Effect of the Internet on Services Export Diversification

This study empirically examines the effect of Internet access on services export diversification. A panel dataset containing 131 countries is analyzed over 1995-2014 and shows that greater access to the Internet is positively associated with services export diversification.T his outcome applies to both high-income and developing countries, and particularly to least developed countries (LDCs) among developing countries. Additionally, the effect of Internet access on services export product diversification translates to countries’ level of innovation, merchandise exports, including export product concentration and size of foreign direct investment (FDI) inflows.T hese findings highlight the need for developing digital infrastructure and regulations that would facilitate access to the Internet, particularly in developing countries.T he international community must focus on developing countries, particularly LDCs, by helping them to develop the requisite digital infrastructure and regulations to better participate in international trade, especially through greater series export diversification.