Does Information-and-Communication-Technology Market Openness Promote Digital Service Exports?

Abstract

ICT has become an important support for the booming trade in services in the digital era. However, the extent to which trade activities can benefit from ICT will depend on the regulatory constraints and the market-openness level of the ICT market. This study empirically examines the impact of ICT market openness on digital service exports on the basis of bilateral trade data at the industry level from 2007 to 2019 from 50 countries. The results show that: (1) ICT market openness seeks the combination of effective regulation and moderate openness, which is mainly reflected in three policy areas: improving information interconnection and sharing, reducing access restrictions and promoting fair competition; (2) The ICT market openness in both exporting and importing countries can significantly boost digital service exports, but in different ways. Exporting countries expand digital service exports mainly by promoting fair competition, while importing countries have the most obvious positive impact on exports through the reduction of access restrictions; (3) The greater the gap between the ICT development levels, and the lower the bilateral risk levels between the two trading countries, the greater the marginal effect that ICT market openness will have on the promotion of digital service exports. Thus, improving market openness indicates an important direction for ICT regulatory reform, but the impact on digital service exports will vary by specific policy area and by trading-partner country.