A Study on the Effect of Information and Communication Technology (ICT) on Trade in Services in the United States

Abstract

The pandemic of COVID-19 appears to boost trade in services and even the ICT service exports in the U.S. The U.S. has been recognized as the world's largest services market and became a leading exporter and importer of services over the last two decades. In this perspective, this study attempts to empirically identify the impact of ICT on trade in services and ICT service exports in the U.S. by employing the modified gravity model of trade from 1990 to 2021. The results indicate that overall ICT access and ICT use have significant positive effects on the trade in services and ICT service exports, but others brought about different results. The study also finds two important facts. First, FTS has a positive effect on the trade in services and ICT services exports, while, MCS has a completely negative effect on both the trade in services and ICT services exports. More interestingly, the dimension of ICT use of IUI and FBS have a different impact on both trade in services and ICT services exports. Another important finding is that the coefficients of IUI and FBS in relation to the trade in services have an unexpected negative sign, while both IUI and FBS have a positive influence on ICT service exports. Finally, these empirical results imply that ICT use has played a more productive role in enhancing ICT service exports than that of ICT access in the U.S. Consequently, these results might provide vital policy insights for the development of ICT and more rapid growth of services trade.