Beyond borders and tangibility: understanding trade restrictions, institutional quality and digital services trade

Yeremia Natanael

International Journal of Development Issues, 2025, vol. 24, issue 3, 396-415

Abstract: PurposeDigital restrictions and the institutional quality governing the economy might pose substantial implications for digital services trade. This study aims to examine the relationship between digital trade restrictions and institutional quality with digitally delivered services trade.Design/methodology/approachUsing panel data from 84 countries spanning 2014–2022, the analysis combines descriptive analysis with empirical econometric estimations. This study uses digitally delivered services trade as the response variable, while the digital services trade restrictiveness index and control of corruption and government effectiveness are the variables of interest.FindingsThe empirical findings reveal a significant and negative relationship between digital services trade and digital restrictions. Conversely, control of corruption and government effectiveness are significantly positively associated with digital services trade.Practical implicationsA balanced digital trade policy needs conditional restrictions to establish trust while enabling secure cross-border flows. Countries with weaker institutions may benefit from capacity-building initiatives to enhance bureaucratic digital skills and strengthen institutional oversight. Streamlining trade procedures, reducing regulatory complexity and enforcing control of corruption could further facilitate digital trade.Originality/valueWhile previous research has studied digital restriction in the digital economy, few studies explore the link between digital services trade restrictiveness and digitally delivered services trade. This study enriches the literature on this topic and incorporates institutional quality indicators, control of corruption and government effectiveness to provide new insights into regulatory impacts on digital trade.

Keywords: Digital services trade; Digital Trade Restrictiveness Index; International Trade; Control of Corruption; Government Effectiveness (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijdipp:ijdi-11-2024-0294

DOI: 10.1108/IJDI-11-2024-0294

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