The impact of AI and cross-border data regulation on international trade in digital services

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Authors: Ruiqi Sun, Daniel Trefler
Cited by: 0
References: 21

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