Based on 50,013 firm observations covering 117 developing and emerging
countries, this paper shows knowledge spillover effects from industries'
use of the internet boosted the average firm's productivity and
innovation performance. We document that industries' "digitization" had
heterogeneous impacts: results from quantile regressions indicate that
the most productive firms benefited much more than others. Wider
Internet adoption rates were also of larger benefit to single-plant
establishments, non-exporters and firms in remote locations,
particularly to the most productive among these firms. Overall, we
document that the internet can play an important role to support
inclusive innovation, conditional on firms' "absorptive" capacities.
Keywords: Information and communication technologies (ICTs), internet, innovation, productivity, firm heterogeneities, informal businesses, developing countries
JEL Classification: O33, O14, O12, D22, L6, L8