Digital Connectedness and Exports Upgrading: Is Sub Saharan Africa Catching Up?
Files
Date
2022-07
Authors
Cariolle, Joël
Piedade, Camille da
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
In this paper, we highlight a new dimension of the submarine cable infrastructure
network, termed ‘digital connectedness’, reflecting a country's digital proximity
to main world markets, and assess its impact on export upgrading. Adopting an
instrumental variables approach conducted in a sample of 60 developing countries―
including 23 sub-Saharan African countries―over the period 1995‒2017, we find
that digital connectedness positively and significantly contributes to the export
basket complexity, but also points out spatial heterogeneity within our sample. In
fact, estimations stress that, compared to the Rest of the World, a 10pp increase in
the share of world GDP directly cabled to SSA countries leads to a supplementary
increase ranging from 4.6 index points to 5.3 index points in the export complexity
index. Moreover, whereas the positive effect of digital connectedness falloffs with
distance from global markets everywhere else, in sub-Saharan Africa, an increased
benefit is recorded. Last but not least, consistent with the literature improved digital
connectedness also materializes into greater exports of differentiated goods and
greater participation in the global value chain. Overall, our analysis gives credit to the
belief that improved access to information and knowledge, through greater digital
connectedness, spurs structural change and export basket upgrading in SSA at a
higher pace than in any other developing areas.
Description
Keywords
Economic complexity; Internet; Connectivity infrastructures; Sub-Saharan Africa: exports: Trade diversification.