Does the level of digitalized service drive the global export of digital service trade? Evidence from global perspective

Digital service trade (DST) has grown as a merging pattern of service trade in the digital era. Countries have become more reliant on digitalization. As a result, a fascinating question is how digitalized service levels among global economies shape the relationship with DST exports. This paper investigates the interlinks among the variables influencing DST exports. Data from 71 countries worldwide over 2005-2019 are considered for our study. We introduce Porter's diamond model to explore the determinants of expanding DST exports and investigate the mechanism of all determinants on DST exports. The global principal component analysis (GPCA) method is employed to evaluate the indicator of digitalized service level. Subsequently, we examine the impact of digitalized service level on DST exports through the two-way fixed-effect approach with the panel model. Analysis reveals that a higher level of digitalized service significantly impacts DST exports across global economies. In contrast, there is an adverse effect for middle-income countries and no effect for low-income countries. Based on these findings, we propose policy recommendations for improving DST exports, focusing on the digital service level, market demand, related and supporting industry, foreign direct investment, marketing policy, and chance.