Estimating the Effect of the Internet on International Trade in Services

Abstract

This paper assesses the relationship between the

The effects of China’s cross-border e-commerce on its exports: a comparative analysis of goods and services trade

“…The comparison of the CBEC distance effect shows that the interaction between CBEC and distance has a more positive impact on exports of services than on exports of goods, supporting Hypothesis 3. Consistent with the findings of Freund and Weinhold [25], Yousefi [29], Alaveras and Martens [57], and Gomez and Bertin [59], our results imply that with the development of CBEC, distance-related costs can be further reduced in China's services exports to B&R countries. This may be because much trade in services, such as information products, does not incur costs for crossing geographic boundaries, making service transactions still more competitive than goods transactions that require physical transportation.…”

“…In contrast, several scholars have focused on the link between the Internet and services trade [25][26][27][28][29]. By analyzing bilateral services trade data from the United States and 31 middle-and high-income countries for the period 1995-1999, Freund and Weinhold [25] examined the impact of the Internet on services trade.…”

“…Additionally, this positive relationship was supported by Choi [26], Salmani et al [27], and Nath and Liu [28] using different country samples. Furthermore, Yousefi [29] studied the impact of the Internet on imports and exports of services using data from developed and developing countries between 2000 and 2014. The results show that an increase in internet users promotes the growth of services exports by 0.27% and services imports by 0.08%.…”

“…In addition, few studies have compared the CBEC effect on goods trade and services trade. As mentioned by Clarke [15], Freund and Weinhold [16], and Yousefi [29], digital technology affects goods trade because it improves information about foreign markets, thus, reducing market entry costs. Compared with goods trade, the impact of digital technology on services trade is relatively greater, because new services transferred via the Internet can be traded almost costless, irrespective of location.…”

“…With the increased efficiency of online search and internet-based digital delivery, the transaction costs for services trade continues to fall, and the potential benefits of trade liberalization in many service sectors will increase [29,60]. Moreover, with the continuous growth of e-commerce, the scope of tradable services will be further expanded.…”