The impact of information and communication technology on services exports: Evidence from developed and developing economies

Abstract

Objective: The objective of the article is to examine direct and indirect channels through which information and communication technology affects exports of services.

Research Design & Methods: In this study a linear fixed effects panel regression model with country-specific fixed effects and with Driscoll and Kraay standard errors is fit to the data over the period 2000-2019. The samples cover the data sets for 80 countries, and separately for 44 high-income and 36 low and middle-income economies.

Findings: The findings show that the access to traditional and broadband digital connectivity has a positive impact on services exports, revealing a slightly stronger influence of the latter for the advanced economies. Additionally, exports and imports of the ICT goods appear to be complementary to services exports.

Implications & Recommendations: The detected dependencies indicate that in a digital era, connectivity infrastructure, as well as international flows of the ICT goods bring about significant effects for services exports. Both findings raise important implications for export-led growth policy that should account for new interdependencies between goods and services, and for further investments in digital infrastructure.

Contribution & Value Added: This study contributes to the relevant literature by extending the traditional factor-endowment approach used to explain the impact of information and communication technology on the exports of services. Besides specifying the exports of services as a function of internet market penetration, both a traditional and a broadband one, we consider the exports and the imports of ICT goods as the potential determinants of services exports.

Keywords

services exports, digital trade, broadband connectivity, international trade, ICT, trade in services

Author Biography

Marta Wajda-Lichy

Assistant Professor at the Department of Macroeconomics, Cracow University of Economics, Poland. Her research interests cover international trade, open economy macroeconomics, economics of regional integration.

Kamil Fijorek

Assistant Professor at the Department of Statistics, Cracow University of Economics, Poland. His research interests include bankruptcy prediction, energy economics, and panel data analysis.

Sabina Denkowska

Assistant Professor at the Department of Statistics, Cracow University of Economics, Poland. Her interests focus on methods of mathematical statistics, including panel methods, multiple testing procedures, propensity score matching and their applications in socio-economic research.

Paweł Kawa

Assistant Professor at the Department of Macroeconomics, Cracow University of Economics, Poland. His research interests focus on the interlinkages between financial development and economic growth.

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