Digital Technologies and Product Upgrading in Global Value Chains: Empirical Evidence from Indian Manufacturing Firms

Karishma Banga ()
Additional contact information
Karishma Banga: Overseas Development Institute

The European Journal of Development Research, 2022, vol. 34, issue 1, No 4, 77-102

Abstract: Abstract This paper provides empirical evidence on the impact of digitalisation on product upgrading in Global Value Chains (GVCs). Analysis is done for a sample of Indian manufacturing GVC firms in the period 2001–2015 from the firm-level database Prowess, using the methodology of System Generalised Method of Moments. Product upgrading is captured by a novel sales-weighted average product sophistication indicator constructed at the firm level. Digitalisation is captured through a digital capability index, constructed using principal component analysis, which draws information on both ‘hard’ and ‘soft’ digital assets for firms. Empirical results indicate that an increase in digital capability of an Indian GVC firm has a significant and positive impact on its product sophistication, implying that by investing in digital capabilities, Indian manufacturing firms can produce better and more sophisticated products in GVCs, enabling them to upgrade and climb up the value-chain ladder. Firms that are Digital Leaders produce 4–5% more sophisticated goods than Digital Laggards.

Keywords: Digital technologies; Global value chains; Upgrading; Indian manufacturing (search for similar items in EconPapers)
JEL-codes: F1 F6 L1 O1 O3 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://link.springer.com/10.1057/s41287-020-00357-x Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:eurjdr:v:34:y:2022:i:1:d:10.1057_s41287-020-00357-x

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/41287/PS2

DOI: 10.1057/s41287-020-00357-x

Access Statistics for this article

The European Journal of Development Research is currently edited by Spencer Henson and Natalia Lorenzoni

More articles in The European Journal of Development Research from Palgrave Macmillan, European Association of Development Research and Training Institutes (EADI) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().