Goods Follow Bytes: The Impact of ICT on EU Trade

25 Pages Posted: 17 Feb 2012

See all articles by Anselm Mattes

Anselm Mattes

affiliation not provided to SSRN

Philipp Meinen

Deutsche Bundesbank

Ferdinand Pavel

affiliation not provided to SSRN

Date Written: January 2012

Abstract

This paper empirically assesses whether the deployment and use of Information and Communication Technology (ICT) infrastructure at the national level affects trade flows within the European Union (EU) and between the EU and its main trading partners. The analysis tests the hypothesis that availability and use of ICT enhances trade by reducing transaction costs and through network effects that materialize when both trading partners are advanced users of ICT. The empirical analysis is based on the application of gravity equations in various robust specifications. The results suggest that ICT does have a significant impact on EU trade. In particular, we find trade to be enhanced if both trading partners reveal advanced ICT endowments, which supports the expected network effects. Additionally, we observe trade diversion effects from less to highly ICT developed countries.

Keywords: Exports, ICT, gravity model, international trade, network effects

JEL Classification: F1, D2

Suggested Citation

Mattes, Anselm and Meinen, Philipp and Pavel, Ferdinand, Goods Follow Bytes: The Impact of ICT on EU Trade (January 2012). DIW Berlin Discussion Paper No. 1182, Available at SSRN: https://ssrn.com/abstract=2006481 or http://dx.doi.org/10.2139/ssrn.2006481

Anselm Mattes (Contact Author)

affiliation not provided to SSRN ( email )

Philipp Meinen

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Ferdinand Pavel

affiliation not provided to SSRN ( email )

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