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Spatial internet spillovers in manufacturing

Author

Listed:
  • Joël Cariolle

    (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)

  • Maëlan Le Goff

    (Banque de France - Banque de France - Banque de France)

Abstract
Does local internet diffusion spur manufacturing firm performance in developing countries? To answer this question, we conduct instrumental variable estimations, using repeated cross-section data on 40,154 manufacturing firms from 91 developing and transition economies, and find that a 10 percentage-point increase in the incidence of email use in locations where firms operate, raises by 36% their sales and sales per worker. This evidence turns out to be driven by the local dissemination of email technology within industries, rather than across industries. This higher performance in manufacturing is also found to be accompanied by output diversification, driven by inter-industry spillovers, and work-force contraction, driven by intra-industry ones. However, we further provide evidence of U-shaped inter-industry spillovers, i.e. negative inter-industry spillovers turning positive once the email incidence threshold reaches ∼ 50% of the local universe of firms, suggesting that network effects are at play. Last, these threshold effects seem related to the presence of outward-oriented firms, which tend to operate in places where internet is more diffused. Overall, this paper shows that local industrialisation paces may diverge between poorly and highly digitalised environments.

Suggested Citation

  • Joël Cariolle & Maëlan Le Goff, 2021. "Spatial internet spillovers in manufacturing," Working Papers hal-03201735, HAL.
    • Handle: RePEc:hal:wpaper:hal-03201735
    Note: View the original document on HAL open archive server: https://hal.science/hal-03201735v3
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    References listed on IDEAS

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    Cited by:

    1. Joël Cariolle & Yasmine Elkhateeb & Mathilde Maurel, 2022. "(Mis-)information technology: Internet use and perception of democracy in Africa," Documents de travail du Centre d'Economie de la Sorbonne 22010, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    2. Cariolle, Joël & Elkhateeb, Yasmine & Maurel, Mathilde, 2024. "Misinformation technology: Internet use and political misperceptions in Africa," Journal of Comparative Economics, Elsevier, vol. 52(2), pages 400-433.
    3. Ackah, Charles & Hanley, Aoife & Hecker, Lars & Kodom, Michael, 2024. "Urbanized and savvy: Which African firms are making the most of mobile money?," KCG Working Papers 35, Kiel Centre for Globalization (KCG).
    4. Joël Cariolle & Florian Léon, 2022. "How internet helped firms cope with COVID-19 [Comment internet a aidé les entreprises à faire face à la Covid-19]," Post-Print hal-03606071, HAL.
    5. Yanlin Sun & Shaoxiong Ma & Hao Feng, 2023. "The New Geography of Manufacturing in China: The Internet and Manufacturing Agglomeration," Sustainability, MDPI, vol. 15(17), pages 1-21, August.

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    Keywords

    Connectivity; internet; spillovers; manufactures; industrialisation;
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