The Growth, Geography, and Implications of Trade in Digital Products

Author:

Viktor Stojkoski, Philipp Koch, Eva Coll, Cesar A. Hidalgo

Keyword:

Economics, General Economics, General Economics (econ.GN)

journal:

date:

2023-10-02 16:00:00

Abstract

Despite global efforts to harmonize international trade statistics, our understanding about trade in digital products and its implications remains elusive. Here, we study five key aspects of trade in digital products by introducing a novel dataset on the exports and imports of digital products. First, we show that compared to trade in physical goods, the origin of digital products exports is more spatially concentrated. Second, we show that between 2016 and 2021 trade in digital products grew faster than physical trade, at an annualized growth rate of 20% compared to 6% for physical trade. Third, we show that trade in digital products is large enough to partly offset some important trade balance estimates, like the physical trade deficit of the United States. Fourth, we show that countries that have decoupled economic growth from greenhouse gas emissions have larger and faster growing exports in digital product sectors. Finally, we add digital products to measures of economic complexity, showing that digital products tend to rank high in terms of sophistication contributing positively to the complexity of digital exporters. These findings provide a novel lens to understand the impact of the digital sector in the evolving geography of global trade.

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