Digital Platforms and Global Value Chains

The two largest changes that have affected international trade since the 1990s are the creation of the new digital economy and the development of global value chains (GVCs). Both are inherently connected to new information and communication technology (ICT), and both have seemingly increased trade inclusivity, benefitting the trade participation of micro, small, and medium-sized enterprises (MSMEs) and developing countries. The interaction between the digital economy and GVCs is not well explored, however. Although the growth of both may have been in parallel, is there evidence that the digital platforms at the core of the digital economy affect GVC participation? This chapter examines the role of digital platforms, especially e-commerce marketplaces in the modern economy; the ways these platforms can increase economic inclusivity; and the development of GVCs and their effect on trade participation. The chapter also reviews the evidence on the link between digital platforms and GVC participation.