Internet Penetration and Productivity: A Panel Study

Since the early 1990s, penetration of internet has accelerated significantly in the world. The impact of internet and ICT on labor productivity at firm and industry level has been studied by many authors. The purpose of this study is to look at the macro-level effects of the internet on various indicators of productivity. A dataset consisting of a panel of annual observations for 162 countries is used in the study. Another important point that distinguishes our paper form other contributions on ICT and productivity is that we employed the most comprehensive set of productivity indicators (13 productivity indicators) instead of using only one indicator. We identified a positive correlation between internet penetration and productivity. This finding is statistically significant and valid for thirteen different productivity indicators. Our results suggest that internet penetration increases productivity controlling for other factors that may contribute to productivity.