Digitalisation and global value chain participation: evidence from Spanish manufacturing firms

This study examines the relationship between the adoption of digital technologies and firms’ participation in global value chains (GVCs), and the channels through which this relationship operates. Using a sample of Spanish manufacturing firms from 2006 to 2018, we analyse the impact of digitalisation on the decision to participate in GVCs. We construct a general synthetic index of digitalisation at the firm level, along with two additional indices capturing information and telecommunication technologies and automation processes. We find that digitalisation is a key driver of GVC participation, both through a direct effect and an indirect effect resulting from enhanced productivity. Our findings also provide evidence on the two channels -imports of intermediate inputs and exports- by which digitalisation affects GVC participation. In particular, ICTs are important for expanding export markets, whereas automation operates predominantly through the import channel and is limited to producers of intermediate goods.