Has the Internet increased FDI, economic growth, and trade? Evidence from Asian economies

Abstract

This study examines the causal relationship between the Internet and economic factors in Asian economies between 1997 and 2017. The economic factors consist of gross domestic product (GDP), foreign direct investment (FDI), imports, and exports. A comparative analysis of East, South, and Western Asia was conducted using a panel vector autoregressive model. The findings show bidirectional causality between FDI and Internet use in South Asia, unidirectional causality from Internet use to FDI in East Asia, and unidirectional causality from FDI to Internet use in Western Asia. Moreover, the findings indicate unidirectional causality from exports to Internet use in East Asia and unidirectional causality from Internet use to exports in South Asia, but no impact in Western Asia. Finally, the results show unidirectional causality from Internet use to GDP in Western Asia. As these results suggest that Internet use has boosted economic performance in Asia, policy makers in the region should improve Internet use with a focus on economic growth, improving transaction efficiency, and facilitating foreign investment.