Patterns in International Digital Trade Flows

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The article examines patterns in international digital trade flows through data on US digital service exports and international digital trade barriers. The article identifies a comprehensive set of digital trade barriers cited in the literature and through congressional submissions by technology companies and their industry associations. The article constructs a unique matrix of countries and barriers, which it then utilizes to model differences in US digital export receipts between countries with digital trade barriers and those without. The results indicate a statistically significant difference in digital trade flows based on the presence of barriers—countries with barriers have lower digital trade volumes. The results also go one step further by providing estimates for each barrier type and by translating coefficients into actual volumes. This process suggests a potential loss of nearly $25 billion in US digital exports due to barriers. The report’s model and trade barrier matrix provide a key foundation for future research in the area, particularly on the causal impacts of trade barriers.