Does Internet Usage Stimulate the Accumulation of Social Capital? A Panel nvestigation for Organization of Economic Cooperation and Development Countries

Mohammad Salahuddin, Khorshed Alam and Lorelle Burton
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Mohammad Salahuddin: School of Commerce, University of Southern Queensland, Toowoomba, QLD 4350, Australia
Khorshed Alam: School of Commerce, University of Southern Queensland, Toowoomba, QLD 4350, Australia,
Lorelle Burton: Psychology and Counselling, University of Southern Queensland, Toowoomba, QLD 4350, Australia

International Journal of Economics and Financial Issues, 2016, vol. 6, issue 1, 347-353

Abstract: This study estimates the effects of the Internet and economic growth on the accumulation of social capital (measured by trust) using panel data for 19 Organization of Economic Cooperation and Development (OECD) countries for the period 1985-2012. A cross sectional dependence (CD) test is performed. Having found the cross sectional dependence, a cross-sectionally augmented IPS (CIPS) unit root test is conducted to check for stationarity of data. All the variables were found first-difference stationary. Pedroni cointegration test confirms the presence of long-run relationship among the variables. This follows the application of pooled mean group regression technique to estimate the short- and long-run association between the variables. The findings suggest a highly significant negative long-run relationship between Internet usage and social capital and a positive relationship between them in the short-run. However, both long-run and short-run coefficients are small in magnitude. Economic growth stimulates social capital both in the short- and the long-run. That the Internet reduces social capital in the long-run implies that the gains in trust obtained from online connectivity were perhaps offset by the loss in the same due to decline in frequency of offline interaction caused by increasing online engagement. Economic growth stimulates activities in markets that engage into more frequent transactions between businesses that may result in increased trust. Finally, the findings of this study do not rule out the potential of including social capital issue into the digital divide policies of these countries

Keywords: Economic Growth; Internet Usage; Organization of Economic Cooperation and Development; Panel Data; Social Capital (search for similar items in EconPapers)
JEL-codes: C23 F43 O (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2016-01-44

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