Does digitalization spur global value chain participation? Firm-level evidence from emerging markets
Sasidaran Gopalan,
Ketan Reddy and
Subash Sasidharan
Information Economics and Policy, 2022, vol. 59, issue C
Abstract:
Does digitalization by firms spur participation in Global Value Chains (GVCs)? Rapid strides in information and communication technology (ICT) through cost-effective and reliable telecommunications have facilitated multinational firms to outsource complex production activities across borders over the years. While the rise of GVCs to prominence has coincided with the ICT revolution, there is very little systematic empirical evidence at the firm-level documenting the nexus between digitalization of firms and their participation in GVCs. By using rich firm-level data for a sample of 24,839 firms across 52 countries spanning the period 2006–2018, we empirically test the importance of digitalization in deepening GVC participation. After correcting for potential biases arising from self-selection and reverse causality, our empirical analysis shows that digitalization by firms positively influences GVC deepening. Our results are quite robust to various measures of GVCs and digitalization. Further, we also document how digitalization boosts GVC integration of firms that are financially constrained.
Keywords: Global value chains; Digitalization; Information and communication technology; Emerging markets; Credit constraints (search for similar items in EconPapers)
JEL-codes: D22 F1 F15 L86 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (13)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:59:y:2022:i:c:s0167624522000117
DOI: 10.1016/j.infoecopol.2022.100972
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