Publication: Has the Internet Increased Exports for Firms from Low and Middle-Income Countries?
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Published
2008
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01676245
Date
2012-03-30
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Many commentators have suggested that the internet is one of the forces driving globalization. This paper assesses one aspect of these claims, looking at whether internet access appears to affect the export performance using data from enterprises in low and middle-income economies in Eastern Europe and Central Asia. The paper finds a strong correlation between exporting and internet access at the enterprise level. Moreover, this correlation remains after controlling factors that might affect both exports and internet connectivity and self-selectivity.
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Publication Has the Internet Increased Trade? Evidence from Industrial and Developing Countries(World Bank, Washington, D.C., 2004-02)If the Internet made it easier for firms to enter new markets by reducing communication and search costs, then it may also have made it easier to export goods and services. The authors find that higher Internet penetration in developing countries is correlated with greater exports to industrial countries, but not with trade between developing countries or with exports from industrial countries. Interpreting the correlations is difficult because causation may run from Internet use to exports or from trade openness to Internet use. To test whether Internet use affects export behavior, the authors endogenize Internet use by using countries' regulation of data services and Internet provision as instrumental variables. The results are robust to endogenizing Internet penetration, suggesting that access to the Internet does affect the export performance of firms in developing countries. In other words, Internet access appears to stimulate exports from poor countries to rich countries. Moreover, the analysis suggests that regulatory policies affecting telecommunications and Internet development indirectly affect trade, further emphasizing the importance of deregulating potentially competitive services in the telecommunications industry.Publication Leapfrogging? India's Information Technology Industry and the Internet(Washington, DC: World Bank and the International Finance Corporation, 2001-05)The Internet has been seen by numerous observers, as a set of technologies that might enable developing countries to "leapfrog" over the development path, taken by industrial countries, enabling poorer countries to increase their rates of growth, and "catch up" sooner. Using India as a case study, this paper reviews the degree to which that promise might be realized. The paper concludes that while internet development in India is still at a very early stage in terms of numbers of connections, and overall use, the promise it offers for increased productivity, and economic growth, is likely to be significant. Most benefits are likely to come from business use of the internet for both internal control, and for dealing with business customers, not from customer use. In particular, global connections will be much enhanced by India's liberalized access to international internet gateways, and to privately-provided undersea cable access. This access alone could offer Indian companies, business opportunities that otherwise would flow to other, better connected Asian competitors. However, poor infrastructure, along with low public investment, remains a difficult problem to overcome. And, although technical education has been a bright spot, India's overall educational attainment is low in demographic terms, and illiteracy will critically limit "leapfrogging" the anticipated expansion of the internet. Rather, economic growth depends on complementary interactions between the private sector, and the government's adequate provision of public goods.Publication The Internet as a General-Purpose Technology : Firm-Level Evidence from Around the World(World Bank Group, Washington, DC, 2015-02)This paper uses firm-level data to assess whether telecommunication services are general-purpose technologies (technologies that benefit a large segment of the economy and have long-lasting effect). It finds that only Internet services are so: firm growth and productivity are much higher when Internet access is greater and when firms use the Internet more intensively; and Internet access benefits firms in high- and low-tech industries, firms of all sizes, and exporter and non-exporter firms. Small firms appear to benefit more from the Internet than large firms do. In contrast, fixed-line and cellular services are not robustly linked to firm performance.Publication Regulation and Internet Use in Developing Countries(World Bank, Washington, DC, 2003-03)Policymakers are simultaneously concerned about the consequences of a worsening "digital divide" between rich and poor countries and hopeful that information and computing technologies could increase economic growth in developing countries. But very little research has explored the reasons for the digital divide beyond noting that it is strongly correlated with standard development indicators, and no empirical research has explored the role of regulation. The author uses data from a unique new survey of telecommunications regulators and other sources to measure the effects of regulation in Internet development. He finds regulation strongly correlated with lower Internet penetration and higher Internet access charges. More specifically, controlling for factors such as income, development of the telecommunications infrastructure, ubiquity of personal computers, and time trends, countries that require formal regulatory approval for Internet service providers (ISPs) to begin operations have fewer Internet users and Internet hosts than countries that do not require such approval. Moreover, countries that regulate ISP final-user prices have higher Internet access prices than countries that do not have such regulations. These results suggest that developing countries' own regulatory policies can have large impacts on the digital divide.Publication The Diffusion of the Internet : A Cross-Country Analysis(2010)This paper analyzes the process of Internet diffusion across the world using a panel of 214 countries during the period 1990-2004. Countries are classified as low- or high-income and it is shown that the diffusion process is characterized by a different S-shaped curve in each group. The estimated diffusion curves provide evidence of very slow "catching up". The paper also explores the determinants of Internet diffusion and shows that network effects are crucial to explain this process. One important finding is that the degree of competition in the provision of the Internet contributes positively to its diffusion.
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