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.

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