Does the Internet Generate Economic Growth, International Trade, or Both?

<p>Recent&nbsp; cross&nbsp; country&nbsp; panel&nbsp; data&nbsp; studies&nbsp; find&nbsp; a&nbsp; positive&nbsp; impact&nbsp; of&nbsp; internet&nbsp; use&nbsp; on&nbsp; economic&nbsp; growth&nbsp; and&nbsp; a&nbsp; positive&nbsp; impact&nbsp; of&nbsp; internet&nbsp; use&nbsp; on&nbsp; trade.&nbsp; The&nbsp; present&nbsp; study&nbsp; challenges&nbsp; the&nbsp; first&nbsp; finding&nbsp; by&nbsp; showing&nbsp; that&nbsp; internet&nbsp; use&nbsp; does&nbsp; not&nbsp; explain &nbsp;economic&nbsp;growth&nbsp;directly&nbsp;in&nbsp;a&nbsp;fully&nbsp;specified&nbsp;growth&nbsp;model.&nbsp;In&nbsp;particular&nbsp;openness&nbsp;to&nbsp;international&nbsp; trade&nbsp;variables&nbsp;seems&nbsp;to&nbsp;be&nbsp;highly&nbsp;correlated&nbsp;with&nbsp;internet&nbsp;use&nbsp;and&nbsp; the&nbsp; findings&nbsp;in&nbsp; the&nbsp; literature&nbsp;that&nbsp;internet&nbsp;use&nbsp;causes&nbsp;trade&nbsp;is&nbsp;confirmed&nbsp;here,&nbsp;suggesting&nbsp;that&nbsp;internet&nbsp;use&nbsp; impacts&nbsp;trade&nbsp;and&nbsp;that&nbsp;trade&nbsp;impacts&nbsp;economic&nbsp;growth.&nbsp;A&nbsp;simultaneous&nbsp;equations&nbsp;model&nbsp; confirms&nbsp;the&nbsp;positive&nbsp;and&nbsp;significant&nbsp;role&nbsp;of&nbsp;internet&nbsp;use&nbsp;to&nbsp;openness&nbsp;and&nbsp;the&nbsp;importance&nbsp; of&nbsp;openness&nbsp;to&nbsp;economic&nbsp;growth.&nbsp;Internet&nbsp;use&nbsp;has&nbsp;been&nbsp;shown&nbsp;to&nbsp;impact&nbsp;trade&nbsp;more&nbsp;in&nbsp; non‐high&nbsp;income&nbsp;countries&nbsp; than&nbsp;in&nbsp;high&nbsp;income&nbsp;countries,&nbsp;whereas&nbsp; the&nbsp;impact&nbsp;of&nbsp; trade on&nbsp;economic&nbsp;growth&nbsp;is&nbsp;the&nbsp;same&nbsp;for&nbsp;both&nbsp;income&nbsp;groups.&nbsp;</p>