Does the deepening of digital trade rules improve GVC positioning?– A product-level analysis

Purpose The purpose of this paper is to examine the impact of deepening digital trade rules on the host country’s position in global value chains (GVCs) of partner countries at the product category level, on the basis of considering the sample self-selection effect. Design/methodology/approach Using the trade data of HS 6-digit product category level from 58 countries between 2000 and 2020, this paper assesses the changes in the host country’s GVC position relative to partner countries. This paper develops a set of in-depth indicators for evaluating digital trade rules in various countries and empirically explores the impact of deepening digital trade rules on the position of GVCs using the Heckman two-stage model. Findings There is a significant positive correlation between deepening digital trade rules and the position of GVCs, and this finding remains robust across multiple validity tests. The mechanism tests indicate that deepening digital trade rules promotes research and development (R&D) innovation, external industrial transfer and technology spillovers in host countries, therefore affecting the position of GVCs. The heterogeneity tests reveal that digital trade rules substantially improve the GVC position of industrialized countries, particularly in non-technology-intensive products, while negatively impacting the GVC position of developing countries across all product categories. This paper offers some policy recommendations to improve the influence of digital trade rules on GVCs. Originality/value This paper extends the sample time of GVCs to 2020 through product category level trade data and constructs a depth measurement system for digital trade rules. Based on considering sample self-selection, this paper uses the Heckman two-stage model to explore the impact of deepening digital trade rules on the position of GVCs.