IDEAS home Printed from https://ideas.repec.org/p/bdi/opques/qef_841_24.html
   My bibliography  Save this paper

Understanding digital trade

Author

Listed:
  • Lilia Patrignani

    (Bank of Italy)

Abstract

The widespread adoption of digital technologies has significantly reshaped international trade, ushering in a new era of digitally-driven transactions. This study provides an overview of the literature on digital trade, exploring its definitions and measurement methods, its key influencing factors, and the challenges posed by fragmented digital regulations across jurisdictions. The paper highlights the growing importance of digital trade, which reached 25 per cent of global trade in 2020 according to OECD estimates. When focusing on cutting-edge digital services, like cloud computing and online advertising, the majority of exports originate from the US, while the EU's global presence remains limited. The growth of digital trade has been fuelled by the digitalization process, from the advent of the internet to the advancement of AI, alongside trade liberalization. However, recent years have seen a rise in barriers to digital trade, in the wake of growing international tensions and a fragmented regulatory landscape, potentially harming international trade.

Suggested Citation

  • Lilia Patrignani, 2024. "Understanding digital trade," Questioni di Economia e Finanza (Occasional Papers) 841, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_841_24
    as

    Download full text from publisher

    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2024-0841/QEF_841_24.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Erik Brynjolfsson & Danielle Li & Lindsey Raymond, 2023. "Generative AI at Work," Papers 2304.11771, arXiv.org.
    2. Carballo, Jerónimo & Rodriguez Chatruc, Marisol & Salas Santa, Catalina & Volpe Martincus, Christian, 2022. "Online business platforms and international trade," Journal of International Economics, Elsevier, vol. 137(C).
    3. Mira Burri & Rodrigo Polanco, 2020. "Digital Trade Provisions in Preferential Trade Agreements: Introducing a New Dataset," Journal of International Economic Law, Oxford University Press, vol. 23(1), pages 187-220.
    4. Erik Brynjolfsson & Xiang Hui & Meng Liu, 2019. "Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform," Management Science, INFORMS, vol. 65(12), pages 5449-5460, December.
    5. Caroline Freund & Diana Weinhold, 2002. "The Internet and International Trade in Services," American Economic Review, American Economic Association, vol. 92(2), pages 236-240, May.
    6. Herman, Peter R. & Oliver, Sarah, 2023. "Trade, policy, and economic development in the digital economy," Journal of Development Economics, Elsevier, vol. 164(C).
    7. Teresa C. Fort, 2017. "Technology and Production Fragmentation: Domestic versus Foreign Sourcing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(2), pages 650-687.
    8. Alan S. Blinder & Alan B. Krueger, 2013. "Alternative Measures of Offshorability: A Survey Approach," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 97-128.
    9. Viktor Stojkoski & Philipp Koch & Eva Coll & César A. Hidalgo, 2024. "Estimating digital product trade through corporate revenue data," Nature Communications, Nature, vol. 15(1), pages 1-15, December.
    10. Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    11. Choi, Changkyu, 2010. "The effect of the Internet on service trade," Economics Letters, Elsevier, vol. 109(2), pages 102-104, November.
    12. Faqin Lin, 2015. "Estimating the effect of the Internet on international trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(3), pages 409-428, April.
    13. Baldwin, Richard, 2022. "Globotics and macroeconomics: Globalisation and automation of the service sector," CEPR Discussion Papers 17530, C.E.P.R. Discussion Papers.
    14. Javier López González & Silvia Sorescu & Pinar Kaynak, 2023. "Of bytes and trade: Quantifying the impact of digitalisation on trade," OECD Trade Policy Papers 273, OECD Publishing.
    15. Erick Kitenge & Sajal Lahiri, 2022. "Is the Internet bringing down language‐based barriers to international trade?," Review of International Economics, Wiley Blackwell, vol. 30(2), pages 566-605, May.
    16. Andreas Lendle & Marcelo Olarreaga & Simon Schropp & Pierre‐Louis Vézina, 2016. "There Goes Gravity: eBay and the Death of Distance," Economic Journal, Royal Economic Society, vol. 126(591), pages 406-441, March.
    17. Erik Marel & Martina Francesca Ferracane, 2021. "Do data policy restrictions inhibit trade in services?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(4), pages 727-776, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bellucci, Chiara & Rubínová, Stela & Piermartini, Roberta, 2023. "Better together: How digital connectivity and regulation reduce trade costs," WTO Staff Working Papers ERSD-2023-07, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Carballo, Jerónimo & Rodriguez Chatruc, Marisol & Salas Santa, Catalina & Volpe Martincus, Christian, 2022. "Online business platforms and international trade," Journal of International Economics, Elsevier, vol. 137(C).
    3. Herman, Peter R. & Oliver, Sarah, 2023. "Trade, policy, and economic development in the digital economy," Journal of Development Economics, Elsevier, vol. 164(C).
    4. Raphaël Chiappini & Cyrielle Gaglio, 2024. "Digital intensity, trade costs and exports' quality upgrading," The World Economy, Wiley Blackwell, vol. 47(2), pages 709-747, February.
    5. Joël Cariolle & Michele Imbruno & Jaime de Melo, 2020. "Bilateral digital connectivity and firm participation in export markets," Working Papers hal-03182438, HAL.
    6. Gnangnon, Sèna Kimm, 2022. "Internet, Participation in International Trade, and Tax Revenue Instability," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 267-315.
    7. Sun, Meng, 2021. "The Internet and SME Participation in Exports," Information Economics and Policy, Elsevier, vol. 57(C).
    8. Gnangnon, Sèna Kimm & Iyer, Harish, 2018. "Does bridging the Internet Access Divide contribute to enhancing countries' integration into the global trade in services markets?," Telecommunications Policy, Elsevier, vol. 42(1), pages 61-77.
    9. Michele Imbruno & Joel Cariolle & Jaime de Melo, 2022. "Digital connectivity and firm participation in foreign markets: An exporter-based bilateral analysis," Discussion Papers 2022-02, University of Nottingham, GEP.
    10. Zouheir El-Sahli, 2020. "Submarine cables, the internet backbone and the trade in services," Discussion Papers 2020-05, University of Nottingham, GEP.
    11. Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    12. Shuzhong Ma & Zengxi Hu, 2023. "Internet penetration and multi‐product exporters: Firm‐level evidence from China," The World Economy, Wiley Blackwell, vol. 46(5), pages 1444-1470, May.
    13. Qinqin Wu & Mengjie Bi & Faiza Siddiqui & Yao Tang, 2023. "Assessing the Impact of Digital Trade on Enterprise Competitiveness: Evidence from Chinese A-Share Listed Companies," Journal of Industry, Competition and Trade, Springer, vol. 23(3), pages 329-362, December.
    14. Erick Kitenge & Sajal Lahiri, 2022. "Is the Internet bringing down language‐based barriers to international trade?," Review of International Economics, Wiley Blackwell, vol. 30(2), pages 566-605, May.
    15. Zi Hui Yin & Chang Hwan Choi, 2023. "The effects of China’s cross-border e-commerce on its exports: a comparative analysis of goods and services trade," Electronic Commerce Research, Springer, vol. 23(1), pages 443-474, March.
    16. Shetewy, Nsreen & Shahin, Ahmed Ismail & Omri, Anis & Dai, Kuizao, 2022. "Impact of financial development and internet use on export growth: New evidence from machine learning models," Research in International Business and Finance, Elsevier, vol. 61(C).
    17. Lynda Sanderson & Garrick Wright-McNaughton & Naomitsu Yashiro, 2022. "Does high-speed internet boost exporting?," Working Papers 2022/02, New Zealand Productivity Commission.
    18. Burcu Ozcan, 2018. "Information and communications technology (ICT) and international trade: evidence from Turkey," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(1), pages 93-113, April.
    19. Feng, Kuo & Guo, Yue & Ji, Yujun & Wang, Yuping, 2023. "Impact of the Internet on the exports in ocean-based manufacturing: Firm-level evidence from China," Journal of Asian Economics, Elsevier, vol. 84(C).
    20. Lapatinas, Athanasios, 2019. "The effect of the Internet on economic sophistication: An empirical analysis," Economics Letters, Elsevier, vol. 174(C), pages 35-38.

    More about this item

    Keywords

    digital trade; e-commerce; digital connectivity; trade agreements; data flows; digital fragmentation;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdi:opques:qef_841_24. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bdigvit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.