Keywords: Internet, Mobile-cellular, Service trade, GDP, Trade openness, Gravity model
This study empirically examines the relationship between the Internet, mobile-cellular and service
trade in South Korea. From this perspective, the main objective of this study is to identify key determinants
of service trade over the period from 1990 to 2018 by using the modified gravity model.
To do this, the study employs ordinary least squares methods and estimates the unknown parameter
in a log-linear regression model. The study recognizes that South Korea is more likely to engage
in service trade if it uses the Internet and mobile-cellular as a communication tool. The empirical
results show that the Internet and mobile-cellular have a significant positive effect on service
trade, service exports and imports respectively. In addition, the study also shows strong evidence for
the causal relationship between service trade and GDP, trade openness. However, the Internet and
mobile-cellular variables have a quantitatively small effect on service trade because the study uses
the aggregated data for service trade. Therefore, to achieve greater positive results of the Internet
and mobile-cellular on service trade, future research needs to utilize a disaggregated trade data in
services. On the other hand, as the Covid-19 outbreak has changed people’s lives and disrupted international
trade, expanding access to the Internet and increasing usage are expected to play a more
crucial role in enlarging service trade in the future.