Content Summary: Measuring the level of digital trade development is the starting point for researching and formulating strategies for digital trade development.
This paper constructs a digital trade development index system that includes 5 first-level indicators, 11 second-level indicators, and 23 third-level indicators from five dimensions: basic support, trade operations, innovation capability, trade scenarios, and trade security.
It measures the digital trade development of 55 countries from 2011 to 2021 and tests the influencing factors of the level of digital trade development by constructing a regression model.
The research results show that the overall level of global digital trade development is continuously improving, but there is a certain trend of differentiation, and the development gap between countries may further widen; overall, the level of digital trade development in developed countries is significantly higher than that in developing countries, and the annual changes are small, in a stable high state; China's level of digital trade development has shown a continuous catching-up trend in recent years, with great potential for development, but there is an imbalance in the development of sub-indicators; the level of economic development, infrastructure, business environment, cutting-edge technology, political system, economic system, and legal system all have a significant positive impact on the level of digital trade development, and the impact on OECD countries and non-OECD countries is heterogeneous.
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I.
Introduction In recent years, the dominant position of digital trade has gradually emerged, becoming a new engine for the growth of global service trade and an important link for the open cooperation of the global digital economy.
The rapid growth of global digital trade and the continuous deepening integration of digital technology and international trade have changed the form of the global value chain, forming a data-driven value chain.
The disintermediation of digital platforms has also reduced the threshold for market entities to participate in international division of labor, providing opportunities for many developing countries.
For China, developing digital trade is an inevitable choice to cope with the unprecedented changes in a century and to build a new development pattern of dual circulation.
The report of the 20th National Congress of the Communist Party of China in 2022 proposed: "Promote the optimization and upgrading of goods trade, innovate the development mechanism of service trade, develop digital trade, and accelerate the construction of a strong trade country."
The development of digital trade is of great significance for the smooth circulation of China's economy inside and outside, and for strengthening China's central node position in the global value chain.
Domestic and foreign scholars have conducted many studies on the concept, rules, index system, and the relationship between digital trade and the global value chain.
At present, there is no consensus on the concept of digital trade internationally, and the digital trade business itself is also in a continuous development and change.
In view of this, the construction of a comprehensive evaluation index system for the level of digital trade development can not only present the overall situation of digital trade development but also provide data support for subsequent research on digital trade.
This paper uses the Entropy Weight Method-Analytic Hierarchy Process to construct a digital trade development level measurement index system that includes 5 first-level indicators, 11 second-level indicators, and 23 third-level indicators, and analyzes the scoring situation of 55 sample countries.
Finally, the regression model derives the influencing factors of the level of digital trade development, in order to provide policy enlightenment for China to further layout the development pattern of digital trade and achieve a high level of opening up.
II.
Literature Review After traditional trade and value chain trade, international trade has entered the era of digital trade.
Driven by digital technology innovation, digital trade is booming.
However, there is still no consensus on the concept of digital trade internationally, and there is a dispute over the breadth of the scope.
The United States International Trade Commission (USITC) first clarified the concept of digital trade.
From its definitions of digital trade in 2013, 2014, and 2017, it can be seen that the types of digital trade included are continuously increasing.
The definition in 2013 includes four types of content, namely digital delivery content, social media, search engines, and other digital products and services.
In 2014, digital trade was defined as domestic and international trade where the Internet and Internet-based technology play an important role in ordering, producing, or delivering products and services, including physical goods trade concluded through the Internet.
In 2017, the data flow of the global value chain, services achieving intelligent manufacturing, and other related platforms and applications were included in the scope of digital trade.
The clarification of the concept of digital trade by various countries involves their game in formulating international rules.
In 2015, Swiss scholar Mira Burri summarized the concept of digital trade into two dimensions: narrow and broad.
The narrow concept only refers to trade that provides products and services through the Internet; the broad concept also covers the digital network environment with characteristics of innovation and free flow of information.
The China Academy of Information and Communications Technology proposed that digital trade refers to trade forms where digital technology plays an important role, including the digitalization of trade methods and trade objects.
With the development of digital trade business forms, more and more institutions and scholars agree that digital trade should be a broad concept.
This paper also agrees with the broad concept and defines digital trade as a new form of international trade that relies on information networks and digital technology, driven by data flow, supported by digital platforms, and penetrates into cross-border production, trade, and consumption activities, including the digitalization of trade methods and trade objects.
The measurement of digital trade has not yet formed a unified standard, which can currently be divided into two approaches: direct measurement of digital trade volume and comprehensive measurement of the level of digital trade development.
The former's representative is: the USITC's digital trade scope proposed in 2017, which excludes physical goods trade but includes digital service platforms and applications; the United Nations Conference on Trade and Development (UNCTAD) proposed a method to measure information and communication technology (Information and Communications Technology, ICT) enabled service trade, which only targets digital delivery service trade; Jia Huaiqin et al.
(2021) proposed a "binary three-ring" digital trade indicator framework, extracting three sub-categories contained in digital trade, namely A for core digital services, B for potential digital technology-enabled services, and C for goods-cross-border e-commerce, where A+B are all service trade, forming a narrow digital trade, and A+B+C include goods trade, forming a broad digital trade.
For the approach of comprehensively measuring the level of digital trade development, the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), and the International Monetary Fund (IMF) published the first edition of the "Digital Trade Measurement Manual" in March 2020, defining digital trade as all trade that is ordered and/or delivered digitally, proposing a digital trade measurement system covering four dimensions of the scope, nature, products, and entities of digital trade, and further proposing a calculation formula for the total amount of digital trade, that is, the total amount of digital trade = digital ordered trade + digital delivery trade, which is also a digital ordered and digital delivery service trade.
This measurement system is widely recognized and has a far-reaching impact.
Some domestic scholars have calculated China's digital trade volume based on it.
Yue Yunsong and Zhang Chunfei (2021) believe that this measurement system may have statistical repetition by simply adding digital ordered trade and digital delivery trade, and only considering the balance of payments (Balance of Payments, BOP) service trade statistics will ignore the statistics of foreign affiliates trade in services (Foreign Affiliates Trade in Services, FATS).
Yue Yunsong and Chen Hongna (2021) analyzed the characteristics and development trends of global and major countries' FATS digital service exports, concluding that global FATS digital service exports are far higher than BOP digital service exports, providing a research reference for subsequent digital trade statistics from the FATS perspective.
Relevant research builds a comprehensive evaluation index system for digital trade and uses statistical methods to calculate the level of digital trade development of countries or regions.
Zhejiang University's "2018 World and China Digital Trade Development Blue Book" built a comprehensive index system for the level of digital trade development, including 13 indicators in 6 aspects.
Feng Zongxian and Duan Dingyun (2022) used the entropy method to select 6 first-level indicators of digital innovation, digital skills, digital trade scale, digital infrastructure, digital trust risk, and digital trade barriers, to construct a digital trade development index evaluation system, and calculated and compared the digital trade development index scores of 49 global sample countries.
Wang Zhixin (2020) focused on countries along the "Belt and Road" and conducted statistical measurement of the digital trade business environment of countries along the "Belt and Road" from six aspects: basic carriers, customs environment, financial services, technical support, human capital, and laws and regulations.
Some domestic scholars have calculated and analyzed the level of digital trade development in various provinces of China.
Ke et al.
(2022) constructed an index system from five dimensions: network infrastructure, technical level, trade methods, trade capacity, and trade potential, and used methods such as kernel density estimation and spatial Markov chains to analyze the dynamic evolution of digital trade in China's 31 provinces.
Zhou Juanmei and Cui Fenfang (2022) built an index system from the perspective of the entire industry chain of digital trade development, including three dimensions: digital trade foundation, trade objects, and trade competitiveness.
For the influencing factors of digital trade, some scholars start from the gravity model for analysis.
Li Bowen and Liu Yisheng (2023) used the stochastic frontier gravity model to study the influencing factors of digital trade efficiency in countries in the Asia-Pacific region, believing that bilateral population size, economic development level, and the use of a common language will have a positive impact on digital service trade, while bilateral geographical distance will have a negative impact.
Normaz Wana Ismail (2021) used the gravity model to study the impact of digital trade facilitation on bilateral trade, and subdivided the measurement standards of digital trade facilitation into three dimensions: digital infrastructure, digital usage, and digital security.
The research results show that digital infrastructure has a significant positive impact on the trade potential of Asian countries and should be given priority, while narrowing the digital and security gaps between trading partners is also very important.
Yang Huiling et al.
(2022) confirmed that the impact of digital trade on a country's global value chain position will be adjusted by the degree of trade facilitation.
There are also scholars who use regression models to explore the influencing factors of digital trade, believing that factors such as technical level, Internet infrastructure, institutional relations, human capital level, cultural proximity, intellectual property protection system, and whether the trading parties have signed regional service trade agreements all have a certain impact on digital trade.The marginal contribution of this paper lies in: First, by employing the entropy weight - Analytic Hierarchy Process (AHP), an index system is constructed from five aspects: basic support, trade operations, innovation capability, trade scenarios, and trade protection.
The digital trade development index is calculated for 55 sample countries from 2011 to 2021, which will enrich the research on the digital trade index system; Second, comparative analysis is conducted, not only analyzing the overall and itemized development differences between China and other countries but also depicting the dynamic evolution trend of digital trade development in countries with different income levels; Third, through regression analysis, the macroeconomic factors affecting the development of digital trade are explored, providing policy insights for China to promote high-quality development of digital trade.
III.
Construction and Analysis of the Digital Trade Development Level Index System The construction of the digital trade development level index system is divided into three steps: model building, weight calculation, and index construction and selection.
After calculating the scores in this paper, the global digital trade development situation will be presented from both overall and itemized perspectives.
(1) Construction of the Digital Trade Development Level Measurement Index System 1.
Introduction and steps of the index system construction model From the perspective of weight determination, the construction model of the index system can be divided into two categories: objective weight assignment and subjective weight assignment.
Most studies on the digital trade development index choose one of these methods to build the index system.
This paper draws on Liu Ling's (2015) method and uses the entropy weight - AHP to construct a comprehensive evaluation index for the level of digital trade development, to overcome the shortcomings of using only objective or subjective weight assignment.
(1) Entropy weight method (2) Analytic Hierarchy Process (AHP) (3) Entropy weight - AHP 2.
Selection and construction of indicators Based on the definition of digital trade, this paper draws on and improves the digital trade standard demand analysis framework proposed in the "Digital Trade Standardization White Paper (2021)", and constructs an index system from five aspects: basic support, trade operations, innovation capability, trade scenarios, and trade protection.
Among them, logistics support, terminal equipment, and internet level constitute the basic support for the development of digital trade; digital products and digital services are the segmentation of digital trade operations; innovation input and innovation output constitute innovation capability indicators; digital knowledge and information, digital publishing are typical scenarios of digital trade; legal supervision and government policies are the protective factors affecting the development of digital trade.
Combining data availability, this paper constructs a digital trade development level measurement system that includes 5 first-level indicators, 11 second-level indicators, and 23 third-level indicators, and calculates the combination weights of each indicator through the entropy weight - AHP (see Table 2).
A total of 55 sample countries' relevant data from 2011 to 2021 are selected, and some missing values are supplemented by multiple imputation and analogy methods.
(2) Analysis of the Measurement Results of Digital Trade Development Level 1.
Overall analysis The annual scores and rankings of the digital trade development level of 55 sample countries from 2011 to 2021 can be calculated by the above methods.
The top five countries in terms of average scores are the United States, China, Japan, the Netherlands, and Singapore.
The United States and China have been in the top two during the sample observation period.
In 2018, 2020, and 2021, China's ranking rose to first place, indicating that China's digital trade has shown a continuous catching-up trend in recent years.
Overall, the level of digital trade development in developed countries is significantly higher than that in developing countries.
Among the top ten countries in terms of average scores, all except China are developed countries, distributed in Western Europe, North America, and East Asia; the last ten countries in terms of average scores are all developing countries, distributed in Eastern Europe, Central Asia, and Southeast Asia.
Among emerging economies, in addition to China, countries such as Malaysia, Brazil, and Russia have a better level of development.
At present, countries with a high level of digital trade development are mainly concentrated in three regions: North America represented by the United States and Canada, East Asia represented by China, Japan, and South Korea, and Western Europe represented by the Netherlands, Germany, and Switzerland.
Among them, the economic development of North America and Western Europe has long maintained a high level, and China, as an emerging economy, has a relatively fast economic growth rate, indicating that the development of digital trade is matched with the level of economic development.
Taking Asian countries as an example, there is a significant gap in the level of digital trade development.
Southeast Asian countries such as Laos and Cambodia and Central Asian countries such as Kazakhstan and Mongolia are in a lower state of development, while East Asian countries are far ahead.
The five countries with the largest increase in score ranking among the sample countries from 2011 to 2021 are Latvia, India, Denmark, Germany, and Pakistan, among which Latvia's ranking rose from 40th in 2011 to 25th in 2021, an increase of 15 places.
Latvia is located at the intersection of the Eurasian market and is an important hub for Eurasian trade, and it is also one of the countries with the most perfect commercial infrastructure in Europe.
The conditions of infrastructure related to trade such as shipping, ports, roads, railways, and communications are good.
At the same time, Latvia and China have always maintained friendly and close ties, actively responding to China's "Belt and Road" initiative, and vigorously promoting trade liberalization and facilitation in international trade cooperation, promoting the continuous and balanced development of bilateral trade.
The five countries with the largest decline in score ranking are Hungary, Greece, Norway, Romania, and Mexico, which may be related to the slow or ineffective policy measures to deal with the impact of the new crown epidemic in these countries.
2.
Itemized analysis This paper sorts out the top ten situations of the average scores of the five first-level indicators of basic support, trade operations, innovation capability, trade scenarios, and trade protection in 55 sample countries from 2011 to 2021.
For the basic support indicator, countries such as Denmark, the Netherlands, Switzerland, Germany, and Singapore are at the forefront, and all the top ten are developed countries, indicating that these countries have a higher level of infrastructure construction related to the development of digital trade.
China ranks 22nd, at a medium level, among which logistics support ranks 11th, terminal equipment ranks 14th, and internet level ranks 32nd, indicating that China still has some shortcomings in information infrastructure construction compared with developed countries and needs to further improve the construction of infrastructure related to the Internet and information communication.
For the trade operations indicator, countries such as Singapore, Malaysia, China, the Netherlands, and Ireland are at the forefront, with China ranking third.
Among them, China's digital product indicator score ranks at the forefront, while the digital service indicator is not satisfactory, ranking 28th, indicating that China has a development advantage in digital products and the digitalization of goods trade, while digital services are temporarily at a weaker stage of development.
For the innovation capability indicator, countries such as China, the United States, Japan, South Korea, and India are at the forefront, with China surpassing the United States, which ranks first in the total score, to the first place.
This is mainly due to China's leading patent application indicators compared to other countries, which fully reflects China's emphasis on scientific and technological research and development, patent applications, and the docking of production and research in recent years.
For the trade scenario indicator, countries such as the United States, the Netherlands, Switzerland, Ireland, and Japan have higher scores, and China is at the 25th place, with a medium ranking, indicating that China's development of application scenarios related to digital trade still needs to be improved.
For the trade protection indicator, developed countries such as Singapore, the Netherlands, the United Kingdom, Finland, and the United States are at the forefront, with China at the 26th place, indicating that China urgently needs to provide a good business environment for the development of digital trade from aspects such as improving laws and regulations and strengthening the construction of digital government.
Overall, developed economies such as the United States, Japan, the Netherlands, and Singapore not only rank at the forefront in the total score but also maintain a high level of performance in each itemized indicator.
China currently has obvious advantages in trade operations and innovation capability, but there are still shortcomings in infrastructure construction, trade scenario expansion, and trade environment improvement, which urgently need to be broken through and developed.
3.
Comparative analysis (1) Comparison of the top five countries in the overall ranking This paper compares the itemized indicators of the top five countries in the overall ranking: the United States, China, Japan, the Netherlands, and Singapore.
China has an absolute advantage in the innovation capability itemized indicator and also performs well in trade operations, while the other three are obviously weaker than the other four countries (see Figure 1), indicating that China's digital trade development situation is not comprehensive and there are still shortcomings.
The United States has relatively prominent scores in innovation capability and trade scenarios.
The Netherlands, Japan, and Singapore have relatively balanced performances in the four indicators, among which Singapore needs to be strengthened in the trade scenario.
(2) Comparison of countries with different income levels According to the World Bank's July 2023 income level classification standards for global economies, among the 55 sample countries selected in this paper, there are 36 high-income countries, 9 upper-middle-income countries, and 10 lower-middle-income countries.
The three-dimensional solid curve of the digital trade development situation of countries in the world and countries with different income categories from 2011 to 2021 is depicted using the kernel density estimation method to analyze the dynamic evolution characteristics of the digital trade development of sample countries.
Kernel density estimation is a non-parametric estimation method, which mainly depicts the distribution shape of random variables through density curves.
This paper selects the commonly used Gaussian kernel density function for analysis.
Through kernel density estimation, this paper derives the three-dimensional solid kernel density distribution curves of countries in the world and the three types of income level countries.
It can be seen that, first, the overall distribution center of the world shows a continuous trend of moving to the right, indicating that the level of digital trade development in countries in the world is continuously increasing.
Second, the overall distribution curve of the world and the three types of income level countries all show a clear right tail phenomenon, indicating that there is a differentiation in the digital trade development situation of countries in the world, that is, some countries are developing rapidly and have a trend of far exceeding other countries, and the development gap between countries may further increase.
Third, the peak of high-income countries increases and the central peak width narrows, indicating that although the development of digital trade in high-income countries is unbalanced, the gap in the level of development is narrowing.
Fourth, the distribution curve of upper-middle-income countries is obviously more flat than the other two types of countries, and the change of the peak is also smaller, indicating that the difference in the development situation of digital trade in this type of country is smaller and the development is relatively balanced.
Fifth, the span between the peaks of the distribution curve of lower-middle-income countries gradually increases, indicating that the gap in the level of digital trade development between lower-middle-income countries is gradually expanding, and the trend of multipolarity is obvious.IV.
Analysis of Factors Influencing the Development Level of Digital Trade The analysis of influencing factors is an essential part of the study of the development level of digital trade.
This section will select relevant indicators, construct a regression model, explore the factors affecting the development level of digital trade, and distinguish between OECD and non-OECD countries for heterogeneous discussions.
(1) Regression Model Setting (2) Variable and Data Explanation (3) Regression Result Analysis V. Conclusion and Policy Implications This paper, combined with the understanding of the concept of digital trade, uses the entropy weight - Analytic Hierarchy Process (AHP) to construct a digital trade development level measurement system that includes 5 first-level indicators (basic support, trade business, innovation capability, trade scenario, and trade protection), 11 second-level indicators, and 23 third-level indicators.
It selects data from 55 sample countries from 2011 to 2021 to measure the development level of digital trade and conducts comparative analysis between countries.
Subsequently, this paper takes the measured scores of digital trade development level as the dependent variable and selects seven variables (economic development level, infrastructure level, business environment, cutting-edge technology level, political system, economic system, and legal system) to construct a multidimensional panel regression model to test the influencing factors of digital trade.
Based on the research conclusions, four policy recommendations are proposed.
(1) Research Conclusions Firstly, looking at the development level of digital trade worldwide, the development level of digital trade in developed countries is significantly higher than that in developing countries.
The countries with the top ten average scores are mainly distributed in Western Europe, North America, and East Asia, and the annual changes in the scores of developed countries are also relatively small, maintaining a stable high state.
The overall development level of global digital trade shows a continuous growth trend, but there is also a certain trend of differentiation in the development of digital trade among countries, and the development gap between different regions may be further widened.
Secondly, looking at the development of China's digital trade, China's digital trade has shown a continuous catching-up trend in recent years.
The average score is ranked at the forefront of the world, with great development potential.
China currently has obvious advantages in trade business and innovation capability, but there are still shortcomings in infrastructure construction, trade scenario expansion, and trade environment improvement, which urgently need breakthroughs and development.
Thirdly, looking at the influencing factors of the development level of digital trade, this paper confirms that the economic development level, infrastructure level, business environment, cutting-edge technology level, political system, economic system, and legal system all have a significant positive impact on the development level of digital trade, and the impact on OECD and non-OECD countries has heterogeneity.
(2) Policy Recommendations Digital trade is a new form of international trade driven by the new round of technological revolution and industrial transformation.
The development of digital trade not only conforms to the new trend of international trade but also aligns with China's goal of building a strong trade country.
Based on the above research, the following policy recommendations are proposed.
Firstly, rely on free trade pilot zones to optimize the digital trade ecosystem.
As a new engine to promote future trade development, digital trade is not limited to digital products and services but connects cross-border e-commerce, information technology, and logistics systems through digital intermediary platforms, gradually forming a digital trade ecosystem, and penetrating into traditional services and manufacturing industries.
Although China's performance in trade business and innovation capability indicators is outstanding, the construction of infrastructure, the expansion of trade scenarios, and the optimization of trade protection still need to be improved.
First, China should further increase investment in digital technology research and development, accelerate the development of core technology difficulties, pay attention to the reserve of digital talents, and at the same time, strengthen the integration of digital and industry, expand digital industrialization and industrial digitization, and seize the high ground of digital trade competition.
Secondly, it should rely on free trade pilot zones and free trade ports to develop digital trade, grasp policy advantages, create digital trade industry clusters, and cultivate new forms of service trade.
In addition, free trade pilot zones and free trade ports are important windows for China to connect with international high-standard economic and trade rules.
In the future, they should construct a system and regulatory model that connects with high-level institutional opening according to policy measures, carry out pilot trials of data stratification and classification, and promote innovation in digital trade rules.
Secondly, improve infrastructure construction.
Firstly, it is necessary to further improve the infrastructure of energy supply, promote the construction of green energy infrastructure, accelerate the realization of the universalization of energy infrastructure, and provide stable power supply, storage device supply, etc., for the servers that digital trade relies on.
Secondly, increase financial investment in network infrastructure construction, especially accelerate the construction of information and communication infrastructure in rural and remote areas, achieve full coverage of broadband networks in urban and rural areas, and help underdeveloped areas cross the digital divide.
Thirdly, strengthen technological innovation, promote the application of digital technology in electronic payment, smart logistics, and other aspects, improve the maturity of electronic data exchange systems, international trade "single window" and other technologies, and achieve rapid popularization and application of digital infrastructure.
Thirdly, improve the quality of the institutional environment.
China should further improve the institutional framework and build a more open market environment.
In terms of politics, China should further improve the government supervision mechanism, improve the transparency of government affairs, use information and communication technology to optimize the government affairs process, promote the formation of a good relationship between government and enterprises, and reduce the communication cost of enterprise investment and trade.
In terms of the economy, China should coordinate the international and domestic markets, eliminate obstacles that hinder the circulation of the factor market, promote efficient allocation of labor, capital, technology, data, and other factors, improve the economic system, steadily increase the openness of the Chinese market, and enhance international economic and trade cooperation.
In terms of law, China should further improve the property rights protection system, promote the full play of innovative factors, align with international digital trade rules, better resolve international trade disputes, and improve the business environment.
Fourthly, participate in the formulation of international digital trade rules and promote institutional opening.
As a new form of trade, digital trade will inevitably bring new challenges to traditional trade rules and regulatory systems, and digital trade rules have become the focus of competition among countries.
At the same time, global cross-border data flow governance also shows a trend of achieving governance cooperation at the regional level, and China urgently needs to improve its ability to participate in global cross-border data flow governance.
At present, the world lacks a multilateral digital trade rule framework, and the "American template" and "European template" representing the interests of Western developed countries dominate the formulation of digital trade rules.
The Asia-Pacific economies have initially formed regional digital trade governance cooperation examples and typical templates.
As a major country with the second-highest level of digital trade development, China should also actively participate in the formulation of international digital trade rules such as the Digital Economy Partnership Agreement (DEPA), express the Chinese voice on issues involving data element flow, personal information protection, and taxation of digital products in the field of digital trade, and promote the construction of digital trade rules that adapt to the development situation of developing countries.
It should rely on the "Belt and Road" initiative, the Regional Comprehensive Economic Partnership (RCEP), and other platforms to build overseas development platforms, improve the platform service system, and promote international cooperation in digital trade.