Participation of developing countries in global value chains: What role for information and communication technologies?

Abstract

This paper introduces model uncertainty into the empirical study on the effect of Information and Communication Technologies (ICTs) in the countries' participation in Global Value Chains (GVCs). This is done by adopting a panel Bayesian model averaging approach applied on the data of 44 developing countries, spanning the period 1990–2019. Findings indicate that ICTs positively and significantly affect the participation of developing countries in GVCs. This positive and significant effect of ICTs on countries participation in GVCs can be explained by the fact that ICTs, especially digitalization may help countries improve their competitiveness in the global market as a result of effects on competitive advantages, including price, product and service. Then, the study deeply explores the relationship between ICTs, other control variables and countries' participation in GVCs by employing the Driscoll and Kraay estimator and the Generalized Method of Moments (GMM) technique. The results are robust and confirm the results of the Bayesian approach. These findings suggest the need to support the access and the use of ICTs in developing countries to enhance their participation in GVCs.