Production, Trade, and Cross-Border Data Flows

47 Pages Posted: 8 Oct 2022 Last revised: 1 Mar 2024

See all articles by Qing Chang

Qing Chang

Central University of Finance and Economics

Lin William Cong

Cornell University - Samuel Curtis Johnson Graduate School of Management; National Bureau of Economic Research (NBER)

Liyong Wang

Central University of Finance and Economics

Longtian Zhang

Central University of Finance and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 15, 2022

Abstract

We build a two-country general equilibrium model to analyze the effects of cross-border data flows and pre-existing development gaps in data economies on each country's production and international trade. Raw data as byproducts of consumption can be transformed into various types of working data (information) to be used by both domestic and foreign producers. Because data constitute a new production factor for intermediate goods, a large extant divide in data utilization can reduce or even freeze trade. Cross-border data flows mitigate the situation and improve welfare when added to international trade. Data-inefficient countries where data are less important in production enjoy a "latecomer's advantage" with international trade and data flows, contributing more raw data from which the data-efficient countries generate knowledge for production. Furthermore, cross-border data flows can reverse the cyclicity of working data usage after productivity shocks, whereas shocks to data privacy or import costs have opposite effects on domestic and foreign data sectors. The insights inform future research and policy discussions concerning data divide, data flows, and their implications for trade liberalization, the data labor market, among others.

Keywords: Data Economy, General Equilibrium, International Trade, Transition Dynamics

Suggested Citation

Chang, Qing and Cong, Lin and Wang, Liyong and Zhang, Longtian, Production, Trade, and Cross-Border Data Flows (September 15, 2022). Available at SSRN: https://ssrn.com/abstract=4241665 or http://dx.doi.org/10.2139/ssrn.4241665

Qing Chang

Central University of Finance and Economics ( email )

Shahe Garden
Changping District
Beijing, Beijing 102206
China

Lin Cong

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

HOME PAGE: http://www.linwilliamcong.com/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Liyong Wang

Central University of Finance and Economics ( email )

770 Middle Road
Dresden, ME 04342
United States

Longtian Zhang (Contact Author)

Central University of Finance and Economics ( email )

Shahe Higher Education Park
Changping District
Beijing, Beijing 102206
China

HOME PAGE: http://longtianzhang.com

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