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<p>After the inception of WTO in 1995, in line with the negotiations under the General Agreement on Trade in Services (GATS), the barriers to trade in services gradually came down. However, the impediments on different modes of international trade in services displayed diverging patterns. On one hand, various newer barriers on movement of skilled professionals (Mode 4) have been witnessed in recent times, in the form of visa and work permit restrictions etc. Conversely, a growth in online service deliveries (Mode 1) is being witnessed. Considering data for 89 countries over 2014–2022, the current study examines the underlying drivers of online service imports, taking into account the role of heterogeneity in digital regulations between trading partners in an adapted gravity framework. The underlying drivers of service exports under Mode 1 and commercial establishment (Mode 3) have also been analyzed for selected countries. The results demonstrate that greater connectivity in a country encourages higher trade in the digitally enabled components of services. This effect however could be dampened in the presence of wider heterogeneity in digital regulations between the trading countries, with the negative impact being stronger for middle-income nations. The empirical results underline the need for improving coherence in cross-country digital regulations.</p>

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How does digital regulations influence mode 1 services trade? cross-country empirical results

  • 期刊论文

  • 发表日期：

    2026年3月4日

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  • Srinka Bose,
  • Debashis Chakraborty

摘要

After the inception of WTO in 1995, in line with the negotiations under the General Agreement on Trade in Services (GATS), the barriers to trade in services gradually came down. However, the impediments on different modes of international trade in services displayed diverging patterns. On one hand, various newer barriers on movement of skilled professionals (Mode 4) have been witnessed in recent times, in the form of visa and work permit restrictions etc. Conversely, a growth in online service deliveries (Mode 1) is being witnessed. Considering data for 89 countries over 2014–2022, the current study examines the underlying drivers of online service imports, taking into account the role of heterogeneity in digital regulations between trading partners in an adapted gravity framework. The underlying drivers of service exports under Mode 1 and commercial establishment (Mode 3) have also been analyzed for selected countries. The results demonstrate that greater connectivity in a country encourages higher trade in the digitally enabled components of services. This effect however could be dampened in the presence of wider heterogeneity in digital regulations between the trading countries, with the negative impact being stronger for middle-income nations. The empirical results underline the need for improving coherence in cross-country digital regulations.