This study aims to empirically examine the impact of digital transformation on agricultural bilateral trade using data from 84 countries over the period 2015–2023. Agricultural trade is characterized by a high reliance on administrative procedures s...
This study aims to empirically examine the impact of digital transformation on agricultural bilateral trade using data from 84 countries over the period 2015–2023. Agricultural trade is characterized by a high reliance on administrative procedures such as document verification, sanitary and phytosanitary inspections, and customs clearance, which makes it particularly sensitive to improvements in digital trade administration. In this context, digitalization—through the adoption of electronic documents, automated customs procedures, and online certification systems—has substantial potential to reduce trade costs. To capture this mechanism, the study adopts a structural gravity framework and constructs a Trade Digitalization Index (TDI) by combining the digital transformation levels of exporting and importing countries using a geometric mean. The model is estimated using the Poisson Pseudo Maximum Likelihood (PPML) estimator with multiple high-dimensional fixed effects.
The empirical results indicate that digital transformation plays a central role in shaping the cost structure of agricultural trade rather than serving as a merely supplementary institutional improvement. A 1% increase in the TDI is associated with an average increase of approximately 2.7% in agricultural trade flows, suggesting that digital measures such as electronic documentation, customs automation, and online certification are directly linked to trade expansion. These findings imply that digital transformation can effectively alleviate non-physical trade costs in agricultural trade that are difficult to address through traditional policy instruments such as logistics infrastructure investment or tariff reductions alone.
Furthermore, the study finds that the trade effects of digital transformation are not uniform across country pairs. The marginal effect of digital transformation is largest for country pairs composed of countries with relatively low levels of digitalization (Low–Low pairs), indicating that improvements at the early stage of digital adoption yield particularly high returns in terms of trade expansion. This result suggests that basic digital measures—such as the introduction of electronic documents or elementary administrative automation—can substantially reduce administrative delays and procedural inefficiencies. Consequently, support for digital trade administration in developing countries may translate into tangible gains in agricultural trade within a relatively short period.
Additional analysis based on income groups shows that the trade effects of digital transformation should be interpreted not only in terms of technological adoption but also in conjunction with the economic conditions shared by trading partners. Although digital transformation has a statistically significant positive effect on trade even among low-income country pairs, the magnitude of the effect is smaller than that observed for country pairs involving high-income countries. This finding suggests that the translation of digital improvements into trade outcomes depends partly on structural conditions such as administrative capacity and institutional environments.
Overall, this study demonstrates that digital transformation exerts a strong average effect on agricultural trade while exhibiting systematic heterogeneity across country pairs depending on their level of digitalization and income structure. These results indicate that strengthening digital trade administration in the agri-food sector should be viewed not merely as a technological policy, but as a strategic instrument that links development strategies, trade policy, and international cooperation. In particular, phased support for digital transformation in developing countries and enhanced interoperability of electronic documentation and customs procedures across countries may constitute effective pathways for promoting agricultural trade.