Internet Adoption and Firm Exports in Developing Economies

Jonathan Timmis

No 2013-05, Discussion Papers from University of Nottingham, GEP

Abstract: This paper investigates the effect of Internet technology on how firms access export markets - directly or via intermediaries. Empirical evidence suggests that technology diffusion is geographically localised, with spillover effects from neighbouring firms decaying quickly over short distances. To address the endogeneity of Internet adoption, I construct an instrument that captures these local network effects, by matching IP addresses to firm locations. Using a cross-section of firms in 18 developing countries I find that Internet access magnifies direct trade with no discernible effect on intermediated trade. Adopting the Internet because of local networks increases direct exports as a proportion of firm sales by 32-36%. The analysis is robust to consideration of a wide-range of potentially omitted variables.

Keywords: Internet; technology; intermediation; international trade; heterogeneous firms (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-bec, nep-cwa and nep-ict
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:13/05

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