Evaluating the influence of information and communication technology and the BRICS in South African trade dynamics: a gravity model approach

Abstract

PurposeThis study aims to assess how South African membership to the Brazil, Russia, India, China and South Africa (BRICS) has influenced its traded sector. It also evaluated information and communication technology (ICT) as an instrument for enhancing bilateral trade.Design/methodology/approachICT was captured from three perspectives: mobile technology, internet usage and fixed telephones. It was integrated into an augmented gravity equation as a trade cost. The study covered 27 years and 181 South African trading partners. Estimation was done using the Poisson pseudo maximum likelihood estimation technique and the implementation of exporter-year and importer-year fixed effects.FindingsIt was revealed that mobile phone and fixed telephone subscriptions improve import and export by 4.66% and 1.79%, respectively, while the internet penetration rate negates export and import by 13.4% and 5.89%, respectively. However, it further demonstrates that the internet penetration rate and fixed telephone subscription reduced the negative impact of distance by 7.26% and 1.15% for export. ICT performed better when South Africa only traded with the BRICS countries. The report also shows an encouraging BRICS effect on South African bilateral trade with the bloc.Practical implicationsThe study highlights that BRICS membership significantly boosts South Africa’s bilateral trade, which encourages new African memberships, while also emphasising the role of ICT in mitigating the negative impact of distance. Policymakers should enhance mobile phone and fixed telephone infrastructures to improve imports and exports, respectively, and strategically manage internet penetration to maximise the benefits of BRICS economic cooperation.Originality/valueThe study evaluated the influence of South Africa’s BRICS membership and how ICT variables interact with distance to mitigate its effects on trade. This provides a nuanced understanding of ICT’s unique impact on South Africa’s bilateral trade, offering valuable insights for policymakers to enhance trade performance and leverage BRICS economic cooperation effectively.