The Role of Digitalisation in Shaping India’s Global Value Chain Participation

This study investigates the role of digital infrastructure in shaping the global value chain (GVC) participation of Indian manufacturing firms. To examine the digitalisation and GVC nexus, a rich, firm-level, unbalanced panel of 4,875 manufacturing firms from the past 2 decades is employed to detail the rising importance of digital infrastructure in the Indian context and then to examine empirically the relationship between digitalisation and GVCs. Employing a logit model, a positive, significant impact of digitalisation is found regarding firms’ GVC participation. Further, subsample results highlight that digitalisation promotes integration of small firms and firms from low-technology industries into the GVC. The findings of the analysis are robust to alternate measures of the GVCs.

This research was conducted as a part of the project ‘ERIA Research on COVID-19’ at the Economic Research Institute for ASEAN and East Asia (ERIA).

The Role of Digitalisation in Shaping India’s Global Value Chain Participation