The effect of internet gap on bilateral export: evidence from an extended gravity model

Abstract

ABSTRACTMost literatures have studied the role of the Internet in promoting the country’s foreign trade. However, when the difference in Internet level between the two countries becomes the focus, will it hinder bilateral trade? This paper attempts to investigate the hinder impact of the Internet gap between the two countries on bilateral export in the framework of gravity model. The goods export data during the period of 2005–2019 from the WTO and the method of Poisson Pseudo-Maximum-Likelihood (PPML) and Ordinary Least Squares (OLS) were used. It is found that the Internet gap between the two countries will hinder bilateral export by increasing the information trade costs. Lower Internet countries are more sensitive to the Internet gap in bilateral export. This paper also analyzes the impact mechanism, which provides the fresh evidence for related study.