Measuring the Impact of Technology on Service Trade Using ICT Development Index Nurhanifah, Dyah Titis Kusuma Wardani
Department of Development Economics, Faculty of Economics and Business, Universitas Muhammadiyah Yogyakarta, Jalan Brawijaya, Tamantirto, Kasihan, Bantul, Daerah Istimewa Yogyakarta, Indonesia 55183 *dyahtitis.wardani[at]gmail.com
Abstract
The world is now entering the era of industrial revolution 4.0, which emphasizes the pattern of digital economy, artificial intelligence, big data and robots or commonly known as the phenomenon of innovation chaos. With the rapid development of electronics, Information and Communication Technology (ICT), better known as ICT-based electronic advances, this has an impact on international and domestic trade. There is progress in ICT, in this case making distance less influential in trade. This is because there is no need for meetings or face-to-face meetings because they have been replaced by electronic mail or cell phones. In this study, we want to examine the impact of ICT on international trade, especially the total service trade between the ten highest service sector exporters to Indonesia. This study uses a panel data with gravity model framework for the period of 2012-2016. The results show that, ICT has a positive and significant impact on export of ten countries services to Indonesia. Other variables such as the GDP of the exporting country have a positive effect on trade service, while export destination countries have negative effect on trade services. In addition, distance, has negative and significant effect on service trade. This is in line with the gravity model theory, whether distance has negative relationship on trade In this case, distance represents transportation cost. Country characteristic such as openness of exporters has a positive and significant effect on service trade. In contrast, openness of destination country has negative and significant effect on service exports to Indonesia.
Keywords: Information and Communication Technology (ICT); Service trade; Gravity model; Disruptive innovation
Topic: International Conference of Islamic Economic and Financial Inclusion
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