Inclusive Trade Through Online Presence

Abstract

Advances in information and communication technology (ICT) have reduced trade costs providing enterprises greater opportunity to access international markets. Using the World Bank's enterprise survey data covering more than 180 000 enterprises from 154 countries, we examine whether online presence contributes to inclusiveness by helping firms that traditionally struggle to enter export markets do so. We find that being online is associated with an increase in the probability of exporting by an average of 8 percentage points and with an increase in the level of a firm's exports by about 37%. We also find supporting evidence that online presence is linked with an increase in the likelihood of foreign market entry for enterprises owned and managed by women, firms with a majority female workforce, small and medium-sized enterprises, firms from lower income countries and developing regions of the world and firms in the services sector. These results have accounted for possible endogeneity of online presence, self-selection into exporting and industry and country-year heterogeneity. They suggest that measures to promote digitalization and improve the business environment can offer effective ways of fostering more inclusive trade.