Service Export Sensitivity to Internet Adoption: Evidence From Dynamic Panel Data Analysis

Abstract

This study aims to examine the causal linkages relating service exports to internet penetration for 116 countries over the period 2000-2017. Taking into account a wide panel of countries, we apply 2-Step GMM methodology for dynamic panel data models. The results show a bi-directional causality relating service exports to internet adoption for developed countries. For the global panel and developing countries, we find those same results attest a positive relationship between the internet adoption and service exports, but in the opposite way; the impact is very low and not significant. Regarding developing countries, despite the fact that internet positively affects service exports, it is considered less efficient than in developed countries.