Digital service trade and carbon total factor productivity: empirical evidence from cross-country panel data

Digital service trade (DST) occupies an increasingly important position in international trade. Moreover, it has a significant impact on the low-carbon development of the global economy. This study investigates the effect of DST on carbon total factor productivity (CTFP) and empirically examines its impact using panel data from 64 countries from 2005 to 2020. The results reveal that DST significantly promotes CTFP. Moreover, DST can improve CTFP through technological progress and industrial structure upgrading. Results of heterogeneity analysis show that digital service imports and exports significantly increase CTFP. Furthermore, DST has a positive effect on CTFP in both developed and developing economies, though the impact in developing economies is greater. Additionally, trade in financial services; charges for the use of intellectual property; telecommunications, computer, and information services; and other business services have a significant positive impact on CTFP, while significant effects were not observed for trade in insurance and pension services, as well as personal, cultural and recreational services. Based on our findings, we suggest corresponding policy implications.