It’s a Small World After All: Internet Access and Institutional Quality

Contemporary Economic Policy (Forthcoming)

47 Pages Posted: 31 Jul 2012 Last revised: 23 Sep 2014

See all articles by Kathleen M. Sheehan

Kathleen M. Sheehan

Texas Tech University - Free Market Institute; West Virginia University- Division of Economics and Finance

Andrew T. Young

Texas Tech University - Rawls College of Business

Date Written: July 2014

Abstract

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.

Keywords: institutional quality, economic freedom, emotional contagion, Internet access

JEL Classification: O10, O43, P48

Suggested Citation

Sheehan, Kathleen M. and Young, Andrew T., It’s a Small World After All: Internet Access and Institutional Quality (July 2014). Contemporary Economic Policy (Forthcoming), Available at SSRN: https://ssrn.com/abstract=2120806 or http://dx.doi.org/10.2139/ssrn.2120806

Kathleen M. Sheehan

Texas Tech University - Free Market Institute ( email )

2500 Broadway
Lubbock, TX 79409
United States

West Virginia University- Division of Economics and Finance ( email )

P.O. Box 6025
Morgantown, WV 26506
United States

Andrew T. Young (Contact Author)

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States

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