Globalization and the Information Revolution: The Role of the Internet on Shaping Governments' Trade Policies

Abstract

Our paper aims to give insight into the impact of the information revolution on various aspects of international trade, mainly tariff rates, trade balance, formation of preferential trading areas and the environment. As the world is continually becoming more integrated and globalized more people are gaining access to information on virtually any topic they can conceive (given that their government does interfere) via the internet. More specifically, informational sites such as Wikipedia and social networking sites such as Facebook and Twitter are playing a crucial role. With barely any time lag between the transfer of ideas, thoughts and information, citizens are able to impact the policies their governments adopt to a greater extent than ever before, and autocracies are finding it more difficult to keep instituted the policies and practices they've adopted in the past. We analyze the impact of the internet on developed and less-developed country's trade policies as well as investigate the realm of governments that choose to restrict their citizens from having complete access to the internet and what consequences may result if they do not adapt to today's globalized world.

Full text

Globalization and the Information Revolution:
The Role of the Internet on Shaping Governments’ Trade Policies
Nicole L. Hunter
Department of Economics
State University of New York at Buffalo
Buffalo, NY 14260
Nima Sadeghian
Department of Economics
State University of New York at Buffalo
Buffalo, NY 14260
April 20, 2011
Abstract
Our paper aims to give insight into the impact of the information revolution on various aspects
of international trade, mainly tariff rates, trade balance, formation of preferential trading areas
and the environment. As the world is continually becoming more integrated and globalized more
people are gaining access to information on virtually any topic they can conceive (given that
their government does interfere) via the internet. More specifically, informational sites such as
Wikipedia and social networking sites such as Facebook and Twitter are playing a crucial role.
With barely any time lag between the transfer of ideas, thoughts and information, citizens are
able to impact the policies their governments adopt to a greater extent than ever before, and
autocracies are finding it more difficult to keep instituted the policies and practices they’ve
adopted in the past. We analyze the impact of the internet on developed and less-developed
country’s trade policies as well as investigate the realm of governments that choose to restrict
their citizens from having complete access to the internet and what consequences may result if
they do not adapt to today’s globalized world.
JEL Classifications: F13, H11, H21, I32, J31, J61, J70, J80
Keywords: Globalization, Informational Systems, International Trade, Internet, Trade Balance,
Tariff Rates, Preferential Trading Agreements, Non-Governmental Organizations, Technological
Diffusion.

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Introduction
At the start of the 1990s, economists argued that globalization went hand in hand with the
“end of geography” implying the declining relevance of spatial considerations in shaping
patterns of industry organization due to the development of information and communication
technologies (ICTs) and the internet (Obrien, 1992). These economists were correct as the
internet has linked people and organizations across great distances, allowed businesses to enter
new markets that were once out of reach and has provided consumers around the globe with a
greater variety of goods and services. There is, however, concern and apprehension in all
countries that the internet is causing serious economic displacement as competition intensifies,
trade imbalances grow, and jobs disappear (Kraemer & Dedrick 2002) due to offshoring and
outsourcing.
The United States led the world in adopting the Internet in the 1990’s and has been the
platform for further innovation ever since. Reasons for the drastic expansion and innovation of
internet technologies in the U.S. include its large consumer market, favorable government
policies, deregulated telecommunications industry, dynamic venture capital market and positive
business and consumer attitudes concerning information technology (Kraemer & Dedrick, 2002).
Through the development and use of the internet, namely e-commerce and e-commerce sites,
informational sites and personal web pages, companies and individuals are able to engage in
transactions more efficiently with reduced time, spatial and monetary barriers.
Many of the developing and under-developed countries are concerned about the pace of
internet innovation, language and culture. They fear that if they fail to adopt new technologies
and business practices, either by choice or by some physical constraint, that the divide between

3
them and the rich countries will further increase, much without their control (Kraemer & Dedrick
2002). Cross country studies have shown that there exists a strong correlation between GDP per
capita and internet connectivity. Wallsten in 2002 shows that not only is internet usage far more
common in richer countries but also, that the number of users has grown at a faster pace. In
response, the poorer countries along with international and non-governmental organizations have
taken initiatives to ensure that the spread of the internet and more specifically e-business, which
is the use of the internet by a firm to buy, sell, or provide support for its products or services,
takes place in such a way as to promote the development of all countries, preventing a further
increase in the gap. Currently, however, the distribution of internet users across countries is less
skewed but the richest group of nations is 60 times richer than the poorest group (Chang 2011),
and the income gap seems to be widening.
It may be surprising that in today’s world only 28.7% of the population is actively using
the internet. One reason may be attributed to the obstacles faced by nations when adopting new
telecommunications technologies. First, regulation is a key component as new entrants in the
industry require cooperation by incumbent firms. Given that the entrants’ network is valuable
only if it can connect its network users with those of the incumbent firm, cooperation between
the two is necessary (Wallsten, 2002). Typically the incumbent firm(s) is a monopoly and has no
incentive to allow competitors into the market. The government must therefore take an active
role in regulation in order to allow new entry and instill a competitive environment to maximize
welfare. Another obstacle is the wealth of a nation. If the citizens are too poor to afford the
internet service the availability of it will not matter (Kiiski & Pohjola, 2002). In turn, a continual
downward spiral may result as the nation becomes even poorer due to its lack of connection with
the rest of the world. The lack of connection makes it less competitive, and thus, increases the

4
poverty level in the country making citizens even less able to afford the service than in the first
place.
Section 1: Trade Balance
In this section we first cite the findings of recent research then aim to observe for ourselves the
influence of internet usage on a given country’s trade balance via statistics on internet access and
imports/exports. We then try to deduce causality between the two.
If the internet has made it easier for firms to enter markets by reducing communication
and search costs then it may also have made it easier to export goods and services as well (Clarke
& Wallsten, 2004). In recent literature there appears to be great discrepancies with respect to
trade balance and the telecommunication industry. Empirical studies of internet adoption have
found that internet use is correlated with openness to trade. An example of such an analysis is
demonstrated by Wallsten (2003) and Baliamoune (2002) in which they find that internet users
made up a greater share of the population in developing countries that are more open to trade. It
is seen that IT use tends to be higher in countries that are more open to trade and thus, import
more. Muller and Salsas (2003) find that the number of PCs, but not the number of internet hosts
and users, is correlated with imports. Imports from high income countries are positively
correlated with internet connectivity. Caselli and Coleman (2001) point out that countries open
to imports from high-income, advanced economies can benefit from knowledge spillovers and,
hence, be more likely to adopt new technologies. They also show that communication
technology investment is higher in countries that import more manufactured goods from OECD
countries, further supporting their 2001 research. We understand that higher internet access in

5
developing countries has been shown to be correlated with greater exports to developed countries
but note that the direction of causation is uncertain (as it may run from internet use to exports or
from trade openness to internet use) (Clarke & Wallsten, 2004). It has also been shown, in
general, that countries with a greater number of exports tend to have higher internet access than
countries that export less. An economist by the name of Stephen Onyeiwu suggests that, “the
extent to which a country is integrated into the global economy can play a role in its access to IT.
Countries with greater contact, either via trade, tourism, or geographical location, with the
outside world, are more likely to be advanced in digital technology than other countries” which
is evident in the OECD trade case above. The case described by Onyeiwu is still a product of
technology spillovers whether advances take place through the physical acquisition of products
through importing or simply from tourists traveling and bringing with them the latest technology
either physically or verbally.
There has, on the other hand, been counter-supportive research. Clarke (2003) for
instance, uses enterprise level data on internet use for Eastern Europe and Central Asia and fails
to find a positive correlation between openness to imports at the country level and internet usage
at the enterprise level. In fact, it may be suggested that Clark (2002) actually finds a negative
correlation. The negative correlation may be due to imports from low and middle-income
countries, as opposed to high-income countries which we discussed above. There does,
however, exist a prominent link between export behavior and internet use at the enterprise level.
One reason for this may be that enterprises which are already exporting are more likely to
connect to the internet in order to keep in contact with buyers around the globe. Exporters could
also find incentive(s) to connect to the internet because it provides a relatively cost and time

6
efficient method for international communications when contrasted with preceding methods e.g.
telephone calls or faxes.
1.1 Our Analysis
We now begin to observe the correlation between a country’s trade balance and internet
usage/accessibility by means of empirical analyses. Trade balance is defined as the relationship
between a nation’s exports and imports; More specifically the difference between the two. A
positive trade balance, or a trade surplus, occurs when a country’s exports exceeds its imports.
Similarly, a negative balance or trade deficit occurs in the opposite case.
We examine the net trade in goods and services via World Development Indicator
statistics. Net trade in goods and services is derived by offsetting imports of goods and services
against exports of goods and services. Exports and imports of goods and services comprise all
transactions involving a change of ownership between residents of one country and the rest of
the world. Data are given in current U.S. dollars. Using the data in Figure 1 in the appendix, we
deduce that for 2009 there is no correlation between trade balance and the percent of active
internet users in a given country. We acknowledge the problem lies in the fact that the trade
balance does not measure the degree of integration of countries via trade. Rather, it supplies us
with a measure of the current account which is not an accurate measure of economic integration
(Chang, 2011). Instead, we find that the relationship lies within the volume of trade that a
country conducts. Using the same countries from Figure 1, we simply added total goods and
services exports with total goods and services imports to get the total volume of trade. Our
analysis finds that the amount of active internet users in a given country is positively correlated

7
with the total amount of trade
1
that the country conducts for 2009. Thus, our analysis for 2009 is
consistent with the findings of previous studies that internet use is indeed correlated with
openness to trade.
We cannot deduce causality from this analysis. Instead, we hypothesize that internet use
is positively correlated with globalization. As the world becomes more integrated, countries will
naturally import and export more from each other leading to and increased volume in trade.
Therefore, it would seem that both internet usage and trade volume are causally linked to
globalization, and the two display prima facie causality towards each other.
Section 2: Tariff Rates
There has been extensive research done with respect to the political economy of trade and
how tariff rates are implemented. It is well known that higher tariff rates are correlated with a
higher degree of protection. High tariff rates could be implemented for several reasons, including
exploitation of market power abroad, strong lobbying powers of domestic special interest groups,
as well as in support of the infant industry argument. Data from the World Trade Organization
statistics shows that in general, the average tariff rates from country to country have decreased
over time. The rates from low income countries to high income countries are relatively higher
than those from high income to high income countries, but tend to decrease over time. The
discrepancy might be attributed to lobbying power, however, the general decrease shows that the
world is leaning towards free trade.
1
Correlation coefficient = 0.344

8
Even with the tariff rates slowly decreasing as countries adopt the internet it is uncertain
if citizens’ access to informational sites on the internet has a direct impact on this reduction. If
anything, access may even increase the incentive for special interest groups to lobby for stronger
protection. Consider the case in which jobs are lost to outsourcing, and it is discovered that the
jobs were replaced by workers earning wages at a fraction of what domestic workers were paid.
Interest groups could claim the playing field is uneven and anti-competitive, causing them to
lobby for stronger protection. As a result a tariff may be implemented on imported products
from that location. Surely there are many other examples one can think of.
It is necessary that we mention the increased volume of international trade has lead to the
formation of preferential trading areas (PTAs), in which members of the trading block agree to
reduce tariffs from products imported from other members. Naturally, this accounts for the
reduction in average tariffs over time, to some extent. This area will be examined in the next
section.
2.1 Our Analysis
Here we look at the effect of internet use on import tariffs. We examine the relationship between
the percentage of internet users in the country and the average import tariff rate. The tariff rates
are taken from the UN World Development Indicators statistics. As a measure of tariff rate(s),
we use the customs and import duties
2
data. Customs and other import duties are defined to be
all levies collected on goods that are entering the country or services delivered by nonresidents to
residents, including levies imposed for revenue or protection purposes and determined on a
specific or ad valorem basis, as long as they are restricted to imported goods or services. We
2
Series code GC.TAX.IMPT.ZS

9
look at countries in which there is consistently available data on both tariffs and internet usage
from 2005 to 2008
3
.
Our results show a consistent negative correlation of approximately -0.46 across the years
indicating that as the percentage of internet users across countries increases, the average import
tariff rate decreases. However, our results do not tell us if it is the tariff rate that effects internet
usage, or vice versa. It is reasonable to assume that internet usage is linked to globalization, as
we stated in the section above, which in turn has a negative relationship to import tariff rates.
This again can be attributed to increased trade volume leading to the formation of PTAs, which
we will now examine.
Section 3: The Formation of PTA’s
In this section we analyze the influence of the internet on the formation of trade agreements
between countries. We theorize that internet use by a country’s citizens will have a positive
influence on the formation of trade agreements. We take into consideration that the polity score
of a country may affect this outcome, but show that a higher polity score (more democratic) is
correlated with higher internet access than a lower score (more autocratic). We deduce this by
using data provided by World Development Indicators and the Polity IV project. We find the
correlation coefficient for 2005, 2006, 2007, 2008 and 2009 were 0.461, 0.457, 0.458, 0.435 and
0.390. Note that internet access in itself may not be the best indicator as a country may be under
the control of an autocratic regime. Although the percentage of internet users may be relatively
high, in this scenario the regime would most likely censor the information available to citizens.
3
We omit 2009 only because tariff data for this year is not yet published

10
Restrictions most commonly take the form of prohibition of pages containing certain words,
phrases or domain names, and control over internet searching capacity. Furthermore, we note
that lobbying powers may play a role, however, this may influence individual tariff levels more
that the formation of PTAs. Nonetheless it must be taken into consideration.
When analyzing the data on PTAs from the WTO we use “Date of entry into force” rather
than “Date of notification” when discussing years of formation. According to the data in 2008,
2009 and 2010, there have been 16, 18 and 12 PTAs formed world-wide, respectively
4
.
Increasingly, less-developed countries are entering into preferential trade agreements with both
developed and other LDCs. This is a natural occurrence as globalization increases, but we
cannot determine if there is a causal link between internet use and the formation of agreements.
We hypothesize the outcome that the spread of globalization encompasses both the formation of
agreements and internet technology adoption, and thus, both are causally linked to globalization
and not each other. From this, we conclude that the percent of internet users in a country does
not directly affect the formation of PTAs in both developed and less-developed countries.
Section 4: NGO’s and International Trade Policies
One way to measure globalization is by analyzing international trade flows between countries.
As we have demonstrated in the previous sections, as the rate of globalization increases so does
the volume of trade between nations. This increase encompasses trade between developed and
less developed countries as well. In this case, trade is usually attributable to differences in labor
and production costs i.e. cheaper wage rates in less-developed countries tends to induce
industrialized, high-wage countries to outsource various stages of production to these countries
4
See appendix A2 for joining countries

11
in order to reduce cost(s), and maximize profit. As many of the labor and environmental
standards and regulations are more lax in less-developed countries, it is sometimes possible for
firms constrained by more stringent policies to take advantage of these lower standards,
frequently resulting in the exploitation of workers (through low wages and poor work
environments), and exploitation of natural resources and the destruction of the environment.
Child labor, sweatshops and environmental degradation are not new issues but they have recently
attracted more attention due to advances in communications technology, most recognizably the
internet, and the increased integration of regions around the world. Much of the transparency of
these issues is due to Non-Governmental Organizations (NGOs) which are legally constituted
organizations that operate independently from any government and which typically pursue
activities promoting human rights and environmental protection.
5
Before the mid-1990’s, NGOs mainly relied on the media as their source of coverage.
Once the internet was commercialized in 1995 they gained more of a direct influence over the
information they wished to spread. Initially the change was quite small as only citizens from the
most developed nations had access to the internet
6
. Eventually, as the internet and its
corresponding technologies diffused to a much wider array of nations, the changes became
apparent as these institutions gained a higher degree of recognition world-wide. Also, followers
and advocates had an easier time tracking current projects and initiatives. The internet is still a
prominent source for tracking continual updates on initiatives, and thus has facilitated the spread
of the favorable messages and changes these institutions wish to implement. The ease of access
and fluent transmission of information has lead to an increase in the transparency of operations
5
There are many other types of NGOs, see http://www.summit-americas.org/ngolist2.htm for others
6
For actual data see https://spreadsheets.google.com/a/buffalo.edu/ccc?key=t3IhOl9n032j5IdI5HJqFBA#gid=0

12
making it continually harder for firms and governments alike to institute corrupt or suboptimal
policies that are harmful in scale and scope.
First we would like to note that the internet has created a new outlet for NGOs (as well as
NGO sponsored, non-profit organizations) to raise money for their campaigns. Before the wide-
spread use of the internet mailing out fliers, tabling at conventions and organized fund-drives
were the main methods used for funding initiatives. Now, private donations comprise a large
portion of the funds as individuals are inclined to donate more frequently due to the ease of the
process. Just by visiting the organizations homepage and clicking “donate now” one can donate
as much or as little as they choose in under five minutes. Secondly, the internet gives people a
greater incentive to donate as in many cases they can be connected with those who are in direct
need of their assistance. The internet has closed the spatial gap and as a result, people feel more
connected with others half way around the world. For recent natural disasters such as the 2010
earthquake in Haiti and the recent tsunami that hit Japan, a large portion of private donations
were via the internet through relief funds sites set up through programs such as the American
Red Cross.
Social networking sites have become the core component in promoting the spread of
NGO initiatives and may be the most influential outlet, so far. It appears that Facebook and
Twitter are the predominant social networking sites used by NGOs as most of the world’s
population communicates via these sites. Facebook currently has over 500 million active users,
of which 50% sign on any given day. The site offers over 70 different translations and 70% of
users are located outside the United States. There are over 900 million community pages, groups
etc. that users can interact with, and over 30 billion pieces of content (including web links, news

13
blogs etc.) that are shared each month
7
. Twitter, a social media network and micro-blogging site,
is estimated to have over 200 million active users generating about 65 million tweets on any
given day. A poll conducted by Harris Interactive generated that 65% of American adults use
social media and say they benefit from it, showing that these sites are now being used by a more
age-diverse population. As a result, NGOs are now able to communicate with large numbers of
supporters in an efficient manner. Furthermore, with the “share now” link available on virtually
all websites (especially social media sites), any video or story people watch or read and find
interesting, can immediately be shared on their personal sites. The post immediately shows up
on the news feed of all their ‘friends’ they are linked with. Transmitting messages via these
networks would seem to be a very optimal and efficient strategy for any organization. In the
section below we cite specific examples of how the internet has played an essential role in
facilitating positive changes.
One final point we would like to discuss is that most of the changes attributed to NGO
activism have taken place at the level of the firm. However, with greater general transparency,
governments are finding that they too are being forced to change. The internet has facilitated
this transparency in the form of disclosing trade practices, policies, and regulations. One of the
motivations for this change is largely political as nations strive to preserve a favorable reputation
in the global community. Large organizations such as the WTO could force policy changes in
countries if they are in violation of human rights, but typically it must be on a relatively large
scale. The nations themselves have motivation to be in good standing for national interest
purposes e.g. for becoming candidates for global organizations or pending admissions into PTAs
that would increase national welfare.
7
Statistics gathered from http://www.facebook.com/press/info.php?statistics

14
4.1 Greenpeace vs Nestle: Kit-Kat Campaign
In early 2010, Greenpeace launched a campaign against Nestle for using products from
companies that manage 'high risk plantations or farms linked to deforestation'.
8
The
deforestation was severely harmful to the environment and local animal populations, namely the
orange orangutan. Ploys used by members of Greenpeace and its supporters included videos
uploaded on youtube and Vimeo of the destruction and status updates on Facebook profiles of
supporters to highlight the current state of the initiative. Another ploy was the creation of faux
Wi-Fi networks at conventions that lead shareholders directly to the Greenpeace website upon
connection and continual tweets to shareholders at meetings. On the morning of May 17, 2010,
only two months after the Kit-Kat campaign was launched, Nestle announced that it would
change its policy and cease to purchase products from companies in its supply chain that play a
part in deforestation. Greenpeace gave “A big 'Thank You!' to the hundreds of thousands…who
supported the two-month Kit Kat campaign by e-mailing Nestlé, calling them, or spreading the
campaign message via Facebook, Twitter and other social media profiles”.
9
The successful
campaign marked a large step forward in the protection of Indonesia's rainforests and peatlands,
and it was strongly facilitated due to the internet and social-media websites. Furthermore, Burger
King and HSBC also eliminated certain companies from their supply chain as a result of this
campaign.
4.2 The National Labor Committee vs Metro Group: R.L. Denim
In 2009, Metro Group a large clothing retailer with outlets mainly located across Europe
accounted for over 80% of production from the R.L. Denim factory in Bangladesh. The National
8
http://www.greenpeace.org/international/en/news/features/Sweet-success-for-Kit-Kat-campaign/
9
http://www.greenpeace.org/international/en/news/features/Sweet-success-for-Kit-Kat-campaign/

15
Labor Committee (NLC) uncovered that hundreds of young workers at this factory were
routinely beaten, denied portions of their wages and forced to work an unreasonable amount of
hours. The Organization released their report in early May 2009. A few days later a joint
statement from Verdi, UNITE and the United Steelworkers union was also released in support of
the workers. Members of the NLC continually kept updated information available on the
organizations website
10
and supporters blogged and debated about issue. It was found that in
2005 Metro Group conducted an individual investigation and found that the factory was not
complying with their standards and made a list of corrections to be implemented. A follow-up
investigation was never conducted, but after the surfacing of the 2009 report and the pressure
from various organizations, the company took four immediate steps
11
threatening to completely
sever D.L. Denim from their supply chain. The turnaround was drastic, R.L. Denim immediately
complied with all standards and workers are now still happy with their new working conditions.
4.3 Pakistan vs Facebook: A case for NGOs
On May 19th of 2010, Justice Ijaz Ahmad Chaudhry of the Honorary Lahore High Court
delivered a notice to the Pakistan Telecommunication Authority requesting a ban on the social
networking site, Facebook. A Pakistani Islamic official told the court that the website, having
various features against the injunctions of Islam, was to be banned. In response to the ban,
Facebook had opted to remove the offending page that begun the controversy and the ban was
lifted on May 31, 2010. There were more than 38 major businesses and NGOs in Pakistan that
were affected by the nationwide ban while it was still in effect. Companies like uFone, Mobilink,
10
See http://www.globallabourrights.org/campaigns?id=0022 for the stream of updates
11
http://www.globallabourrights.org/alerts?id=0179

16
Dell Pakistan, and Google Pakistan all contained active Facebook pages with the number of
members ranging from 10,000 to 99,000. These firms were cut off from Pakistan’s easily
accessible e-audience for marketing purposes. Similarly, there were at least 500 firms in Pakistan
that had a Facebook presence and suffered as a result of the ban. In addition, NGOs such as The
Second Floor (T2F) with 5,462 members, Pakistan Animal Welfare Society with 2,717 members,
and the Pakistan Sustainability Network with 1,170 members were completely shut down as a
result of the ban as well. Operations completely ceased as most marketing activities and
communication was conducted on this site. This case presents an example of the increasing
dependency of organizations (and firms) on social media sites. As we have seen Facebook plays
a key role in successful communication but also an increasingly important role for NGO daily
operation and function as well.
4.4 Japan Earthquake Tsunami Relief
On March 11th of 2011, an earthquake struck off the coast of Japan, creating a devastating
tsunami that swept over cities and farmland in the northern part of the country and set off
warnings as far away as the west coast of the United States and South America. Recorded as 9.0
on the Richter scale, it was the most powerful quake ever to hit the country. As the nation
struggled with a rescue effort, Facebook and other social networking sites began bringing
attention to the issue. Specifically, within Facebook’s not-for-profit platform, there exists a
section for ‘Causes’. One of the ‘Causes’ pages were listed as ‘Donate Japan Earthquake
Tsunami Relief 2011’. With a multifaceted layout that provides real-time newsfeed to its
members, it is an attractive venue to collect donations. With the continual stream of hits
members can keep track of posts and donations, and contribute as they please. This has turned

17
out to be a very useful tool as hundreds of thousands of dollars have been raised for Japan, as
well as many other ‘Causes’ connected to this site.
4.5 NGO’s and the Digital Divide
Interestingly, NGOs have also taken an active role in trying to bridge the digital divide between
the rich and poor nations (Wallsten, 2002) and numerous changes have been implemented on
behalf of NGOs activism. To halt the widening gap, NGOs take part in donating computers to
under developed nations where internet hosts have been set up, as well as working to raise funds
to help local agencies afford installation. They team up with government sponsored
organizations as well to devise campaigns to promote literacy and education in these countries,
other factors that are actively contributing to the divide.
How It All Ties In
Recently, there have been many uprisings in the Middle East by citizens demanding political
reform of their governments and governmental policies. Tunisia, Egypt, Libya, Yemen and Iran
with polity 2 scores of -4, -3, -7, -2 and -7 in 2009, respectively are experiencing, or have
recently experienced, uprisings to some degree. The percent of citizens who had access to the
internet in each of these countries was 34.07, 20.04, 5.51, 1.78 and 37.62, respectively.
The country we would like to draw attention to is Egypt. In early January of this year
citizens began organizing protest in Tahrir (or ‘Liberty’) square, a major site in downtown Cairo.
It is a known fact that in times of political unrest autocratic governments will limit
communication services to help stabilize order, and it also well known that some governments
tend to limit access to foreign sources of information in general. But in late January the Egyptian
government shut down nearly all access to the internet and cut out cell phone service to an

18
unprecedented degree
12
. With Egypt being a growing economy and its moderate integration with
other economies around the globe, the shutdown was not only a cause for concern by protesters
but rather for the entire global market. Attached to a high degree of globalization, is
responsibility. Once widely used practices by these governments, such as limiting
communication into and out of the country, are no longer applicable due to the dependence
(mainly economic) of other nations. The difficulties these autocracies or semi-democracies are
going to face in trying to uphold old their old traditions and ways are just not a domestic issue,
but one of international concern. In today’s world, globalization cannot be ignored, as countries
that choose autarky lose and are left behind. The governments must then choose to integrate and
trade, or face the consequences that will result.
Conclusion
Overall our paper has looked at the affect of the internet on international trade measures and has
shown that in many cases internet access leads to positive changes for countries and citizens. In
Section 1 internet access was shown to be correlated with a larger trade volume. Section 2 and 3
displayed a general decrease in tariff rates and increased formation of PTAs as internet use and
access increased in countries. And lastly, Section 4 has showed how the internet and social
media networks are playing a central role in international communications. We did not deduce
the direction of causality between internet access and all other variables. We do note, however,
that all observed changes are linked with globalization. As globalization leads to more
integration and a higher volume of trade, new technologies diffuse around the world. In time,
diffusion leads to adoption. We conclude that the countries who’ve adopted the internet at a
12
http://www.nytimes.com/2011/01/29/technology/internet/29cutoff.html

19
faster rate have seen the changes in their trade volume, tariff rates, and transparency of practices
examined in this paper at an accelerated rate as well. In time, less developed countries should
approach the same level of adoption that developed nations currently have, and hopefully benefit
from it in the same manner.
Appendix
A.1: Internet Use and Trade Balance
Figure 1
Country Name
% Int Usage
Net Trade
Country Name
% Int Usage
Net Trade
2009
2009
2009
2009
Angola
3.283664
-
378203335.8
Israel
51.6071
4747700000
Albania
41.2009
-3037254387
Italy
48.83225
-
10766680748
Argentina
30.4
17611550436
Japan
76.80159
23251643637
Armenia
6.75327
-2349398315
Kuwait
36.85035
31013037781
Austria
73.45416
14439540102
Libya
5.512526
10375000000
Azerbaijan
41.76719
12975269000
Lithuania
59.75715
-240065295.4
Belgium
76.20357
5788158365
Latvia
66.83846
-254800000
Bangladesh
0.3805308
-6154397015
Morocco
32.19495
-
10926909416
Bulgaria
44.99923
-3925683508
Mexico
25.94584
-
12390222424
Belarus
46.05595
-5516800000
Netherlands
89.63375
58927378995
Bolivia
11.1783
274145019.2
Norway
92.08044
56190917760
Brazil
39.2
6044437700
Nepal
2.133615
-3593371693
Canada
78.11198
-
23896195302
New Zealand
84.37833
1156022207
Switzerland
72.41339
36362262661
Philippines
6.474124
-7339000000
Chile
33.98356
12907233518
Poland
58.96612
358000000
China
28.53425
2.20112E+11
Portugal
48.27477
-
15991613608
Czech Republic
64.43115
10851501679
Romania
36.60085
-9979000000
Germany
79.25817
1.64729E+11
Saudi Arabia
38.10175
41324264533
Denmark
86.84178
12537762004
Sudan
9.935553
-2986301698
Spain
62.6177
-
Singapore
77.23231
38726441076

20
27366093530
Estonia
72.3533
1103821923
Slovak
Republic
75.17181
-13457194.28
Finland
84.14
6763676447
Slovenia
64.27869
562611347.2
France
71.58073
-
45906099964
Sweden
90.7953
29240534810
United
Kingdom
83.55676
-
60321331062
Tunisia
34.07485
-1174131195
Greece
44.53517
-
25054161134
Turkey
35.3
-8591000000
Haiti
9.967487
-1879939720
United States
76.23928
-3.74909E+11
Hungary
61.80942
7759727153
Vietnam
27.25139
-9435315000
India
5.116848
-
69213838687
Yemen, Rep.
1.781154
-2908487109
Ireland
67.38291
33373326963
South Africa
8.821225
-2221438467
The OECD countries are highlighted in green
A2: PTAs formed in 2008, 2009, 2010 and 2011
Figure 2
RTA Name
Coverage
Type
Notification
Date of entry
into force
Status
Hong Kong, China - New
Zealand
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Jan-11
In Force
Turkey - Jordan
Goods
FTA
GATT Art. XXIV
1-Mar-11
In Force
Turkey - Chile
Goods
FTA
GATT Art. XXIV
1-Mar-11
In Force
ASEAN - Australia - New
Zealand
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Jan-10
In Force
ASEAN - India
Goods
FTA
Enabling Clause
1-Jan-10
In Force
ASEAN - Korea, Republic of
Goods &
Services
FTA & EIA
01-Jan-2010(G)
In Force
01-May-2009(S)
Chile - China
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
01-Oct-2006(G)
In Force
01-Aug-2010(S)
EC - Montenegro
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
01-Jan-2008(G)
In Force
01-May-2010(S)
EFTA - Albania
Goods
FTA
GATT Art. XXIV
1-Nov-10
In Force
EFTA - Serbia
Goods
FTA
GATT Art. XXIV
1-Oct-10
In Force
EU - Serbia
Goods
FTA
GATT Art. XXIV
1-Feb-10
In Force

21
Korea, Republic of - India
Goods &
Services
FTA & EIA
1-Jan-10
In Force
Peru - China
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Mar-10
In Force
Turkey - Montenegro
Goods
FTA
GATT Art. XXIV
1-Mar-10
In Force
Turkey - Serbia
Goods
FTA
GATT Art. XXIV
1-Sep-10
In Force
Australia - Chile
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
6-Mar-09
In Force
Canada - Peru
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Aug-09
In Force
Chile - Colombia
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
8-May-09
In Force
China - Singapore
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Jan-09
In Force
EC - Albania
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
01-Dec-2006(G)
In Force
01-Apr-2009(S)
EC - Cameroon
Goods
FTA
GATT Art. XXIV
1-Oct-09
In Force
EC - Côte d'Ivoire
Goods
FTA
GATT Art. XXIV
1-Jan-09
In Force
EFTA - Canada
Goods
FTA
GATT Art. XXIV
1-Jul-09
In Force
India - Nepal
Goods
PSA
Enabling Clause
27-Oct-09
In Force
Japan - Switzerland
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Sep-09
In Force
Japan - Viet Nam
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Oct-09
In Force
MERCOSUR - India
Goods
PSA
Enabling Clause
1-Jun-09
In Force
Pakistan - China
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
01-Jul-2007(G)
In Force
10-Oct-2009(S)
Panama - Honduras (Panama
- Central America )
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
9-Jan-09
In Force
Peru - Singapore
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Aug-09
In Force
US - Oman
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Jan-09
In Force
US - Peru
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Feb-09
In Force
ASEAN - Japan
Goods
FTA
GATT Art. XXIV
1-Dec-08
In Force
Brunei Darussalam - Japan
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
31-Jul-08
In Force

22
China - New Zealand
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Oct-08
In Force
EC - Bosnia and Herzegovina
Goods
FTA
GATT Art. XXIV
1-Jul-08
In Force
EC - CARIFORUM States EPA
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Nov-08
In Force
EFTA - SACU
Goods
FTA
GATT Art. XXIV
1-May-08
In Force
Honduras - El Salvador and
the Separate Customs
Territory of Taiwan, Penghu,
Kinmen and Matsu
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Mar-08
In Force
Japan - Indonesia
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Jul-08
In Force
Japan - Philippines
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
11-Dec-08
In Force
Nicaragua and the Separate
Customs Territory of Taiwan,
Penghu, Kinmen and Matsu
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
1-Jan-08
In Force
Pakistan - Malaysia
Goods &
Services
FTA & EIA
Enabling Clause
& GATS Art. V
1-Jan-08
In Force
Panama - Chile
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
7-Mar-08
In Force
Panama - Costa Rica
(Panama - Central America)
Goods &
Services
FTA & EIA
GATT Art. XXIV
& GATS V
23-Nov-08
In Force
Turkey - Albania
Goods
FTA
GATT Art. XXIV
1-May-08
In Force
Turkey - Georgia
Goods
FTA
GATT Art. XXIV
1-Nov-08
In Force
Complete spreadsheet available at http://rtais.wto.org/UI/PublicAllRTAList.aspx

23
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