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15/11/2023
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Nguyen, H. M. (2023). Impact of Internet use on industrial value added: evidence from Southeast Asian countries. Journal of International Economics and Management, 23(3), 44-55. https://doi.org/10.38203/jiem.023.3.0073
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Impact of Internet use on industrial value added: evidence from Southeast Asian countries
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Abstract
The Internet facilitates real-time communication and collaboration, enabling seamless coordination in industrial processes. This enhanced connectivity can increase efficiency and productivity in the production chain. Moreover, the Internet provides a platform for businesses to reach a global audience. Expanded market access can contribute to the growth of industrial activities, fostering international trade, and positively impacting industrial value added. Therefore, this study seeks to explore how Internet usage impacts industrial value added across eight Southeast Asian countries, using a sample collected from the World Bank and Global Economy from 1991 to 2021. Two regression methods were employed: fixed-effects and Driscoll-Kraay standard error models. The research findings indicate that Internet growth has a positive effect on industrial value added in Southeast Asian countries. Additionally, the results reveal a positive correlation between industrial value added, economic growth, and trade openness. This study contributes to a deeper understanding of the connection between Internet usage and industrial value added, with profound implications for the economic restructuring of selected Southeast Asian countries.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Keywords
Internet use, Industrial value added, Southeast Asian countries
References
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Attaran, M. and Woods, J. (2019), “Cloud computing technology: improving small business performance using the Internet”, Journal of Small Business & Entrepreneurship, Vol. 31 No. 6, pp. 495 - 519.
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Chatterjee, A. (2020), “Financial inclusion, information and communication technology diffusion, and economic growth: a panel data analysis”, Information Technology for Development, Vol. 26 No. 3, pp. 607 - 635.
Chen, Y., Han, Z., Cao, K., Zheng, X. and Xu, X. (2020), “Manufacturing upgrading in industry 4.0 era”, Systems Research and Behavioral Science, Vol. 37 No. 4, pp. 766 - 771.
Driscoll, J.C. and Kraay, A.C. (1998), “Consistent covariance matrix estimation with spatially dependent panel data”, The Review of Economics and Statistics, Vol. 80 No. 4, pp. 549 - 560.
Dutta, D. and Ahmed, N. (2004), “Trade liberalization and industrial growth in Pakistan: a cointegration analysis”, Applied Economics, Vol. 36 No. 13, pp. 1421 - 1429.
Dutta, D. and Bose, I. (2015), “Managing a big data project: the case of Ramco Cements Limited”, International Journal of Production Economics, Vol. 165, pp. 293 - 306.
Edquist, H., Goodridge, P. and Haskel, J. (2021), “The Internet of Things and economic growth in a panel of countries”, Economics of Innovation and New Technology, Vol. 30 No. 3, pp. 262 - 283.
Ejemeyovwi, J.O., Osabuohien, E.S. and Bowale, E.I. (2021), “ICT adoption, innovation and financial development in a digital world: empirical analysis from Africa”, Transnational Corporations Review, Vol. 13 No. 1, pp. 16 - 31.
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Fernandes, A.M., Mattoo, A., Nguyen, H. and Schiffbauer, M. (2019), “The internet and Chinese exports in the pre-Ali Baba era”, Journal of Development Economics, Vol. 138, pp. 57 - 76.
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Kurniawati, M.A. (2020), “ICT infrastructure, innovation development and economic growth: a comparative evidence between two decades in OECD countries”, International Journal of Social Economics, Vol. 48 No. 1, pp. 141 - 158.
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Latif, Z., Xin, W., Khan, D., Iqbal, K., Pathan, Z.H., Salam, S. and Jan, N. (2017), “ICT and sustainable development in South Asian countries”, Human Systems Management, Vol. 36 No. 4, pp. 353 - 362.
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Lee, S.H. (2017), “Digital democracy in Asia: the impact of the Asian internet on political participation”, Journal of Information Technology & Politics, Vol. 14 No. 1, pp. 62 - 82.
Markusen, J.R. and Venables, A.J. (1999), “Foreign direct investment as a catalyst for industrial development”, European Economic Review, Vol. 43 No. 2, pp. 335 - 356.
Maroof, Z., Hussain, S., Jawad, M. and Naz, M. (2019), “Determinants of industrial development: a panel analysis of South Asian economies”, Quality & Quantity, Vol. 53 No. 3, pp. 1391 - 1419.
Meijers, H. (2014), “Does the internet generate economic growth, international trade, or both?”, International Economics and Economic Policy, Vol. 11 No. 1, pp. 137 - 163.
Miller, D. (2018), “Blockchain and the Internet of Things in the industrial sector”, IT Professional, Vol. 20 No. 3, pp. 15 - 18.
Mohsen, A.S., Chua, S.Y. and Sab, C.N.C. (2015), “Determinants of industrial output in Syria”, Journal of Economic Structures, Vol. 4 No. 1, pp. 1 - 12.
Najarzadeh, R., Rahimzadeh, F. and Reed, M. (2014), “Does the Internet increase labor productivity? Evidence from a cross-country dynamic panel”, Journal of Policy Modeling, Vol. 36 No. 6, pp. 986 - 993.
Ngouhouo, I., Nchofoung, T. and Njamen Kengdo, A.A. (2021), “Determinants of trade openness in Sub Saharan Africa: do institutions matter?”, International Economic Journal, Vol. 35 No. 1, pp. 96 - 119.
Nguyen, C.P., Doytch, N., Dinh Thanh, S. and Schinckus, C. (2021), “Do institutions and technologies matter for trade openness? Empirical evidence from African countries”, The International Trade Journal, Vol. 35 No. 5, pp. 413 - 438.
Osei, D.B., Sare, Y.A. and Ibrahim, M. (2019), “On the determinants of trade openness in low-and lower–middle-income countries in Africa: how important is economic growth?”, Future Business Journal, Vol. 5 No. 1, pp. 1 - 10.
Ouyang, X. and Lin, B. (2015), “An analysis of the driving forces of energy-related carbon dioxide emissions in China’s industrial sector”, Renewable and Sustainable Energy Reviews, Vol. 45, pp. 838 - 849.
Ozcan, B. and Apergis, N. (2018), “The impact of internet use on air pollution: evidence from emerging countries”, Environmental Science and Pollution Research, Vol. 25 No. 5, pp. 4174 - 4189.
Palvia, P., Baqir, N. and Nemati, H. (2018), “ICT for socio-economic development: a citizens’ perspective”, Information & Management, Vol. 55 No. 2, pp. 160 - 176.
Romer, P.M. (1986), “Increasing returns and long-run growth”, Journal of Political Economy, Vol. 94 No. 5, pp. 1002 - 1037.
Rosario, A. and Raimundo, R. (2021), “Consumer marketing strategy and E-commerce in the last decade: a literature review”, Journal of Theoretical and Applied Electronic Commerce Research, Vol. 16 No. 7, pp. 3003 - 3024.
Salahuddin, M. and Gow, J. (2016), “The effects of Internet usage, financial development and trade openness on economic growth in South Africa: a time series analysis”, Telematics and Informatics, Vol. 33 No. 4, pp. 1141 - 1154.
Sawhney, M., Verona, G. and Prandelli, E. (2005), “Collaborating to create: the Internet as a platform for customer engagement in product innovation”, Journal of Interactive Marketing, Vol. 19 No. 4, pp. 4 - 17.
Sharma, G.D., Rahman, M.M., Jain, M. and Chopra, R. (2021), “Nexus between energy consumption, information and communications technology, and economic growth: an enquiry into emerging Asian countries”, Journal of Public Affairs, Vol. 21 No. 2, e2172.
Suvankulov, F., Lau, M.C.K. and Chau, F.H.C. (2012), “Job search on the internet and its outcome”, Internet Research, Vol. 22 No. 3, pp. 298 - 317.
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Tomas Gomez Arias, J. (1995), “Do networks really foster innovation?”, Management Decision, Vol. 33 No. 9, pp. 52 - 56.
Tripathi, M. and Inani, S.K. (2016), “Does internet affect economic growth in sub-Saharan Africa?”, Economics Bulletin, Vol. 36 No. 4, pp. 1993 - 2002.
Wahab, N.A., Nayan, S. and Cheah, Y.K. (2020), “Internet user and economic growth: empirical evidence from panel data”, Journal of Emerging Economies and Islamic Research, Vol. 8 No. 3, pp. 17 - 25.
Wang, J., Wang, W., Ran, Q., Irfan, M., Ren, S., Yang, X., Wu, H. and Ahmad, M. (2022), “Analysis of the mechanism of the impact of internet development on green economic growth: evidence from 269 prefecture cities in China”, Environmental Science and Pollution Research, Vol. 29 No. 7, pp. 9990 - 10004.
World Bank. (2022), “World development indicators”, The World Bank, Available at https://databank.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/1ff4a498/Popular-Indicators (Accessed 18 July, 2022).
World Bank. (2023), “Metadata glossary”, The World Bank, Available at https://databank.worldbank.org/metadataglossary/world-development-indicators/series/NV.IND.TOTL.ZS (Accessed 25 August, 2023).
Yakubu, A.S., Aboagye, A.Q., Mensah, L. and Bokpin, G.A. (2018), “Effect of financial development on international trade in Africa: does measure of finance matter?”, The Journal of International Trade & Economic Development, Vol. 27 No. 8, pp. 917 - 936.
Yanikkaya, H. (2003), “Trade openness and economic growth: a cross-country empirical investigation”, Journal of Development Economics, Vol. 72 No. 1, pp. 57 - 89.
Yu, B. (2022), “The impact of the internet on industrial green productivity: evidence from China”, Technological Forecasting and Social Change, Vol. 177, 121527.
Zoroja, J. (2016), “Impact of ICTs on innovation activities: indication for selected European countries”, Naše Gospodarstvo/Our Economy, Vol. 62 No. 3, pp. 39 - 51.
Al-Mudimigh, A.S., Zairi, M. and Ahmed, A.M.M. (2004), “Extending the concept of supply chain: the effective management of value chains”, International Journal of Production Economics, Vol. 87 No. 3, pp. 309 - 320.
Alshubiri, F., Jamil, S.A. and Elheddad, M. (2019), “The impact of ICT on financial development: empirical evidence from the Gulf Cooperation Council countries”, International Journal of Engineering Business Management, Vol. 11, pp. 1 - 14.
Attaran, M. and Woods, J. (2019), “Cloud computing technology: improving small business performance using the Internet”, Journal of Small Business & Entrepreneurship, Vol. 31 No. 6, pp. 495 - 519.
Barro, R.J. and Lee, J.W. (1994), “Sources of economic growth”, Carnegie-Rochester Conference Series on Public Policy, Vol. 40, pp. 1 - 46.
Batten, J.A. and Vo, X.V. (2009), “An analysis of the relationship between foreign direct investment and economic growth”, Applied Economics, Vol. 41 No. 13, pp. 1621 - 1641.
Canh, N.P., Schinckus, C., Thanh, S.D. and Ling, F.C.H. (2020), “Effects of the internet, mobile, and land phones on income inequality and the Kuznets curve: cross country analysis”, Telecommunications Policy, Vol. 44 No. 10, 102041.
Chatterjee, A. (2020), “Financial inclusion, information and communication technology diffusion, and economic growth: a panel data analysis”, Information Technology for Development, Vol. 26 No. 3, pp. 607 - 635.
Chen, Y., Han, Z., Cao, K., Zheng, X. and Xu, X. (2020), “Manufacturing upgrading in industry 4.0 era”, Systems Research and Behavioral Science, Vol. 37 No. 4, pp. 766 - 771.
Driscoll, J.C. and Kraay, A.C. (1998), “Consistent covariance matrix estimation with spatially dependent panel data”, The Review of Economics and Statistics, Vol. 80 No. 4, pp. 549 - 560.
Dutta, D. and Ahmed, N. (2004), “Trade liberalization and industrial growth in Pakistan: a cointegration analysis”, Applied Economics, Vol. 36 No. 13, pp. 1421 - 1429.
Dutta, D. and Bose, I. (2015), “Managing a big data project: the case of Ramco Cements Limited”, International Journal of Production Economics, Vol. 165, pp. 293 - 306.
Edquist, H., Goodridge, P. and Haskel, J. (2021), “The Internet of Things and economic growth in a panel of countries”, Economics of Innovation and New Technology, Vol. 30 No. 3, pp. 262 - 283.
Ejemeyovwi, J.O., Osabuohien, E.S. and Bowale, E.I. (2021), “ICT adoption, innovation and financial development in a digital world: empirical analysis from Africa”, Transnational Corporations Review, Vol. 13 No. 1, pp. 16 - 31.
Fenoaltea, S. (1976), “Real value added and the measurement of industrial production”, in Berg, S.V. (Ed.), Annals of Economic and Social Measurement, National Bureau of Economic Research, New York, pp. 111 - 137.
Fernandes, A.M., Mattoo, A., Nguyen, H. and Schiffbauer, M. (2019), “The internet and Chinese exports in the pre-Ali Baba era”, Journal of Development Economics, Vol. 138, pp. 57 - 76.
Haini, H. (2019), “Internet penetration, human capital and economic growth in the ASEAN economies: evidence from a translog production function”, Applied Economics Letters, Vol. 26 No. 21, pp. 1774 - 1778.
Hair, J.F.J., Anderson, R.E., Tatham, R.L. and Black, W.C. (1995), Multivariate data analysis, 3rd Edition, Macmillan, New York.
Henderson, V. (2003), “The urbanization process and economic growth: the so-what question”, Journal of Economic Growth, Vol. 8 No. 1, pp. 47 - 71.
Huchet‐Bourdon, M., Le Mouel, C. and Vijil, M. (2018), “The relationship between trade openness and economic growth: some new insights on the openness measurement issue”, The World Economy, Vol. 41 No. 1, pp. 59 - 76.
Khan, R.A. and Quadri, S.M. (2012), “Business intelligence: an integrated approach”, Business Intelligence Journal, Vol. 5 No. 1, pp. 64 - 70.
Kurniawati, M.A. (2020), “ICT infrastructure, innovation development and economic growth: a comparative evidence between two decades in OECD countries”, International Journal of Social Economics, Vol. 48 No. 1, pp. 141 - 158.
Lampropoulos, G., Siakas, K. and Anastasiadis, T. (2019), “Internet of Things in the context of industry 4.0: an overview”, International Journal of Entrepreneurial Knowledge, Vol. 7 No. 1, pp. 4 - 19.
Latif, Z., Xin, W., Khan, D., Iqbal, K., Pathan, Z.H., Salam, S. and Jan, N. (2017), “ICT and sustainable development in South Asian countries”, Human Systems Management, Vol. 36 No. 4, pp. 353 - 362.
Lee, H.J. and Oh, H. (2020), “A study on the deduction and diffusion of promising artificial intelligence technology for sustainable industrial development”, Sustainability, Vol. 12 No. 14, 5609.
Lee, S.H. (2017), “Digital democracy in Asia: the impact of the Asian internet on political participation”, Journal of Information Technology & Politics, Vol. 14 No. 1, pp. 62 - 82.
Markusen, J.R. and Venables, A.J. (1999), “Foreign direct investment as a catalyst for industrial development”, European Economic Review, Vol. 43 No. 2, pp. 335 - 356.
Maroof, Z., Hussain, S., Jawad, M. and Naz, M. (2019), “Determinants of industrial development: a panel analysis of South Asian economies”, Quality & Quantity, Vol. 53 No. 3, pp. 1391 - 1419.
Meijers, H. (2014), “Does the internet generate economic growth, international trade, or both?”, International Economics and Economic Policy, Vol. 11 No. 1, pp. 137 - 163.
Miller, D. (2018), “Blockchain and the Internet of Things in the industrial sector”, IT Professional, Vol. 20 No. 3, pp. 15 - 18.
Mohsen, A.S., Chua, S.Y. and Sab, C.N.C. (2015), “Determinants of industrial output in Syria”, Journal of Economic Structures, Vol. 4 No. 1, pp. 1 - 12.
Najarzadeh, R., Rahimzadeh, F. and Reed, M. (2014), “Does the Internet increase labor productivity? Evidence from a cross-country dynamic panel”, Journal of Policy Modeling, Vol. 36 No. 6, pp. 986 - 993.
Ngouhouo, I., Nchofoung, T. and Njamen Kengdo, A.A. (2021), “Determinants of trade openness in Sub Saharan Africa: do institutions matter?”, International Economic Journal, Vol. 35 No. 1, pp. 96 - 119.
Nguyen, C.P., Doytch, N., Dinh Thanh, S. and Schinckus, C. (2021), “Do institutions and technologies matter for trade openness? Empirical evidence from African countries”, The International Trade Journal, Vol. 35 No. 5, pp. 413 - 438.
Osei, D.B., Sare, Y.A. and Ibrahim, M. (2019), “On the determinants of trade openness in low-and lower–middle-income countries in Africa: how important is economic growth?”, Future Business Journal, Vol. 5 No. 1, pp. 1 - 10.
Ouyang, X. and Lin, B. (2015), “An analysis of the driving forces of energy-related carbon dioxide emissions in China’s industrial sector”, Renewable and Sustainable Energy Reviews, Vol. 45, pp. 838 - 849.
Ozcan, B. and Apergis, N. (2018), “The impact of internet use on air pollution: evidence from emerging countries”, Environmental Science and Pollution Research, Vol. 25 No. 5, pp. 4174 - 4189.
Palvia, P., Baqir, N. and Nemati, H. (2018), “ICT for socio-economic development: a citizens’ perspective”, Information & Management, Vol. 55 No. 2, pp. 160 - 176.
Romer, P.M. (1986), “Increasing returns and long-run growth”, Journal of Political Economy, Vol. 94 No. 5, pp. 1002 - 1037.
Rosario, A. and Raimundo, R. (2021), “Consumer marketing strategy and E-commerce in the last decade: a literature review”, Journal of Theoretical and Applied Electronic Commerce Research, Vol. 16 No. 7, pp. 3003 - 3024.
Salahuddin, M. and Gow, J. (2016), “The effects of Internet usage, financial development and trade openness on economic growth in South Africa: a time series analysis”, Telematics and Informatics, Vol. 33 No. 4, pp. 1141 - 1154.
Sawhney, M., Verona, G. and Prandelli, E. (2005), “Collaborating to create: the Internet as a platform for customer engagement in product innovation”, Journal of Interactive Marketing, Vol. 19 No. 4, pp. 4 - 17.
Sharma, G.D., Rahman, M.M., Jain, M. and Chopra, R. (2021), “Nexus between energy consumption, information and communications technology, and economic growth: an enquiry into emerging Asian countries”, Journal of Public Affairs, Vol. 21 No. 2, e2172.
Suvankulov, F., Lau, M.C.K. and Chau, F.H.C. (2012), “Job search on the internet and its outcome”, Internet Research, Vol. 22 No. 3, pp. 298 - 317.
The Global Economy. (2022), “Share of industry - Country rankings”, Available at https://www.theglobaleconomy.com/rankings/Share_of_industry/Asia/ (Accessed 05 May, 2022).
Tomas Gomez Arias, J. (1995), “Do networks really foster innovation?”, Management Decision, Vol. 33 No. 9, pp. 52 - 56.
Tripathi, M. and Inani, S.K. (2016), “Does internet affect economic growth in sub-Saharan Africa?”, Economics Bulletin, Vol. 36 No. 4, pp. 1993 - 2002.
Wahab, N.A., Nayan, S. and Cheah, Y.K. (2020), “Internet user and economic growth: empirical evidence from panel data”, Journal of Emerging Economies and Islamic Research, Vol. 8 No. 3, pp. 17 - 25.
Wang, J., Wang, W., Ran, Q., Irfan, M., Ren, S., Yang, X., Wu, H. and Ahmad, M. (2022), “Analysis of the mechanism of the impact of internet development on green economic growth: evidence from 269 prefecture cities in China”, Environmental Science and Pollution Research, Vol. 29 No. 7, pp. 9990 - 10004.
World Bank. (2022), “World development indicators”, The World Bank, Available at https://databank.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/1ff4a498/Popular-Indicators (Accessed 18 July, 2022).
World Bank. (2023), “Metadata glossary”, The World Bank, Available at https://databank.worldbank.org/metadataglossary/world-development-indicators/series/NV.IND.TOTL.ZS (Accessed 25 August, 2023).
Yakubu, A.S., Aboagye, A.Q., Mensah, L. and Bokpin, G.A. (2018), “Effect of financial development on international trade in Africa: does measure of finance matter?”, The Journal of International Trade & Economic Development, Vol. 27 No. 8, pp. 917 - 936.
Yanikkaya, H. (2003), “Trade openness and economic growth: a cross-country empirical investigation”, Journal of Development Economics, Vol. 72 No. 1, pp. 57 - 89.
Yu, B. (2022), “The impact of the internet on industrial green productivity: evidence from China”, Technological Forecasting and Social Change, Vol. 177, 121527.
Zoroja, J. (2016), “Impact of ICTs on innovation activities: indication for selected European countries”, Naše Gospodarstvo/Our Economy, Vol. 62 No. 3, pp. 39 - 51.