IMPACT OF THE INTERNET ON MANUFACTURING TRADE

The article investigates the impact of the number of Internet users on the bilateral manufacturing export growth among OECD countries. We employ the gravity model using panel and cross-section regressions. The empirical results suggest that the Internet stimulates manufacturing export. The effect of the number of Internet users is found to be significant in the importing countries, and to a lesser extent in the exporting countries, suggesting that the number of Internet users improves information on the availability of manufacturing trade, reduces trade costs, enhances competition, and encourages manufacturing exports. The increase in the number of Internet users has also mitigated the effect of distance on manufacturing exports. The number of Internet users as a factor of manufacturing export growth provides support for a more intensive role of computer information systems in global manufacturing trade activities.