Services Trade and Internet Connectivity

Sam Haltenhof
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Sam Haltenhof: University of Michigan

No 668, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: Internet connectivity and exports of services are positively correlated. This paper presents a gravity model with bilateral measures of Internet connectivity to formalize this correlation. To establish bilateral connectivity, I construct a novel dataset based on the undersea fiber-optic cable network responsible for 99% of international data traffic. I measure the degree of bilateral connectivity using information on the capacities of these cables in order to estimate the effect of that connection on export growth between pairs of digitally connected countries. I estimate a positive relationship between Internet connectivity and bilateral exports in data-intensive industries with an elasticity of 0.25 to 2.25 over a variety of possible settings.

Keywords: Internet; trade in services; gravity (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Pages: 26 pages
New Economics Papers: this item is included in nep-int and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:668

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