Evaluating the influence of information and communication technology and the BRICS in South African trade dynamics: a gravity model approach

• Date: 11 October 2024
• Pages: 168-186
• DOI: https://doi.org/10.1108/JITLP-07-2024-0045
• Published date: 11 October 2024
• Subject Matter: Strategy,International business,International business law,Economics,International economics,International trade
• Author: Nnanna P. Azu,Samuel O. Adekalu,Yusuf Isa,Joshua O. Chiadikobi

Evaluating the inf‌luence of

information and communication

technology and the BRICS in South

African trade dynamics: a gravity

model approach

Nnanna P. Azu

Department of Economics, Air Force Institute of Technology,Kaduna, Nigeria

Samuel O. Adekalu

Depatment of General Studies, Federal University of Allied Health Sciences,

Enugu, Nigeria, and

Yusuf Isa and Joshua O. Chiadikobi

Department of Economics, Nile University of Nigeria, Abuja, Nigeria

Abstract

Purpose –This study aims to assess how South Africanmembership to the Brazil, Russia, India, China and

South Africa (BRICS) has inf‌luenced its traded sector. It also evaluated information and communication

technology(ICT) as an instrument for enhancing bilateral trade.

Design/methodology/approach –ICT was captured from three perspectives: mobile technology, internet

usage and f‌ixed telephones. It was integrated into an augmented gravity equation as a trade cost. The study

covered 27years and 181 South African trading partners. Estimation was done using the Poisson pseudo

maximum likelihood estimation technique and the implementation of exporter-year and importer-year f‌ixed

effects.

Findings –It was revealed thatmobile phone and f‌ixed telephone subscriptions improve import andexport by

4.66% and 1.79%, respectively, while the internet penetration rate negates export and import by 13.4% and

5.89%, respectively. However, it further demonstrates that the internet penetration rate and f‌ixed telephone

subscription reduced the negative impactof distance by 7.26% and 1.15% for export. ICT performed better

when South Africa only tradedwith the BRICS countries. The report also shows an encouraging BRICS effect

on South African bilateraltrade with the bloc.

Practical implications –The study highlights that BRICS membership signif‌icantly boosts South Africa’s

bilateral trade, which encourages new African memberships, while also emphasising the role of ICT in

mitigating the negative impact of distance. Policymakers shouldenhance mobile phone and f‌ixed telephone

infrastructures to improve importsand exports, respectively, and strategically manage internet penetrationto

maximise the benef‌itsof BRICS economic cooperation.

Originality/value –The study evaluated the inf‌luence of South Africa’s BRICS membership and howICT

variables interactwith distance to mitigate its effects on trade. This providesa nuanced understanding of ICT’s

unique impact on South Africa’sbilateral trade, offering valuable insights for policymakersto enhance trade

performanceand leverage BRICS economic cooperation effectively.

Keywords ICT, Bilateral trade, BRICS, South Africa, Gravity model, Digitalisation

Paper type Research paper

Declaration of Interest Statement: The authors have no conf‌licts of interest to disclose.

JITLP

23,2/3

168

Received4 July 2024

Revised20 August 2024

30 August2024

Accepted1 Se ptember 2024

Journalof International Trade Law

andPolicy

Vol.23 No. 2/3, 2024

pp. 168-186

© Emerald Publishing Limited

1477-0024

DOI 10.1108/JITLP-07-2024-0045

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1477-0024.htm

1. Introduction

South Africa’s accession to BRICS (Brazil, Russia, India, China and South Africa) on

December 24, 2010, was anticipated to create new trade opportunities with these emerging

economies. However, empirical evidence on this impact is limited. Esposito et al. (2016)

observed that while BRICS was once celebrated for its growth potential, it now faces

signif‌icant economic and political challenges. No fewer than 19 (19) countries applied for

BRICS membership (Vecchiatto, 2023), which later rose to 40 countries before the 2023

summit in South Africa, among which are Algeria,Egypt, Ethiopia, Democratic Republic of

Congo, Comoros and Gabon-developing African countries.Borger (2023) reported that Iran,

Saudi Arabia, Egypt, Argentina, the UAE and Ethiopia will be (and indeed were) formally

admitted in January 2024, a signif‌icant expansion to the economic bloc that would mean

more economic relevance. Before this latest admission, the BRICS accountedfor over 40%

of the world population and one-fourthof the global economy.

This study contributes to trade literature by exploring the effects of South Africa’s

membership in the BRICS group on its trade dynamics,particularly emphasising the role of

information and communication technology (ICT). Specif‌ically, the research aims to

evaluate whether ICT helps mitigate the negative impact of geographical distance, which

traditionally poses a signif‌icant barrier to international trade. This analysis is particularly

important, as ICT has the potential to enhance trade eff‌iciency and connectivity (Wang and

Choi, 2018;Lin, 2014), thereby reducing the traditional constraints posed by physical

distance. Moreover,the study investigates whether the inf‌luence of ICTon trade differs when

South Africa engages with other BRICS nations, considering the unique economic and

political relationships that characterise this group. An insight into these dynamics is crucial

for assessing how ICTcan be leveraged to strengthen South Africa’strade position within the

BRICS coalition and beyond.

Cattaneo and Snowball (2019) emphasised that the BRICS bloc is a crucial trading

partner for South Africa, driving development and job creation in the post-apartheid

economy. However, they note South Africa’s trade imbalance with China and India,

inf‌luential BRICS members. Between 2010 and 2018, bilateral trade between South Africa

and BRICS countries increased from US$35.43bn to US$57.57bn, with a worsening

negative trade balance of US$3.82bn–US$13.43bn. By 2021, South Africa exported US

$35.29bn worth of goods to BRICScountries but imported US$47.01bn, further highlighting

the trade imbalance (WDI, 2023). Sawhney and Kiran (2019) also observe high trade

intensity among BRICS members, varying by commodity and country. While there is

evidence of growing trade within the bloc, the extent to which BRICS membership

inf‌luences South Africa’s trade dynamics remains unclear. This research aims to f‌illthis gap

by providing empirical evidence of BRICS’s impact on South Africa’s bilateral trade,

particularly in imports and exports, and highlighting the distinct inf‌luence of BRICS

membership on overall traderelationships.

Similarly, Çakıra and Kabundi (2013) demonstrated that shocks from each BRICS

country signif‌icantly inf‌luenceSouth African actual output and imports. The impact from the

import direction concurs with Cattaneo and Snowball (2019), which established a trade

def‌icit with core BRICS members. To ref‌lect on the impact of BRICS on South Africa’s

economy, Mazenda et al. (2018) acknowledged the negative effect of South Africa-BRIC

trade. Still, they noted that South Africa-SADC trade inf‌luences the economy positively.

Nonetheless, Bezuidenhoutand Claassen (2013) identify a potential trade shift from African

trade partners to BRICS. It ref‌lects onits political justif‌ication but advocates it should not be

detrimental to a more benef‌icial relationship with the European Union. Thus, this paper’s

Journal of

International

Trade Law and

Policy

169