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Bilateral digital connectivity and firm participation in export markets

Joël Cariolle (), Michele Imbruno () and Jaime de Melo ()

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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.

Keywords: Internet Connectivity; ICT; Submarine cables; Export behaviour (search for similar items in EconPapers)
Date: 2020-09-30
New Economics Papers: this item is included in nep-ict and nep-int
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