IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-03201735.html
   My bibliography  Save this paper

Spatial internet spillovers in manufacturing

Author

Listed:
  • Joël Cariolle

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

  • Maëlan Le Goff

    (Banque de France - Banque de France - Banque de France)

Abstract

Does local internet diffusion spur manufacturing firm performance in developing countries? To answer this question, we conduct instrumental variable estimations, using repeated cross-section data on 40,154 manufacturing firms from 91 developing and transition economies, and find that a 10 percentage-point increase in the incidence of email use in locations where firms operate, raises by 36% their sales and sales per worker. This evidence turns out to be driven by the local dissemination of email technology within industries, rather than across industries. This higher performance in manufacturing is also found to be accompanied by output diversification, driven by inter-industry spillovers, and work-force contraction, driven by intra-industry ones. However, we further provide evidence of U-shaped inter-industry spillovers, i.e. negative inter-industry spillovers turning positive once the email incidence threshold reaches ∼ 50% of the local universe of firms, suggesting that network effects are at play. Last, these threshold effects seem related to the presence of outward-oriented firms, which tend to operate in places where internet is more diffused. Overall, this paper shows that local industrialisation paces may diverge between poorly and highly digitalised environments.

Suggested Citation

  • Joël Cariolle & Maëlan Le Goff, 2021. "Spatial internet spillovers in manufacturing," Working Papers hal-03201735, HAL.
  • Handle: RePEc:hal:wpaper:hal-03201735
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-03201735v3
    as

    Download full text from publisher

    File URL: https://hal.archives-ouvertes.fr/hal-03201735v3/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
    2. 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, vol. 26(6), pages 1067-1088.
    3. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2006. "Investment climate and international integration," World Development, Elsevier, vol. 34(9), pages 1498-1516, September.
    4. Avi Goldfarb & Catherine Tucker, 2019. "Digital Economics," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 3-43, March.
    5. Holger Görg & David Greenaway, 2016. "Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 9, pages 163-189, World Scientific Publishing Co. Pte. Ltd..
    6. Sadowski, B. M. & Maitland, C. & van Dongen, J., 2002. "Strategic use of the Internet by small- and medium-sized companies: an exploratory study," Information Economics and Policy, Elsevier, vol. 14(1), pages 75-93, March.
    7. Paunov, Caroline & Rollo, Valentina, 2016. "Has the Internet Fostered Inclusive Innovation in the Developing World?," World Development, Elsevier, vol. 78(C), pages 587-609.
    8. Bennett Harrison & Maryellen R. Kelley & Jon Gant, 1996. "Innovative Firm Behavior and Local Milieu: Exploring the Intersection of Agglomeration, Firm Effects, and Technological Change," Economic Geography, Taylor & Francis Journals, vol. 72(3), pages 233-258, July.
    9. Caroline Paunov & Valentina Rollo, 2015. "Overcoming Obstacles: The Internet's Contribution to Firm Development," The World Bank Economic Review, World Bank Group, vol. 29(suppl_1), pages 192-204.
    10. Carol Corrado & Jonathan Haskel & Cecilia Jona-Lasinio, 2017. "Knowledge Spillovers, ICT and Productivity Growth," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(4), pages 592-618, August.
    11. Jo Thori Lind & Halvor Mehlum, 2010. "With or Without U? The Appropriate Test for a U‐Shaped Relationship," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(1), pages 109-118, February.
    12. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
    13. Jeremy Grace & Charles Kenny & Christine Zhen-Wei Qiang & Jia Liu & Taylor Reynolds, 2003. "Information and Communication Technologies and Broad-Based Development : A Partial Review of the Evidence," World Bank Publications - Books, The World Bank Group, number 15053.
    14. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    15. Oecd, 2014. "International Cables, Gateways, Backhaul and International Exchange Points," OECD Digital Economy Papers 232, OECD Publishing.
    16. Kugler, Maurice, 2006. "Spillovers from foreign direct investment: Within or between industries?," Journal of Development Economics, Elsevier, vol. 80(2), pages 444-477, August.
    17. 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.
    18. Jieun Choi & Mark Dutz & Zainab Usman, 2020. "The Future of Work in Africa [L’avenir du travail en Afrique]," World Bank Publications - Books, The World Bank Group, number 32124.
    19. Dani Rodrik, 2018. "New Technologies, Global Value Chains, and the Developing Economies," CESifo Working Paper Series 7307, CESifo.
    20. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    21. Buys, Piet & Dasgupta, Susmita & Thomas, Timothy S. & Wheeler, David, 2009. "Determinants of a Digital Divide in Sub-Saharan Africa: A Spatial Econometric Analysis of Cell Phone Coverage," World Development, Elsevier, vol. 37(9), pages 1494-1505, September.
    22. 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.
    23. Ryohei Nakamura, 2012. "Contributions of local agglomeration to productivity: Stochastic frontier estimations from Japanese manufacturing firm data," Papers in Regional Science, Wiley Blackwell, vol. 91(3), pages 569-597, August.
    24. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, February.
    25. Dani Rodrik, 2016. "Premature deindustrialization," Journal of Economic Growth, Springer, vol. 21(1), pages 1-33, March.
    26. Kevin J. Stiroh, 2002. "Are ICT Spillovers Driving the New Economy?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 33-57, March.
    27. 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.
    28. Ram C. Acharya, 2016. "ICT use and total factor productivity growth: intangible capital or productive externalities?," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 16-39.
    29. Joël Cariolle & Maelan Le Goff & Olicier Santoni, 2019. "Digital vulnerability and performance of firms in developing countries," Working papers 709, Banque de France.
    30. Matthieu Chemin, 2020. "Judicial Efficiency and Firm Productivity: Evidence from a World Database of Judicial Reforms," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 49-64, March.
    31. Koen Frenken & Frank Van Oort & Thijs Verburg, 2007. "Related Variety, Unrelated Variety and Regional Economic Growth," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 685-697.
    32. 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.
    33. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 1-31, October.
    34. Cremer, Jacques & Rey, Patrick & Tirole, Jean, 2000. "Connectivity in the Commercial Internet," Journal of Industrial Economics, Wiley Blackwell, vol. 48(4), pages 433-472, December.
    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. Joël Cariolle & Florian Léon, 2022. "How internet helped firms to cope with COVID-19," Working Papers hal-03592617, HAL.
    2. Joël Cariolle & Yasmine Elkhateeb & Mathilde Maurel, 2022. "(Mis-)information technology: Internet use and perception of democracy in Africa," Documents de travail du Centre d'Economie de la Sorbonne 22010, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

    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. 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.
    2. Cariolle, Joël, 2021. "International connectivity and the digital divide in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 55(C).
    3. Joël Cariolle & Michele Imbruno & Jaime de Melo, 2020. "Bilateral digital connectivity and firm participation in export markets," Working Papers hal-03182438, HAL.
    4. Jenny Aker & Joel Cariolle, 2022. "The Use of Digital for Public Service Provision in Sub-Saharan Africa," Post-Print hal-03003899, HAL.
    5. 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.
    6. Joël Cariolle & Florian Léon, 2022. "How internet helped firms cope with COVID-19 [Comment internet a aidé les entreprises à faire face à la Covid-19]," Post-Print hal-03606071, HAL.
    7. Pieri, Fabio & Vecchi, Michela & Venturini, Francesco, 2018. "Modelling the joint impact of R&D and ICT on productivity: A frontier analysis approach," Research Policy, Elsevier, vol. 47(9), pages 1842-1852.
    8. 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.
    9. Joël Cariolle & Maelan Le Goff & Olicier Santoni, 2019. "Digital vulnerability and performance of firms in developing countries," Working papers 709, Banque de France.
    10. Nicola Cortinovis & Riccardo Crescenzi & Frank van Oort, 2020. "Multinational enterprises, industrial relatedness and employment in European regions [Innovation: mapping the winds of creative destruction]," Journal of Economic Geography, Oxford University Press, vol. 20(5), pages 1165-1205.
    11. Galliano, D. & Roux, P., 2005. "The evolution of the spatial digital divide : from internet adoption to internet use by french industrial firms," Economics Working Paper Archive (Toulouse) 200513, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).
    12. 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).
    13. Giulio Cainelli & Eleonora Di Maria & Roberto Ganau, 2011. "Agglomeration, related-variety and internationalisation. Does a relationship exist?," Openloc Working Papers 1114, Public policies and local development.
    14. Chou, Yen-Chun & Hao-Chun Chuang, Howard & Shao, Benjamin B.M., 2014. "The impacts of information technology on total factor productivity: A look at externalities and innovations," International Journal of Production Economics, Elsevier, vol. 158(C), pages 290-299.
    15. Nicola Cortinovis & Riccardo Crescenzi & Frank van Oort, 0. "Multinational enterprises, industrial relatedness and employment in European regions," Journal of Economic Geography, Oxford University Press, vol. 20(5), pages 1165-1205.
    16. Elstner, Steffen & Grimme, Christian & Kecht, Valentin & Lehmann, Robert, 2022. "The diffusion of technological progress in ICT," European Economic Review, Elsevier, vol. 149(C).
    17. 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).
    18. No, Angela, 2008. "Cities and Growth: Knowledge Spillovers in the Adoption of Advanced Manufacturing Technologies," The Canadian Economy in Transition 2008018e, Statistics Canada, Economic Analysis Division.
    19. Norbäck, Pehr-Johan & Persson, Lars & Tåg, Joacim Ingemar, 2013. "Acquisitions, Entry, and Innovation in Network Industries," CEPR Discussion Papers 9585, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Connectivity; internet; spillovers; manufactures; industrialisation;
    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-03201735. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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 hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.