Impact of the Internet on the exports in ocean-based manufacturing: Firm-level evidence from China

Abstract

Ocean-based manufacturing (OBM) is closely related to the advancement of information technology, and the dramatic expansion in Internet access necessitates an analysis of the Internet’s impact on marine economy. Combining firm-level manufacturing census data with provincial-level Internet development data, this study is the first to examine how Internet penetration across China’s provinces in the 1999–2007 period influenced exports in OBM. The results indicate that the Internet rollout boosted exports in OBM firms, showing a significant technology-driven effect. Furthermore, the effects of the Internet on micro-behavior differ significantly between OBM and non-OBM firms. For OBM firms, the results suggest that the main mechanism at work is a productivity effect rather than a scale effect, whereas the results for non-OBM firms suggest the opposite. This study also emphasizes the cross-regional and cross-industry heterogeneity in the effects. The heterogeneity analysis supports a greater impetus of the Internet on capital and technology-intensive marine industries and non-state-controlled OBM firms. Moreover, the improvement of Internet penetration can significantly promote participation in international trade by OBM firms in large- and medium-sized cities. Compared with the Bohai Rim Area, the southern regions, including the Yangtze River Delta and the Pearl River Delta, have shown more rapid growth in marine industries due to the Internet rollout.