The impact of AI and cross-border data regulation on international trade in digital services
Abstract
International trade in digital services, including mobile app trade (e.g., Facebook in Frankfurt, Instagram in Istanbul), is large and rapidly growing. Analyzing 2015--2020 data on 28,000 mobile apps, we find that AI increases an app's user base threefold, a massive effect. AI's handmaiden is data, including cross-border flows of personal data. Concerned with privacy and national security, policymakers have responded with thousands of conflicting regulations, ranging from guaranteeing free trade in data (USMCA) to data export bans. We are the first to show that these regulations matter: AI's massive effect is halved in countries with strict data flow restrictions.
Fields of Study & Subjects
E-commerce and Technology Innovations
Law
AI
and Intellectual Property
Digital Transformation in Law
Publication details
- Journal / source
- Journal of International Economics
- Publisher
- Elsevier BV
- Volume
- 164
- Pages
- 104328–104328
- Publication date
- 24 August 2026
- Language
- EN