Comparative Advantage in the Digital Era: New insights into trade in digital tasks and ICT capital

Client/Funding Institution

Anniversary Fund of the Oesterreichische Nationalbank

Abstract

Comparative advantage remains one of the basic principles of international trade theory. This also holds true in times of globalisation and digitalisation. Taking into account the existence of international value chains and productivity differences across countries, this project identifies comparative advantages of EU member states in the ‘digital endowments’, comprising 'digital tasks' and ICT capital. The project provides new insights into countries' position in ‘digital trade’ and their readiness to master the shift to cyber-physical production systems that characterise the ‘digital revolution’. Furthermore, the underlying institutions and policies that shape these comparative advantages are investigated. This way, the analysis of digital comparative advantage provides valuable insights into what actions may be needed in the EU to defend and improve technological leadership in the digital era.

Duration

March 2021 - February 2023

wiiw team Leader

Roman Stöllinger

wiiw Staff

Birgit Buschbom, Alexandra Bykova, Stefan Jestl, Sandra M. Leitner, Robert Stehrer

Keywords: Comparative advantage, Heckscher–Ohlin–Vanek model, digital tasks, ICT capital, hierarchical decomposition, competitiveness

Countries covered: EU-28

Research Areas: International Trade, Competitiveness and FDI


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