Revising the effect of the Internet access on International trade: A study on submarine Internet cables’ effect on international trade

Sammanfattning: The purpose of this thesis is to further the knowledge of the Internet’s effect on trade. The study is conducted by examining the specific example of the introduction of the SAT-3/WASC submarine Internet cable in Benin. The research is conducted by using a Difference in Difference estimator and observing the treatment effect of the Internet cable on the country’s exports. Previous studies have mostly used the gravity model. Our approach allows us to observe a more sudden and large variation of the Internet. Exports from Benin and the control country Guinea to 167 other importing countries, between the period of 1998 to 2007 are observed, both on an overall trade level and when additionally allowing for four different product group treatment effects. The paper finds no significant effect of the treatment on the overall trade. The initial results do however suggest that trade on a product level is restructured, trade in some product categories increase while others decrease. However, the results of the placebo test denounce these results.