Are digital technologies reshaping trade patterns? Evidence from European industries

Marco Sforza ()
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Marco Sforza: Department of Economics, Roma Tre University

No 275, Departmental Working Papers of Economics - University 'Roma Tre' from Department of Economics - University Roma Tre

Abstract: The paper explores the relationship between the industry-level diffusion of digital technologies and the regionalisation of trade in value added. Theoretical literature underlines two potential effects of these technologies. They may facilitate coordination, favouring higher fragmentation, but also redefine comparative advantages, pushing toward relocation. The aim of the paper is to provide empirical evidence on the relationship between digital technologies and trade regionalisation, for a panel of selected European countries and sectors over the period 2005-2018. I build a dataset combining data from TiVA-OECD, EU-KLEMS and Eurostat SBS. I define two regionalisation measures, comparing intra-EU against extra-EU trade flows, to capture the relative importance of the two regions for input sourcing and output destination. The econometric analyses show a differentiated effect on the two measures: digital capital reduces regionalisation of the input sourcing, while positively correlating with the regionalisation of the intermediate output. Finally, a differentiated effect is also found in magnitude between technologies, namely, physical ICT and software.

Keywords: Digital technologies; Global Value Chains; Trade regionalisation (search for similar items in EconPapers)
JEL-codes: F10 F15 O33 (search for similar items in EconPapers)
Pages: 40
Date: 2023-04
New Economics Papers: this item is included in nep-eec, nep-eur, nep-geo, nep-ict, nep-ino, nep-int and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:rtr:wpaper:0275

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