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Innovation Fact of the Week: From 2001-12, Increased Internet Use Boosted Countries’ Exports by Almost 2 Percent

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Internet-enabled platforms facilitate online trade for firms by increasing efficiencies in the supply chain, including lower transaction costs and greater access to various destinations. The Internet also allows firms to easily customize their marketing information to the local setting and language and reduces information asymmetries between exporting and importing firms, expanding market access. These efficiencies add up to increase the volume of trade between countries.

Analyzing countries’ Internet adoption rates and trade flows between 2001 and 2012, The World Bank estimates that a 10 percent increase in Internet use in an exporting country increases the volume of trade between that country and its import partner country by 1.5 percent. They explain that as export-oriented firms adopt Internet technologies, they gain access to a greater number of markets, which leads to a more diverse range of products exported. Additionally, the World Bank estimates that increased Internet use further increases trade by 0.4 percent through allowing export firms greater market penetration. This means an increase in trade volume for products already traded between a pair of export-import countries. In total, increased Internet use boosted trade for countries’ exports by almost 2 percent between 2001 and 2012.

Read last week’s Innovation Fact of the Week

Photo Credit: brett jordan via Flickr

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