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Internet Adoption and Firm Exports in Developing Economies

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  • Jonathan Timmis
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.

Suggested Citation

  • Jonathan Timmis, 2013. "Internet Adoption and Firm Exports in Developing Economies," Discussion Papers 2013-05, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:13/05
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    File URL: https://www.nottingham.ac.uk/gep/documents/papers/2013/2013-05.pdf
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    Cited by:

    1. Bing Li & Linyue Li & Rou Li & Yunsong Yue, 2023. "Internet and firms’ exports and imports: Firm level evidence from China," The World Economy, Wiley Blackwell, vol. 46(3), pages 835-872, March.
    2. Carballo, Jerónimo & Graziano, Alejandro & Schaur, Georg & Volpe Martincus, Christian, 2016. "The Border Labyrinth: Information Technologies and Trade in the Presence of Multiple Agencies," IDB Publications (Working Papers) 7691, Inter-American Development Bank.
    3. Jerónimo Carballo & Alejandro Graziano & Georg Schaur & Christian Volpe Martincus, 2016. "The Border Labyrinth: Information Technologies and Trade in the Presence of Multiple Agencies," IDB Publications (Working Papers) 94637, Inter-American Development Bank.

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    Keywords

    Internet; technology; intermediation; international trade; heterogeneous firms;
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