A study on the impact of digital trade on the position of services in global value chains

Abstract The advent of the information age has led to the growing development of digital trade, which has a potential impact on the position of the service sector in global value chains (GVCs). In order to further clarify the mechanism of this impact, this paper selects a sample of 50 economies in the ADBMRIO database for the period of 2005-2020 and conducts a benchmark regression analysis with the GVC status index and digital trade as the explanatory variables and the core explanatory variables, respectively. The results of the analysis show that the relationship between digital trade and service industry GVC is “inverted U”, that is, in the early stage of the participation of digital services in global trade, the increase of digital trade has increased the status of service industry GVC, and with the deepening of the degree of digitization, the status of the service industry GVC declines with the increase of the level of digital trade. The following are a few examples of how digital trade affects services. Also for lower-middle-income, upper-middle-income, and high-income countries, the coefficients of the impact of digital trade on the global value chain position of the service industry are 0.152, 1.752, and -0.022, respectively, revealing that the relationship between digital trade and the service industry’s position in the full value chain varies with different income levels of the country.