IT'S A SMALL WORLD AFTER ALL: INTERNET ACCESS AND INSTITUTIONAL QUALITY

Using a panel of up to 114 countries covering the years 1990 through 2010, we estimate the effect of Internet use on changes in countries' Economic Freedom of the World (EFW) scores. The point estimates suggest that the marginal effect is generally positive. However, starting from above‐average...

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Bibliographic Details
Published in:Contemporary economic policy 2015-10, Vol.33 (4), p.649-667
Main Authors: Sheehan, Kathleen M., Young, Andrew T.
Format: Article
Language:English
Subjects:
Access
Access to information
China
Countries
Economic indicators
Freedoms
Hong Kong
Institutional change
Interaction
Internet
Internet access
Manycountries
New technology
Nigeria
Organizational change
Pakistan
Social media
Studies
Switzerland
United Kingdom
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Summary:Using a panel of up to 114 countries covering the years 1990 through 2010, we estimate the effect of Internet use on changes in countries' Economic Freedom of the World (EFW) scores. The point estimates suggest that the marginal effect is generally positive. However, starting from above‐average EFW scores (>7.7 out of 10; examples in 2010 include the UK, Switzerland, and Hong Kong) the marginal effect turns negative. Taking this interaction into account, the marginal effect is positive and statistically significant for countries starting at initial EFW scores of around 6 or less. Examples of countries with 2010 EFW scores near this threshold include China, Nigeria, and Pakistan. We discuss mechanisms that potentially generate this conditional relationship between Internet use and institutional change. (JEL O10, O43, P48)
ISSN:1074-3529
1465-7287
DOI:10.1111/coep.12095