Digital Technology Empowers Trade Growth: A Quasi-Natural Experiment Based on the Adoption of 4G

Juncai Zhou and Xueren Zhou

Emerging Markets Finance and Trade, 2025, vol. 61, issue 12, 3913-3935

Abstract: Bilateral trade forms the foundation of global commerce. With communication technologies, represented by 4 G and 5 G, increasingly becoming pivotal sources of industrial and trade competitiveness among nations, their impact on bilateral trade warrants attention. This study uses the opening of 4 G networks as a quasi-natural experiment and employs a difference-in-difference approach to identify the effect of upgraded communication technologies on bilateral trade growth. The research reveals that, compared to pairs where at least one country had not adopted 4 G, bilateral trade significantly increased between pairs where both countries had adopted 4 G. Considering heterogeneity in initial communication technology levels, 4 G adoption status, geographic distance between nations, and trade goods’ reliance on communication technologies, significant variations in the bilateral trade growth effects of communication technology upgrades are observed. Mechanisms include synergistic enhancement of production capacities and improvements in bilateral communication service levels. Furthermore, communication technology upgrades significantly enhance the scale and quality of China’s bilateral trade, deepen cooperation, and optimize structural outcomes. This study enriches understanding of the factors driving high-quality development in bilateral trade, providing empirical evidence crucial for China’s pursuit of high-level openness and the establishment of a more open global cooperation framework to foster new productivity advancements, accompanied by policy recommendations.

Date: 2025
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DOI: 10.1080/1540496X.2025.2496366

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