Does the depth of digital trade rules promote bilateral value chain cooperation?

Abstract

This study explores the impact of the depth of digital trade regulations on bilateral value chain (BVC) cooperation within the framework of regional trade agreements (RTAs) using the University of International Business and Economics global value chain database and the Trade Agreements Provisions on Electronic Commerce and Data database from 2001 to 2014. The number of digital trade provisions in RTAs has been increasing since the US–Jordan RTAs first included them in 2000, and countries are paying more attention to digital trade negotiations. The author has constructed indicators of bilateral digital rules and classified them. At the sector level, indicators of the degree of BVC cooperation were also constructed. The result confirms that the depth of digital trade rules primarily facilitates BVC cooperation through four pathways, including lower bilateral trade costs, investment effects, strengthening spatial knowledge spillovers, and optimizing bilateral business environments. Furthermore, the heterogeneous promotion effects of digital trade rules on BVC cooperation were analyzed from four perspectives (i.e., type of country pairs, regional differences, industry differences, and types of provisions). The results of this analysis are significant and hold for various robustness checks.