We know globalisation has always been driven by technology. Better technology, better communications. Whether we are talking about the bronze age to the telegraph to the internet, with each jump in technology, globalisation has improved and extended.
Globalisation can be defined as increased communications, increased trade, increased resource transfers, increased knowledge, etc. on a global basis. And people do complain about globalisation mucking up the poor. Is that true? One way of answering this question is to ask whether the internet has improved exports for lower and middle income countries. This is, of course, assuming that the internet drives globalisation, which I am saying it does.
This paper checks this hypothesis and finds "a strong correlation between exporting and internet access at the enterprise level. Moreover, this correlation remains after controlling factors that might affect both exports and internet connectivity and self-selectivity".
The authors check eastern European and central Asian republics as their sample countries and most importantly, use firm level data rather than country level data (as country level data can be skewed by few very larger firms). The authors found that the firms having internet connectivity export more than firms who did not. But before you get all excited and get everybody hooked up to the internet, the authors also found that non-internet firms which already exported did not show more exports when they did get connected to the net.
But conscious of the fact that correlation does not mean causality, they further generate regression models and determine that even after controlling for various factors, the link between exports and net access is strong thereby giving credence to the fact that if you get net access, your exports will start at worst and improve at best.
So overall, it does seem to be prudent for Governments interested in pushing for better export performance to improve internet access and penetration rates across the country. Also for globalisation opponents, it might be worthwhile for them to consider the plus's of their argument as well.
I was a bit disappointed with the selection of sample countries, I would have preferred if they had added some of the lesser developed countries from Latin America and Africa but I suppose data availability was the challenge.
George R.G. Clarke, Has the internet increased exports for firms from low and middle-income countries, Information Economics and PolicyVolume 20, Issue 1, , March 2008, Pages 16-37.
Many commentators have suggested that the internet is one of the forces driving globalization. This paper assesses one aspect of these claims, looking at whether internet access appears to affect the export performance using data from enterprises in low and middle-income economies in Eastern Europe and Central Asia. The paper finds a strong correlation between exporting and internet access at the enterprise level. Moreover, this correlation remains after controlling factors that might affect both exports and internet connectivity and self-selectivity.
Keywords: Internet; Development; Exports