Digital Technology and Trade Performance in Sub-Saharan Africa

Abstract

This study examines the relationship between digital technology and trade performance with a focus on export trade in sub-Saharan African countries. The main objectives are to examine the impact digital technology measured by ICT goods import, internet use and mobile telephone subscriptions have on export trade in Sub-Saharan Africa (SSA), to evaluate the link between the degree of the region’s development and export trade and the form of digital technology most suitable in facilitating trade in the region. The study hypotheses are that: (1) ICT goods import, internet use and mobile telephone subscriptions do not influence significantly export trade in SSA; (2) the region’s development does not link appreciably to export trade in SSA; (3) no form of digital technology can facilitate trade in the region. The panel regression estimation technique is adopted considering the panel least squares, fixed effect and random effect estimation techniques. Results show that information and communication technology imports exert greater positive and significant impact on export trade flows compared to internet usage demonstrating theoretical and practical relevance of technology in trade flows. The degree of development is low and does not show an appreciable impact on trade flows in the region indicating that trade integration can thrive better in a well-structured economy. Redundant fixed effect test confirms that the panel least squares estimation is better compared to the fixed effect estimation. Hausman test demonstrates that random effect estimation is also better than fixed effect estimation. In attaining the reality of the contribution of digitalization process in SSA, policy makers need to pursue major goals that would address problems hampering its success.