Does the internet generate growth, international trade, or both?

Research output: Contribution to journalArticleAcademicpeer-review


Recent cross country panel data studies find a positive impact of internet use on economic growth and a positive impact of internet use on trade. The present study challenges the first finding by showing that internet use does not explain economic growth directly in a fully specified growth model. In particular openness to international trade variables seem to be highly correlated with internet use and the findings in the literature that internet use causes trade is confirmed here suggesting that internet use impacts trade and that trade impacts economic growth. A simultaneous equations model confirms the positive and significant role of internet use to openness and the importance of openness to economic growth. Internet use shows to be more impacting trade in non-high income countries than in high income countries whereas the impact of trade on economic growth is the same for both income groups.
Original languageEnglish
Pages (from-to)137-163
JournalInternational Economics and Economic Policy
Issue number1-2
Publication statusPublished - 1 Jan 2014

Cite this