Can digital transformation of services promote participation in manufacturing global value chains?

Using data from 17 manufacturing industries in 65 countries (regions) spanning the period 2000–2018, this paper investigates the impact of digital transformation in services on the participation of manufacturing industries in global value chains (GVCs). Empirical analysis reveals that by reducing trade costs and improving production efficiency in manufacturing industries, digitalization of services can significantly promote manufacturing GVC participation. The magnitude of this effect is influenced by several factors, including the service input intensity of manufacturing industries, a country's position within GVCs, and the specific configuration of the manufacturing GVC pattern. Specifically, the impact of the digital transformation in services on manufacturing GVC participation is more pronounced in service-input-intensive manufacturing industries, countries positioned peripherally within GVCs, and those following the "snake-shaped" GVC pattern. A series of tests, including endogeneity analysis, confirm the robustness of our findings.