Information and Communications Technology and Trade in Emerging Market Economies

We examine the effects of information and communications technology (ICT) on international trade in emerging markets. Using panel data for forty emerging market economies (EMEs) from 1995 to 2010, we estimate fixed effects models of exports and imports with ICT as the main explanatory variable of interest. The empirical results overwhelmingly suggest that Internet subscriptions and Internet hosts have significant positive effects on both exports and imports in EMEs. Thus, the trade-enhancing effect of ICT does not depend on ICT infrastructure or ICT capability per se but on its use. This result is robust to a number of sensitivity checks.