THE IMPACT OF DIGITALIZATION ON GLOBAL VALUE CHAINS

The nature of trade is changing, and the focus is no longer on trade in final goods but on the exchange of components and added value. Technological advancements have reduced prices in transport and communication networks and brought revolutionary changes to the way trade is performed. Digitalization further changed manufacturing processes and has the potential to disrupt established value chains but also to create a number of opportunities, especially for developing countries. The main aim of the paper is to analyze the new trade paradigm in the form of global value chains (GVC) and to establish the role of digitalization and its effects on global value chains. This paper points out that digitalization is a global process and at the same time reveals it is occurring at a different pace across countries. It is transforming the production process, and while causing some jobs to disappear, it can be the source of new jobs, skills and technological spillovers, which are especially important for developing countries. However, in order to take advantage of opportunities from digital technologies, appropriate infrastructure has to be in place as well as supporting institutions and regulation.