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Are digital technologies reshaping trade patterns? Evidence from European industries

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  • Marco Sforza

    (Department of Economics, Roma Tre University)

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.

Suggested Citation

  • Marco Sforza, 2023. "Are digital technologies reshaping trade patterns? Evidence from European industries," Departmental Working Papers of Economics - University 'Roma Tre' 0275, Department of Economics - University Roma Tre.
    • Handle: RePEc:rtr:wpaper:0275
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    More about this item

    Keywords

    Digital technologies; Global Value Chains; Trade regionalisation;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration

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