevier, vol. 112(C), pages 150-165.
    18. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    19. Joël Cariolle & David A Carroll, 2020. "Advancing digital frontiers in African economies: lessons learned from firm-level innovations," Working Papers hal-03118738, HAL.
    20. Jonas Hjort & Jonas Poulsen, 2019. "The Arrival of Fast Internet and Employment in Africa," American Economic Review, American Economic Association, vol. 109(3), pages 1032-1079, March.
    21. 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.
    22. Daniel Björkegren, 2019. "The Adoption of Network Goods: Evidence from the Spread of Mobile Phones in Rwanda," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(3), pages 1033-1060.
    23. Paula Bustos, 2011. "Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms," American Economic Review, American Economic Association, vol. 101(1), pages 304-340, February.
    24. 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.
    25. Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    26. Richard Kneller & Jonathan Timmis, 2016. "ICT and Exporting: The Effects of Broadband on the Extensive Margin of Business Service Exports," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 757-796, September.
    27. Mario Larch & Joschka Wanner & Yoto V. Yotov & Thomas Zylkin, 2019. "Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(3), pages 487-510, June.
    28. Osnago,Alberto & Tan,Shawn Weiming, 2016. "Disaggregating the impact of the internet on international trade," Policy Research Working Paper Series 7785, The World Bank.
    29. Linghui Tang, 2006. "Communication Costs and Trade of Differentiated Goods," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 54-68, February.
    30. Joël Cariolle & Maelan Le Goff & Olicier Santoni, 2019. "Digital vulnerability and performance of firms in developing countries," Working papers 709, Banque de France.
    31. Cariolle, Joël, 2021. "International connectivity and the digital divide in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 55(C).
    32. 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.
    33. 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.
    34. 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.
    35. Danielle Galliano & Pascale Roux, 2008. "Organisational motives and spatial effects in Internet adoption and intensity of use: evidence from French industrial firms," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(2), pages 425-448, June.
    36. repec:bla:jindec:v:48:y:2000:i:4:p:433-72 is not listed on IDEAS
    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. Herman, Peter R. & Oliver, Sarah, 2023. "Trade, policy, and economic development in the digital economy," Journal of Development Economics, Elsevier, vol. 164(C).
    3. Jaime de Melo & Jean-Marc Solleder, 2022. "Patterns and Correlates of Supply Chain Trade in MENA and SSA," Working Papers hal-03649085, HAL.
    4. 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. 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. Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    3. 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.
    4. 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.
    5. Sun, Meng, 2021. "The Internet and SME Participation in Exports," Information Economics and Policy, Elsevier, vol. 57(C).
    6. Joël Cariolle & Maëlan le Goff, 2023. "Spatial Internet Spillovers in Manufacturing," Journal of Development Studies, Taylor & Francis Journals, vol. 59(8), pages 1163-1186, August.
    7. Cariolle, Joël, 2021. "International connectivity and the digital divide in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 55(C).
    8. Carballo, Jerónimo & Rodriguez Chatruc, Marisol & Salas Santa, Catalina & Volpe Martincus, Christian, 2022. "Online business platforms and international trade," Journal of International Economics, Elsevier, vol. 137(C).
    9. Xiong, Tingting, 2023. "The effect of technological intensity on international trade," International Economics, Elsevier, vol. 176(C).
    10. Joël Cariolle & Maelan Le Goff & Olicier Santoni, 2019. "Digital vulnerability and performance of firms in developing countries," Working papers 709, Banque de France.
    11. Zi Hui Yin & Chang Hwan Choi, 2023. "The effects of China’s cross-border e-commerce on its exports: a comparative analysis of goods and services trade," Electronic Commerce Research, Springer, vol. 23(1), pages 443-474, March.
    12. Joël Cariolle & David A Carroll, 2020. "Digital Technologies for Small and Medium Enterprises and job creation in Sub-Saharan Africa," Working Papers hal-03004583, HAL.
    13. Herman, Peter R. & Oliver, Sarah, 2023. "Trade, policy, and economic development in the digital economy," Journal of Development Economics, Elsevier, vol. 164(C).
    14. Joël Cariolle & David A Carroll, 2022. "The Use of Digital for Public Service Provision in Sub-Saharan Africa," Working Papers hal-03004535, HAL.
    15. 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).
    16. Lynda Sanderson & Garrick Wright-McNaughton & Naomitsu Yashiro, 2022. "Does high-speed internet boost exporting?," Working Papers 2022/02, New Zealand Productivity Commission.
    17. Joel Cariolle & Maëlan Le Goff & Olivier Santoni, 2018. "Broadband infrastructure deployment, digital vulnerability, and local firm performance in developing and transition countries," Post-Print hal-01758660, HAL.
    18. Abeliansky, Ana Lucia & Barbero, Javier & Rodriguez-Crespo, Ernesto, 2021. "ICTs quality and quantity and the margins of trade," Telecommunications Policy, Elsevier, vol. 45(1).
    19. Hildegunn K. Nordås & Dorothée Rouzet, 2017. "The Impact of Services Trade Restrictiveness on Trade Flows," The World Economy, Wiley Blackwell, vol. 40(6), pages 1155-1183, June.
    20. Gopalan, Sasidaran & Reddy, Ketan & Sasidharan, Subash, 2022. "Does digitalization spur global value chain participation? Firm-level evidence from emerging markets," Information Economics and Policy, Elsevier, vol. 59(C).

    More about this item

    Keywords

    Internet Connectivity; ICT; Submarine cables; Export behaviour;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hal:wpaper:hal-03182438. 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.