Digitalization of Trade Procedures: Effects on Foreign Trade Diversification

Abstract

The article examines effects of the digitalization of trade procedures on the diversification of countries’ foreign trade. Country-level indices of trade digitalization are taken from the UN Global Survey on Digital and Sustainable Trade Facilitation for 2015–2021, while trade concentration indices (Herfindahl–Hirschman) are calculated using data from the BACI-CEPII international trade database. The econometric results indicate that higher levels of digitalization in exporting countries are associated with greater diversification of the product structure of bilateral trade, as well as with increased geographical diversification of exports within product groups. For importing countries, similar effects of digitalization are obtained; however, the corresponding estimates are less robust and statistically significant.