CROSS-BORDER TRADE IN THE ERA OF THE INTERNET.

Using a gravity model framework, this paper examines the relationship between bilateral trade and the degree of Internet adoption in an economy. The study distinguishes between agricultural and non-agricultural commodities while analyzing the effect of the Internet adoption on bilateral exports. The study uses panel data from 2006 to 2010 and uses the fixed-effects method to estimate the gravity equation. Moreover, to correct for the sample selection bias arising from missing trade values, this study uses the Heckman sample selection method. The results suggest that a higher degree of internet adoption stimulates both agricultural and non-agricultural exports, though the impact is stronger for non-agricultural commodities. Furthermore, the study found the degree of Internet adoption in the exporting country to have a more prominent effect than the degree of Internet adoption in the importing country. [ABSTRACT FROM AUTHOR]