Digital services trade networks strengthen manufacturing global value chains

The research, conducted by Limin Liu and Minjie Wang, constructs two separate but interlinked networks—one tracking digital services trade between countries and another mapping manufacturing global value chain (GVC) relationships—and then applies dynamic network models to test whether the first shapes the second over time.

The study integrates sector-level services trade classification, value-added trade decomposition, and social network analysis to build its datasets. Rather than treating trade as a simple bilateral flow, the authors treat each country’s trade relationships as nodes and edges in a network, allowing them to capture how patterns of connectivity emerge, persist, and dissolve across years.

To test whether digital services trade actually drives manufacturing GVC formation, the researchers employ Temporal Exponential Random Graph Models (TERGMs) and Separable Temporal Exponential Random Graph Models (STERGMs). The models also control for country attributes, dyadic characteristics, endogenous network structures, and time effects, ensuring that the observed relationship is not simply an artifact of country size or geographic proximity.

Bilateral digital services trade linkages significantly increase the likelihood that two countries will also form manufacturing GVC connections. This holds even after accounting for the many other factors that could explain the association.

The STERGM results go further by separating the formation of new ties from the persistence of existing ones. Digital services trade promotes both processes, but the effect on persistence is stronger. This suggests that digital services trade does not merely help countries find new production partners; it also helps consolidate relationships that already exist, making existing manufacturing GVC ties more durable over time. The authors describe this as a cross-network mechanism that strengthens manufacturing GVC connectivity and creates favorable conditions for deeper integration into global production networks.

Heterogeneity analysis reveals important differences across country groups and industries. The effect of digital services trade on manufacturing GVC linkages exists broadly, but it is more pronounced when the digital services trade linkages originate from high-income and advanced economies.

At the industry level, the pattern is even more differentiated. The effect is strongest in high-technology industries, remains significant in medium-technology industries, and is statistically insignificant in low-technology industries.

The study addresses a gap in the literature. While digital services trade has been recognized as an important channel through which countries participate in global production networks, limited attention has been paid to how digital services trade networks shape the dynamic evolution of manufacturing GVC networks specifically.

The research is published as an open access article, making the full network models and decomposition methods available to other researchers working on trade networks and global value chain dynamics.

Subject of Research: How digital services trade networks shape the dynamic formation and persistence of manufacturing global value chain linkages

Article Title: Digital services trade networks and manufacturing global value chain integration: a dynamic network perspective

Article References: Liu, L., & Wang, M. (2026). Digital services trade networks and manufacturing global value chain integration: a dynamic network perspective. Applied Network Science. https://doi.org/10.1007/s41109-026-00827-x

Image Credits: AI Generated

DOI: 10.1007/s41109-026-00827-x

Keywords: digital services trade, global value chains, manufacturing, network analysis, TERGM, STERGM, trade networks, high-technology industries, GVC integration, economic networks, Digital, services