engleski

Do ICT and technological development facilitate supply chain trade?

The aim of this paper is to estimate the impact of ICT and technological development of countries on supply chain trade. Domestic value added (DVAFX) included in gross foreign exports and foreign value added included in domestic exports (FVA) from the Eora MRIO database are used as a proxy measures of supply chain trade, while the ICT variable is constructed using confirmatory factor analysis. The economic complexity index developed by Harvard's Growth Lab is used as a proxy variable for the country's technological development. The analysis is based on the structural gravity model estimated with the Poisson Pseudo-Maximum Likelihood Estimator (PPML). Together with the standard gravity regressors, the model includes the bilateral position of countries in the supply chain. Our panel dataset covers the period from 2000 to 2019 and includes 130 countries in the world. To control for the potential source of endogeneity, the model includes reporter and partner country fixed effects, yearly fixed effects, and country- pair fixed effects. The results confirm a statistically significant relationship between the country's technological development and supply- chain trade. Technological development enables country to produce more complex, higher value- added products and thus to be more upstream positioned in the supply chain. The more upstream the country is in the supply chain, the more domestic value added is included in its exports.

ICT ; technology ; supply chain trade ; trade in value-added ; PPML

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