Digital Economy and Trade: Evidence from South Africa

Abstract

Advances in Information and Communication Technology (ICT) have mitigated the physical distance as a trade barrier, making it easier to trade globally. Information and Communication Technology has become very important in today’s globalisation era. As a result, the primary aim of this study is to analyse the influence of digital economy on trade in South Africa from 1990 to 2022. The study used Autoregressive Distributed Lags (ARDL) approach to examine the impact of population of individuals using internet, literacy rate, economic globalisation and foreign direct investment on the trade share.  The results showed that population of individuals using internet have a positive and significance impact on trade share in the long run. Similarly, there was a positive and significance relationship between trade share and literacy rate, economic globalisation and foreign direct investment in the long run. Furthermore, the study reported that literacy rate, economic globalisation and foreign direct investment influence trade share positivity in the long run. The study recommend that policy makers should prioritise digital inclusion initiatives, which aims to increase the internet access in the rural areas and digital literacy to people who are not familiar with technology.  By doing so, this will lead to a higher number of internet users, ultimately fostering a positive and significant on trade.