The recent literature has provided evidence that the adoption of DTs by enterprises generally leads to reductions in various types of costs and frictions (e.g., search, replication, transport and monitoring costs as well as networking and organization costs). These efficiencies, in turn, are expected to generate better economic outcomes, including higher productivity, higher sales, and better and more jobs (Goldfarb and Tucker, 2019). However, the materialization of these benefits may require some time as well as complementary investments (Brynjolfsson and McAffee, 2014, Brynjolfsson et. al 2020). There is also evidence that the impact of DTs exhibits heterogeneity across different types of technologies as well as across localities. For example, DeStefano et. al. (2019) find that while conditional correlations between broadband adoption and various firm performance variables are positive and significant, there is no causal effect of broadband on plant exit, productivity, sales growth, employment or employment growth. They find weak evidence of impact on sales, but this finding is not robust to variations in the specification of econometric approach. The finding of a positive causal impact of DT adoption on productivity is also not universal. For example, DeStefano et al. (2019) find that DTs causally affect firm size (captured by either sales or employment) but not productivity.<sup>3</sup> While until recently most research focused on developed countries, a few papers have begun to explore the use of DTs in emerging markets, including in Latin America, Asia and more recently, in Sub-Saharan Africa (SSA). Reporting results from studies on Argentina, Brazil, Chile, Colombia, and Mexico, Dutz, Almeida, and Packard (2018) show that low-skilled workers can also benefit from the more intensive use of internet due to the output expansion effect from increases in productivity and consequent lower prices: while firm investments in information and communication technologies (ICT) capital and firm-level use of faster internet result in a substitution effect whereby some low skilled workers are replaced by the new technology, a sufficiently strong output effect results in a net increase in the use of low skilled labor as well as higher skilled labor. More generally, as long as adoption of DTs expands production volumes and does not totally eliminate the need for lowerskilled workers including through new tasks, it results in more jobs over time, including both higher and lower-skilled jobs. The output expansion effect requires sufficient responsiveness of demand to the lower prices, which is more likely in lower-income countries where demand for most products is still far from being satiated and therefore more likely to be highly price-elastic (Bessen 2019); the output expansion effect is additionally facilitated through exports. Iacovone et al. (2016) show that over the period 2008-2012, firms that increased ICT use in Mexico had higher growth in productivity. They also find that firms that face higher competition and make more intensive use of ICT have a better performance. Fernandes et. al (2019) find that the rollout of internet (captured by the availability of internet interacted with intensity of use) in China increases a firm’s likelihood of exporting and its export-output ratio. Further, rollout of internet also results in increased total factor productivity and use of labor. They also find that increased availability and use of online services leads to a higher increase in exports in industries more reliant on an online presence.

Work on SSA includes Hjort and Poulsen (2019), who examine the impact of availability of faster internet made possible by the arrival of submarine cables on jobs by skill and education levels in

> 3 Moreover, they also find evidence of larger effects for small as opposed to large firms. Their explanation is that “ADSL broadband provided small and medium sized firms low-cost access to internet technologies for the first time allowing them to create websites, develop e-commerce sales and extend their market reach”. For productivity, they find a positive correlation in the OLS estimates but that this is no longer significant when correcting for endogeneity bias.

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