Nonlinear effects of digitalization on export activities: an empirical investigation in European countries

    Nguyen Thi Hong Nham Affiliation
    ; Nguyen Khac Quoc Bao Affiliation
    ; Le Thanh Ha Affiliation


Our study is the first to empirically analyze the nonlinear relationship between digitalization and export value and diversification. This paper measures the digital transformation process in terms of digital connectivity, uses of the internet, e-business, e-commerce, and e-government. The various econometrics techniques are applied for the database of 23 European countries during the period 2015–2020. The vital findings should be conveyed here. First, the bottlenecks of export values could be resolved by promoting digital transformation. However, the non-linear reverted U-shaped relationship between digitalization and export diversification suggests that positive effects only appear when the digital activities, especially in digital connectivity, humans with digital skills, use of internet services, or digital public services reaches a certain threshold. Second, the positive influence of digitalization on exports stems from a reduction in export cost and export time to deal with documentary and border compliance as well as improvements in competence and quality of logistic services and quality of trade and transport-related infrastructure, thus enhancing exports. Third, the role of digital connectivity and the integration of digital technology into business and commerce become especially important for export diversification.

Keyword : digital transformation, export value and diversification, European countries

How to Cite
Nham, N. T. H., Bao, N. K. Q., & Ha, L. T. (2023). Nonlinear effects of digitalization on export activities: an empirical investigation in European countries. Technological and Economic Development of Economy, 29(3), 1041–1079.
Published in Issue
May 24, 2023
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Aditya, A., & Acharyya, R. (2013). Export diversification, composition, and economic growth: Evidence from cross-country analysis. The Journal of International Trade & Economic Development, 22(7), 959–992.

Agosin, M. R., Alvarez, R., & Bravo-Ortega, C. (2012). Determinants of export diversification around the world: 1962–2000. The World Economy, 35(3), 295–315.

Alcácer, J., Cantwell, J., & Piscitello, L. (2016). Internationalization in the information age: A new era for places, firms, and international business networks? Journal of International Business Studies, 47(5), 499–512.

Ali, M., Cantner, U., & Roy, I. (2016). Knowledge spillovers through FDI and trade: The moderating role of quality-adjusted human capital. Journal of Evolutionary Economics, 26(4), 837–868.

Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51.

Awan, U., Sroufe, R., & Shahbaz, M. (2021). Industry 4.0 and the circular economy: A literature review and recommendations for future research. Business Strategy and the Environment, 30(4), 2038–2060.

Azar, G., & Ciabuschi, F. (2017). Organizational innovation, technological innovation, and export performance: The effects of innovation radicalness and extensiveness. International Business Review, 26(2), 324–336.

Baker McKenzie. (2020, April 8). Beyond COVID-19: Supply chain resilience holds key to recovery. Chicago, IL. LMIC-CIMT. Retrieved August 7, 2021, from

Bayram, M., Springer, S., Garvey, C. K., & Özdemir, V. (2020). COVID-19 digital health innovation policy: A portal to alternative futures in the making. OMICS: A Journal of Integrative Biology, 24(8), 460–469.

Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American Political Science Review, 89(3), 634–647.

Ben Hammouda, H., Karingi, S., Njuguna, A., & Sadni Jallab, M. (2006). Diversification: Towards a new paradigm for Africa’s development (MPRA Paper No. 13359). University Library of Munich, Germany.

Bettiol, M., Capestro, M., Marchi, V. D., & Maria, E. D. (2020). Industry 4.0 investments in manufacturing firms and internationalization (“Marco Fanno” Working Papers No. 0245). Dipartimento di Scienze Economiche “Marco Fanno.”

Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143.

Bojnec, S., & Ferto, I. (2010, March). Market-creating effect of the internet on food trade. In 84th Annual Conference. Edinburgh, Scotland, 91958. Agricultural Economics Society.

Bossong, R., & Rhinard, M. (2013). The EU internal security strategy: Towards a more coherent approach to EU Security? Studia Diplomatica, 66(2), 45–58.

Branstetter, L. (2006). Is foreign direct investment a channel of knowledge spillovers? Evidence from Japan’s FDI in the United States. Journal of International Economics, 68(2), 325–344.

Cabral, M. H., & Veiga, P. (2010). Determinants of export diversification and sophistication in Sub-Saharan Africa (FEUNL Working Paper Series No. 550). SSRN.

Cadot, O., Carrère, C., & Strauss-Kahn, V. (2011). Export diversification: What’s behind the hump? The Review of Economics and Statistics, 93(2), 590–605.

Canh, N. P., & Thanh, S. D. (2020). Financial development and the shadow economy: A multi-dimensional analysis. Economic Analysis and Policy, 67, 37–54.

Centobelli, P., Cerchione, R., Chiaroni, D., Del Vecchio, P., & Urbinati, A. (2020). Designing business models in circular economy: A systematic literature review and research agenda. Business Strategy and the Environment, 29(4), 1734–1749.

Chiarvesio, M., & Romanello, R. (2018). Industry 4.0 technologies and internationalization: Insights from Italian companies. In R. van Tulder, A. Verbeke, & L. Piscitello (Eds.), International business in the information and digital age (Vol. 13, pp. 357–378). Emerald Publishing Limited.

Dalenogare, L. S., Benitez, G. B., Ayala, N. F., & Frank, A. G. (2018). The expected contribution of Industry 4.0 technologies for industrial performance. International Journal of Production Economics, 204, 383–394.

Daszak, P. (2012). Anatomy of a pandemic. The Lancet, 380(9857), 1883–1884.

de Piñeres, S. A. G., & Ferrantino, M. (1997). Export diversification and structural dynamics in the growth process: The case of Chile. Journal of Development Economics, 52(2), 375–391.

Dethine, B., Enjolras, M., & Monticolo, D. (2020). Digitalization and SMEs’ export management: Impacts on resources and capabilities. Technology Innovation Management Review, 10(4), 18–34.

Digital Economy and Society Index. (2021). Shaping Europe’s digital future. DESI. Retrieved April 3, 2022, from

Dingel, J. I., & Neiman, B. (2020). How many jobs can be done at home? Journal of Public Economics, 189, 104235.

El-Haggar, S. (2007). Sustainable industrial design and waste management: Cradle-to-cradle for sustainable development. Academic Press. Retrieved November 20, 2021, from

Espoir, L. M. (2020). Determinant of export diversification: An empirical analysis in the case of SADC countries. International Journal of Research in Business and Social Science (2147-4478), 9(7), 130–144.

European Commission. (2021a). EU citizens: Over half seek health information online. Products Eurostat News. Retrieved October 6, 2021, from

European Commission. (2021b). European Green Deal: Commission adopts new proposals to stop deforestation, innovate sustainable waste management and make soils healthy for people, nature and climate. Brussels. Retrieved November 20, 2021, from

Ferdous, F. B. (2011). Export diversification in East Asian economies: Some factors affecting the scenario. International Journal of Social Science and Humanity, 1(1), 13–18.

Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the World Economy (IESE Business School Working Paper No. WP-1240-E). SSRN.

Feroz, A. K., Zo, H., & Chiravuri, A. (2021). Digital transformation and environmental sustainability: A review and research agenda. Sustainability, 13(3), 1530.

Ferrari, F., Striani, R., Minosi, S., De Fazio, R., Visconti, P., Patrono, L., Catarinucci, L., Esposito Corcione, C., & Greco, A. (2020). An innovative IoT-oriented prototype platform for the management and valorisation of the organic fraction of municipal solid waste. Journal of Cleaner Production, 247, 119618.

Ford, T. E., Colwell, R. R., Rose, J. B., Morse, S. S., Rogers, D. J., & Yates, T. L. (2009). Using satellite images of environmental changes to predict infectious disease outbreaks. Emerging Infectious Diseases, 15(9), 1341–1346.

Freund, C. L., & Weinhold, D. (2004). The effect of the Internet on international trade. Journal of International Economics, 62(1), 171–189.

Gala, P., Camargo, J., Magacho, G., & Rocha, I. (2018). Sophisticated jobs matter for economic complexity: An empirical analysis based on input-output matrices and employment data. Structural Change and Economic Dynamics, 45, 1–8.

Gnangnon, S. K. (2019). Aid for trade and export diversification in recipient-countries. The World Economy, 42(2), 396–418.

Gopinath, G. (2020). Limiting the economic fallout of the coronavirus with large targeted policies. In R. Baldwin & B. Weder di Mauro (Eds.), Mitigating the COVID economic crisis: Act fast and do whatever it takes (pp. 41–48). CEPR Press.

Guerrieri, V., Lorenzoni, G., Straub, L., & Werning, I. (2020). Macroeconomic implications of COVID-19: Can negative supply shocks cause demand shortages? (Working Paper No. 26918). National Bureau of Economic Research.

Ha, L. T. (2022). Are digital business and digital public services a driver for better energy security? Evidence from a European sample. Environmental Science and Pollution Research, 29, 27232–27256.

Ha, L. T., Dung, H. P., & Thanh, T. T. (2021). Economic complexity and shadow economy: A multi-dimensional analysis. Economic Analysis and Policy, 72, 408–422.

Hilty, L., Lohmann, W., & Huang, E. M. (2011). Sustainability and ICT – An overview of the field. Notizie Di Politeia, 27(104), 13–28.

Hodey, L. S., Oduro, A. D., & Senadza, B. (2015). Export diversification and economic growth in Sub-Saharan Africa. Journal of African Development, 17(2), 67–81.

Honarvar, A. R., & Sami, A. (2019). Towards sustainable smart city by particulate matter prediction using urban Big Data, excluding expensive air pollution infrastructures. Big Data Research, 17, 56–65.

Hong, P. M. (2021). The importance of export diversification for developing ASEAN economies. Perspective, 80, 1–15.

Hovardas, T. (2016). Two paradoxes with one stone: A critical reading of ecological modernization. Ecological Economics, 130, 1–7.

Ibn-Mohammed, T., Mustapha, K. B., Godsell, J., Adamu, Z., Babatunde, K. A., Akintade, D. D., Acquaye, A., Fujii, H., Ndiaye, M. M., Yamoah, F. A., & Koh, S. C. L. (2021). A critical analysis of the impacts of COVID-19 on the global economy and ecosystems and opportunities for circular economy strategies. Resources, Conservation and Recycling, 164, 105169.

Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53–74.

Imbs, J., & Wacziarg, R. (2003). Stages of diversification. American Economic Review, 93(1), 63–86.

Jebril, N. (2020). World Health Organization declared a pandemic public health menace: A systematic review of the coronavirus disease 2019 “COVID-19” (ID 3566298). SSRN.

Krugman, P., & Venables, A. J. (1995). The seamless world: A spatial model of international specialization (Working Paper No. 5220). National Bureau of Economic Research.

Laplume, A. O., Petersen, B., & Pearce, J. M. (2016). Global value chains from a 3D printing perspective. Journal of International Business Studies, 47(5), 595–609.

Lawless, M., Siedschlag, I., & Studnicka, Z. (2019). Firm strategies in expanding and diversifying exports. The World Economy, 42(2), 349–375.

Lee, Y., & Falahat, M. (2019). The impact of digitalization and resources on gaining competitive advantage in international markets: Mediating role of marketing, innovation and learning capabilities. Technology Innovation Management Review, 9(11), 26–39.

Melitz, M. J. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71(6), 1695–1725.

Mosikari, T. J., & Eita, J. H. (2020). Modelling asymmetric relationship between exports and growth in a developing economy: Evidence from Namibia. South African Journal of Economic and Management Sciences, 23(1), a2905.

Nguyen, C. P., Schinckus, C., & Su, T. D. (2020). The drivers of economic complexity: International evidence from financial development and patents. International Economics, 164, 140–150.

OECD. (2020). Leveraging digital trade to fight the consequences of COVID-19. Retrieved August 6, 2021, from

Özsoy, S., Ergüzel, O. Ş., Ersoy, A. Y., & Saygılı, M. (2022). The impact of digitalization on export of high technology products: A panel data approach. The Journal of International Trade & Economic Development, 31(2), 277–298.

Parente, P. M. D. C., & Santos Silva, J. M. C. (2012). A cautionary note on tests of overidentifying restrictions. Economics Letters, 115(2), 314–317.

Parteka, A., & Tamberi, M. (2013). What determines export diversification in the development process? Empirical assessment. The World Economy, 36(6), 807–826.

Pesaran, M. H. (2021). General diagnostic tests for cross-sectional dependence in panels. Empirical Economics, 60(1), 13–50.

Pontones-Rosa, C., Pérez-Morote, R., & Santos-Peñalver, J. F. (2021). ICT-based public policies and depopulation in hollowed-out Spain: A survey analysis on the digital divide and citizen satisfaction. Technological Forecasting and Social Change, 169, 120811.

Porter, M. E., & Heppelmann, J. E. (2014, November 1). How smart, connected products are transforming competition. Harvard Business Review.

Ranney, M. L., Griffeth, V., & Jha, A. K. (2020). Critical supply shortages – The need for ventilators and personal protective equipment during the COVID-19 pandemic. New England Journal of Medicine, 382(18), e41.

Rehnberg, M., & Ponte, S. (2018). From smiling to smirking? 3D printing, upgrading and the restructuring of global value chains. Global Networks, 18(1), 57–80.

Roodman, D. (2009). How to do Xtabond2: An introduction to difference and system GMM in stata. The Stata Journal, 9(1), 86–136.

Roy, V., & Singh, S. (2017). Mapping the business focus in sustainable production and consumption literature: Review and research framework. Journal of Cleaner Production, 150, 224–236.

Samuelson, P. A. (1952). The transfer problem and transport costs: The terms of trade when impediments are absent. The Economic Journal, 62(246), 278–304.

Scholz, R. W. (2017). Digital threat and vulnerability management: The SVIDT method. Sustainability, 9(4), 554.

Sergi, B. S., Popkova, E. G., Bogoviz, A. V., & Litvinova, T. N. (2019). Future outlines in the sphere of education in the age of the information economy. In Understanding Industry 4.0: AI, the Internet of things, and the future of work (pp. 73–78). Emerald Publishing Limited.

Sharma, G. D., Yadav, A., & Chopra, R. (2020). Artificial intelligence and effective governance: A review, critique and research agenda. Sustainable Futures, 2, 100004.

Sohrabi, C., Alsafi, Z., O’Neill, N., Khan, M., Kerwan, A., Al-Jabir, A., Iosifidis, C., & Agha, R. (2020). World Health Organization declares global emergency: A review of the 2019 novel coronavirus (COVID-19). International Journal of Surgery, 76, 71–76.

Sołoducho-Pelc, L., & Sulich, A. (2020). Between sustainable and temporary competitive advantages in the unstable business environment. Sustainability, 12(21), 8832.

Solomon, E. M., & van Klyton, A. (2020). The impact of digital technology usage on economic growth in Africa. Utilities Policy, 67, 101104.

Strange, R., & Zucchella, A. (2017). Industry 4.0, global value chains and international business. Multinational Business Review, 25(3), 174–184.

Sulich, A., Rutkowska, M., Krawczyk-Jezierska, A., Jezierski, J., & Zema, T. (2021). Cybersecurity and sustainable development. Procedia Computer Science, 192, 20–28.

Sweet, C., & Eterovic, D. (2019). Do patent rights matter? 40 years of innovation, complexity and productivity. World Development, 115, 78–93.

Venables, A. J., & Limão, N. (2002). Geographical disadvantage: A Heckscher–Ohlin–von Thünen model of international specialisation. Journal of International Economics, 58(2), 239–263.

Webster, R. G. (1997). Predictions for future human influenza pandemics. The Journal of Infectious Diseases, 176(Suppl 1), S14–S19.

Wen, H., Lee, C.-C., & Song, Z. (2021). Digitalization and environment: How does ICT affect enterprise environmental performance? Environmental Science and Pollution Research, 28, 54826–54841.

Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25–51.

Zhang, Y., Ren, S., Liu, Y., & Si, S. (2017). A big data analytics architecture for cleaner manufacturing and maintenance processes of complex products. Journal of Cleaner Production, 142(Part 2), 626–641.