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The global software production network

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  • Birkholz, Carlo
  • Gomtsyan, David

Abstract

Can developing countries benefit from exporting opportunities in the growing sector of tradable services, given the near free information flow via the internet and wage differentials relative to developed countries? Focusing on the software development industry, we analyze data from 2.68 million software projects across 5200 locations, and estimate an economic geography model in which locations trade tasks. The results reveal three factors limiting exports: (i) significant productivity differences within and between countries; (ii) a notable decline in trade volumes with distance; (iii) sorting patterns among software developers that are suggestive of brain drain.

Suggested Citation

  • Birkholz, Carlo & Gomtsyan, David, 2026. "The global software production network," Journal of Development Economics, Elsevier, vol. 180(C).
    • Handle: RePEc:eee:deveco:v:180:y:2026:i:c:s0304387825002597
    DOI: 10.1016/j.jdeveco.2025.103708
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    Keywords

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    JEL classification:

    • F1 - International Economics - - Trade
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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