We investigated the impact of e-commerce on global value chains (GVC). Using firm-level data from Korea for the period 2006-2014, we found that firms that adopted an integrated e-commerce management system had a significantly higher probability of participating in GVC, particularly for firms with productivity levels below the upper quartile. We also examined the implications of firm-level e-commerce participation for the aggregate GVC trade using a theoretical model. The model showed that e-commerce facilitates GVC trade and makes the trade volume more responsive to trade costs. From these results, we conclude that supporting SMEs in their digital transformation and e-commerce participation can be effective in promoting SMEs’ participation in GVC. We also highlight that efforts to reduce trade costs remain imperative, even as e-commerce becomes more prevalent.
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