Production, Trade, and Cross-Border Data Flows

Qing Chang, Lin Cong, Liyong Wang and Longtian Zhang

No 31416, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We build a two-country general equilibrium model to analyze the effects of cross-border data flows and pre-existing development gaps in data economies on each country's production and international trade. Raw data as byproducts of consumption can be transformed into various types of working data (information) to be used by both domestic and foreign producers. Because data constitute a new production factor for intermediate goods, a large extant divide in data utilization can reduce or even freeze trade. Cross-border data flows mitigate the situation and improve welfare when added to international trade. Data-inefficient countries where data are less important in production enjoy a "latecomer's advantage'' with international trade and data flows, contributing more raw data from which the data-efficient countries generate knowledge for production. Furthermore, cross-border data flows can reverse the cyclicity of working data usage after productivity shocks, whereas shocks to data privacy or import costs have opposite effects on domestic and foreign data sectors. The insights inform future research and policy discussions concerning data divide, data flows, and their implications for trade liberalization, the data labor market, among others.

JEL-codes: F15 F29 F43 (search for similar items in EconPapers)
Date: 2023-06
New Economics Papers: this item is included in nep-dge, nep-int and nep-opm
Note: CF EFG ITI PR
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