Use of the Internet and Productivity of Microbusinesses: Evidence from the Peruvian Case (2007–2010) (English)

Abstract

The Internet is a tool that facilitates better and broader access to information, as well as a more efficient form of communication both inside and outside a business. According to the theory of ICT for development (ICT4D), the use of ICT helps business owners make better decisions (reducing transaction costs and the uncertainty associated with decision-making processes), which would, in turn, increase the business’ productivity. In the case of Peru (and also for the Latin American case, in general), this effect would be especially relevant, since microbusinesses constitute not only the largest business group (98% of the total companies in the country), but also the group with the lowest productivity rates. Based on a nationwide representative sample for the years 2007–2010, we used a first differences model which determined that a one-point increase in the adoption index (0–100 scale) results in a productivity increase of approximately 1.5% of the sample’s average productivity.