Enhancing Sustainable Development Through Digital Service Trade Liberalization: Analyzing the Effects and Mechanisms on Bilateral Imports

Xin Xiang and Jinlong Zhao ()
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Xin Xiang: School of Economics, Shanghai University, Shanghai 200444, China
Jinlong Zhao: School of Economics, Shanghai University, Shanghai 200444, China

Sustainability, 2025, vol. 17, issue 5, 1-24

Abstract: This study empirically examines the effects of digital services trade liberalization on digital services trade imports and its mediating mechanism through an augmented gravity model, utilizing data from 55 importing nations and 56 exporting countries from 2014 to 2020. Digital services trade liberalization substantially enhances digital services trade imports by reducing trade costs and aligning regulatory integration, and it exerts notable spillover effects on digital goods trade. Moreover, considering the variety of data service trade provisions, trade promotion provisions and privacy protection terms in digital RTAs exert much stronger positive effects on trade imports compared to data flow provisions. Regarding the heterogeneity of policy areas, liberalization initiatives, mainly removing performance and commercial presence criteria for digital services trade, exert the most substantial positive impact on imports of digital services. Furthermore, from the standpoint of industry heterogeneity, trade liberalization in digital services significantly enhances imports in insurance and pension services, intellectual property services, telecommunications, computer and information services, and personal, cultural, and recreational services. Finally, this article finds that a higher level of Internet development between the two parties correlates with a diminished trade promotion benefit of digital service trade liberalization.

Keywords: liberalization of trade in digital services; trade in digital services; trade in digital goods; trade costs; regulatory integration (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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