Does ICT Development Flatten the Globe? Evidence from International Trade Costs Data

Moussa Keita

MPRA Paper from University Library of Munich, Germany

Abstract: This study attempts to bring new perspectives on the death of distance hypothesis by examining to what extent the intensification of ICT has contributed to attenuate the effect of distance on international trade issues. Our analysis is based on an extended gravity model constituted of 2827 country pairs observed from 2002 to 2012. The model is estimated by using the Hausman-Taylor instrumental variable approach to deal with specificities of the panel gravity models that cannot be treated in classical fixed-effect or random-effect models. The estimations confirm significant beneficial effects of ICT regarding trade costs reduction. We found that bilateral trade costs are significantly low between countries that have a more densified communication network. And this effect appears to be strongly heterogeneous regarding the distance. In particular, we found that the impact of ICT on trade costs is greater when the distance between the trading partners is more important. We also found that the elasticity of trade costs to distance decreases as the level of ICT increases. These results appear robust to various sensitivity and robustness checks and are consistent with other studies. Finally, the results obtained in this study suggest the existence of strong distance-neutralizing effect of ICT.

Keywords: ICT; Distance; Trade; Trade costs; infrastructure; Gravity model. (search for similar items in EconPapers)
JEL-codes: F14 O33 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-ict, nep-int and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in American Journal of Trade and Policy 3.2(2015): pp. 153-160

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/69882/1/MPRA_paper_69882.pdf original version (application/pdf)

Related works:
Journal Article: Does ICT Development Flatten the Globe? Evidence from International Trade Costs Data (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:69882

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().