The Impact of Digitalization and Trade Agreements on New Zealand's Trade Involving Global Value Chains

Abstract

The purpose of this dissertation is to examine the impact of digitalization and trade agreements on New Zealand’s trade involving global value chains (GVCs). As a small, open economy, NZ’s integration into GVCs is crucial for its economic growth and competitiveness. This study employed a mixed-methods approach, combining quantitative analysis of trade and economic data with qualitative content analysis of trade agreement provisions. This study revealed that NZ’s GVC participation (including backward and forward GVC participation) showed a decreased trend between 2008 and 2020, despite it tried to integrate into global production networks. A positive correlation between digital adoption and GVC participation was observed, with increased Internet penetration rate and ICT use index corresponding to higher GVC participation. In addition, recent trade agreements with digital provisions, such as CPTPP and DEPA, have shown promising early results in facilitating digital trade and cross-border data flows. However, the benefits of digitalization and trade agreements are not uniformly distributed, with SMEs lagging larger enterprises in leveraging these opportunities. This study recommended targeted policies to support SMEs, continued investment in digital infrastructure, and prioritization of digital trade provisions in future agreements. Generally, this study helped to understand how small economies harness the complexity of GVCs in the digital age and provide valuable insights for policymakers and enterprises.