This year’s World Bank World Development Report uncovers new insights on the relationship between international connectivity and economic activity.
Thanks to technological improvements, the costs to transport goods, people, knowledge and capital between countries have declined. This environment has changed the underlying structure of global economic production: we’re seeing an increasing number of multinational corporations; higher degrees of specialization of various stages of production; and rising levels of trade of intermediate goods (the parts and materials imported to make products for consumption domestically and abroad) between developing countries.
One of the impacts of increased global specialization is growth in the value and volume of trade of intermediate products and services. These networks of coordinated transactions between tiers of firms, or global value chains, operates across countries with production hubs around the globe specializing in various specific parts of the production process. Given the complexity of these global value chains, it’s essential to create ways to quickly and easily share information across workers in different parts of production.
It has been challenging to quantify the role of worker connectivity to a global value chain since person-to-person connection data has typically been hard to find. But with more than 630 million members, LinkedIn’s unique insights about the networks of professionals are uncovering critical details on the relationship between economic activity and connectivity at the international level.
Using a combination of LinkedIn and World Bank data, we’ve found that global value chain participation is strongly correlated to the number of international relationships between employees in a sector. What that looks like in our data: a 1% increase in a sector’s international connections on LinkedIn is associated with 0.8-0.9% increase in exports, imports, and other measures of global value chain participation. While this isn’t a causal link, it does tell us that that growing professional networks are complementary to the expansion of global value chains.
These findings raise an important point for the policy community: there is a strong case for investing in infrastructure that facilitates information flow across workers, firms, and countries — whether it is expanding broadband access or investing in training workers with digital literacy skills.
The World Bank Group and LinkedIn have a shared vision and commitment to helping workers around the world access and realize economic opportunity (https://linkedindata.worldbank.org/). As we continue to leverage our collective data and insights, we plan to publish additional research about the relationship between connectivity and economic activity with our data sets.