Digital Connectedness and Exports Upgrading: Is SubSaharan Africa Catching Up?
August 17, 2022
Joël Cariolle's presentation highlighted a new dimension of the submarine cable infrastructure network, called "digital connectivity," which reflects a country's digital proximity to key global markets, while assessing its impact on export enhancement.
Adopting an instrumental variables approach conducted on a sample of 60 developing countries-including 23 sub-Saharan African countries-over the period 1995-2017, Joël Cariolle and Camille da Piedade find that digital connectivity contributes positively and significantly to the complexity of the export basket, but they also highlight spatial heterogeneity within their sample.
The estimates highlight that, relative to the rest of the world, a 10 percentage point increase in the share of global GDP directly wired to SSA countries leads to an additional increase ranging from 4.6 index points to 5.3 index points in the export complexity index. Moreover, while the positive effect of digital connectivity fades everywhere else with distance from global markets, in SSA an increased advantage is recorded. Finally, consistent with the literature, improved digital connectivity also materializes in terms of increased exports of differentiated goods and greater participation in the global value chain. Overall, their analysis lends credence to the belief that improved access to information and knowledge, through greater digital connectivity, stimulates structural change and upgrading of the export basket in SSA at a higher rate than in any other developing region.
