Open Access Journal Article

An Analysis of How Digital Technology Impacts Trade Costs—Based on the Empirical Data of RCEP Member Countries

by Juan Meng a,* ,  Hao Lu a  and  Shenxiang She b
a
Business School, Hunan First Normal University, Changsha, China
b
Institute of Science Innovation and Culture, Rajamangala University of Technology Krungthep, Bangkok, Thailand
*
Author to whom correspondence should be addressed.
FEL  2024 3(3):31; https://doi.org/10.58567/fel03030001
Received: 13 July 2024 / Accepted: 30 July 2024 / Published Online: 10 October 2024
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Abstract

This paper explores how digital technology reduces trade costs using bilateral trade data from RCEP member countries and a panel fixed effects model. The findings show that digital technology significantly lowers trade costs, a conclusion that holds even after accounting for lag effects and various robustness checks. The impact of digital technology on trade costs follows an inverted U-shape: the effect is most significant in the current period, especially with a one-period lag, and diminishes over time. Larger economies and higher export levels strengthen this negative impact due to their reliance on exports and continuous improvements in domestic digital technology. The study recommends investing in digital infrastructure, formulating reasonable internet access policies, supporting digital skills development, and enhancing digital connectivity to bridge the digital divide, thereby promoting trade facilitation and efficiency.

Keywords: Digital Technology; Trade Costs; RCEP; Panel Fixed Effects Model;
Copyright: © 2024 by Meng, Lu and She. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

Funding

Hunan Social Science Achievement Review Committee (XSP22YBC399) , Hunan Provincial Department of Education (21B0813)

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ACS Style
Meng, J.; Lu, H.; She, S. An Analysis of How Digital Technology Impacts Trade Costs—Based on the Empirical Data of RCEP Member Countries. Financial Economics Letters, 2024, 3, 31. https://doi.org/10.58567/fel03030001
AMA Style
Meng J, Lu H, She S. An Analysis of How Digital Technology Impacts Trade Costs—Based on the Empirical Data of RCEP Member Countries. Financial Economics Letters; 2024, 3(3):31. https://doi.org/10.58567/fel03030001
Chicago/Turabian Style
Meng, Juan; Lu, Hao; She, Shenxiang 2024. "An Analysis of How Digital Technology Impacts Trade Costs—Based on the Empirical Data of RCEP Member Countries" Financial Economics Letters 3, no.3:31. https://doi.org/10.58567/fel03030001
APA style
Meng, J., Lu, H., & She, S. (2024). An Analysis of How Digital Technology Impacts Trade Costs—Based on the Empirical Data of RCEP Member Countries. Financial Economics Letters, 3(3), 31. https://doi.org/10.58567/fel03030001

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