Digital intermediation of export of creative goods from India

Digitalisation is transforming trade in creative goods and services. Digital intermediaries are easing market access, increasing product visibility and discoverability, and weakening the traditional price-exchange-rate channel. However, it is also creating new platform-scale effects. It has blurred geographic distance in production and consumption. Given the differing levels of digitalisation, data policies, and digital divides, its effect on trade is not uniform across countries. There is also a lack of studies on the impact of digitalisation on the trade of creative goods using large macro panels, especially in the case of India, one of the largest exporters of creative goods globally. The present study aims to fill this gap by examining India's creative goods exports to its 114 partner countries from 2002 to 2022. The study employs second-generation panel regression - the common correlated effects method. Driscoll-Kraay standard errors estimators are used for validity checks and to estimate the average standardised trade potential. The study shows that digitalisation has a significant impact on India's exports: a 1% increase in digitalisation in partner countries is associated with a 0.79% increase in exports of creative goods. The impact of the bilateral exchange rate is weak. The study shows that the income structure, rather than the size of the market, is a key factor in enhancing exports. The present paper contributes to the emerging literature, which has largely focused on advanced economies, by demonstrating that the global creative market is driven less by a low-cost advantage but more by income compatibility and digital readiness.