Internet, Economic Growth and Recession

Abstract

This paper investigates the impact of internet on economic growth and this impact during the recession. The data are drawn from World Bank in a panel of 201 countries from 1988 to 2010. Results from an OLS model reveal that a 10 percentage point increase in internet penetration rate raises real GDP per capita by 0.57 to 0.63 percentage points. During the recession relative to expansion, the coefficient of internet reduces but it still remains statistically positive. This suggests that internet provides a way to solve the problem of economic recession. Our results are robust to the inclusion of time and country fixed effects. [PUBLICATION ABSTRACT]