Estimating Trade in Digital Goods

We developed a dataset by integrating consumption data from 60 countries with revenue data from over 2500 digital firms. The data extrapolation to 189 countries and 31 sectors was achieved using machine learning and optimal transport techniques.

Summary: Estimating Trade in Digital Products

Researchers have constructed a comprehensive dataset to estimate the trade in digital products by integrating consumption data from 60 countries with revenue data from over 2,500 digital firms. Using advanced techniques such as machine learning and optimal transport, they expanded this data to cover 189 countries and 31 sectors.
The study focuses on three categories of digital goods: digital products (like video games and software), productized services (like cloud computing and video streaming), and intermediation platforms (like online marketplaces). The methodology involves selecting large internet companies, collecting their revenue data, and categorizing it by digital sectors. This data is then combined with country-specific consumption patterns to estimate global digital trade.
Key findings include:

1. Trade Volume: Trade in digital products constitutes around 3.5% of global trade in goods and services in 2021 and is projected to reach 15% by 2030 if current growth rates continue.
2. Geographic Concentration: Digital trade is highly concentrated, with a few countries dominating the exports.
3. Economic Impact: Analysis shows a correlation between higher digital product exports and positive economic indicators such as trade balances and economic complexity.
   Challenges and limitations include potential distortions due to reliance on app and game data for extrapolation, geographical proximity assumptions, and the complexity of assigning revenues to countries due to tax optimization practices by firms.
   The study also explores the implications of digital trade on economic balances, decoupling of emissions from growth, and economic complexity, highlighting the growing importance of digital products in global trade and economy.