historic telephone network) as an instrument for firms’ use of broadband internet.<sup>6</sup> Focusing on China and using firm-level data, Chen and Xu (2015) compare data from Aliexpress and Chinese customs and find that firms exporting through Alibaba are smaller, sell more products per firm, and reach different export markets than firms exporting directly. We contribute to this literature by showing that access to the internet _per se_ can reduce trade barriers not just for business services but also for goods, and boost firms’ goods exports even before large scale, international e- commerce platforms became widely available.

Apart from the few studies on the trade impact, there is also a literature on the impact of internet access on productivity at the country and firm levels. This literature is relevant here for methodological reasons and because we will also consider impacts on overall firm performance. The basis for efficiency gains from the internet could include access to information on better management techniques or technology; more efficient marketing and sourcing, management of inventories and other benefits of more coordinated decisions with suppliers and customers; improved human resource practices and communication within the firm; etc. (as argued for instance in the literature on telecommunications reform and manufacturing productivity, e.g. in Arnold et al., 2016). Using cross-sections of firms across developing countries, Clarke et al. (2015) and Paunov and Rollo (2015) show that firm growth and productivity are much higher when internet access is greater and when firms use the internet more intensively. These studies are prone to endogeneity biases as ICT investments and internet-use by firms are not exogenous to their (expected future) productivity.<sup>7</sup> Recently, progress has been made in addressing the endogeneity of internet use with respect to firm productivity following different approaches. A few studies use data on sub-national variation in the availability of internet infrastructure as an instrument for internet usage at the firm-level to estimate its impact on firm productivity. Bertschek et al. (2013) and Haller and Lyons (2015) find an insignificant impact of broadband internet on firm productivity in Germany and Ireland, respectively, whereas Grimes et al. (2012) and Akerman et al. (2015) find a positive impact of broadband internet on firm productivity in New Zealand and Norway, respectively. The latter study

> 6 They draw on the exogenous features of the historic subterraneous fiber-optic and copper-wire telephone network which is the infrastructure through which broadband internet is delivered in the United Kingdom.

> 7The fact that more productive firms use more ICT suggests there may be barriers to firms using ICT more effectively (Paunov and Rollo, 2015; World Bank, 2016). Two such barriers for firms are workforce skills and complementary organizational capital (Bresnahan et al., 2002; Haltiwanger et al., 2003; Crespi et al., 2007; Bartel et al., 2007; Commander et al., 2011; Iacovone et al., 2015). There is even evidence that investing in ICT without business process reorganization can reduce firms’ productivity growth (Brynjolfsson and Hitt, 2003).

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