Internet Use and Openness to Trade

This paper presents an econometric model that links the number of broadband users in a country to its volume of international trade in goods and services. The model indicates that the growth in broadband use between 2000 and 2011 increased a country's openness to trade (measured by the ratio of their total trade to their GDP) by 4.21 percentage points on average, with much larger effects in high income countries (a 10.21 percentage point increase on average) than in developing countries (a 1.67 percentage point increase on average). We also use the econometric model to project how each country's openness to trade will be affected by expected future growth in broadband use: we project that the trade-to-GDP ratios will increase an additional 6.88 percentage points on average in the high income countries and an additional 1.67 percentage points on average in the developing countries due to further growth in broadband use over the next five years.