Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283761 
Year of Publication: 
2023
Series/Report no.: 
WIDER Working Paper No. 2023/65
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
Digitalization and shifting patterns of globalization are fast changing the rules of the game for countries embarking on a path of industrialization. In this study, we empirically examine the impact of digitalization and global value chains on structural transformation using a cross-country panel of 51 economies in the GGDC/UNU-WIDER Economic Transformation Database for the period 1990-2018. The analysis is based on a novel cross-country panel combining information from the Economic Transformation Database with the UNCTAD EORA data set, World Development Indicators, and Penn World Tables. Structural transformation is examined through changes across three variables: changes in manufacturing labour productivity, manufacturing employment share, and country-level structural change. To address issues related to endogeneity and country fixed effects, we use methodologies of fixed effects with instrumental variables and the two-step system GMM estimator. Results indicate that digitalization has a positive impact on structural change and manufacturing labour productivity but a negative impact on manufacturing employment share, indicating a reallocation of labour from the agricultural sector into services. Overall global value chain participation, and particularly forward participation, has a positive impact on structural change and manufacturing labour productivity.
Subjects: 
industrialization
digital technologies
structural transformation
global value chains
JEL: 
O14
F6
F14
C23
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-373-4
Document Type: 
Working Paper

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