Total Factor Productivity and Digital Trade Disputes: Insights from WTO Trade Settlement Cases

Abstract

The advent of digital trade has revolutionized global commerce, introducing new dynamics and complexities. Concurrently, digital trade disputes have emerged, raising questions about their impact on Total Factor Productivity (TFP), a key measure of economic performance and competitiveness. This study aims to investigate the impact of digital trade disputes on TFP levels and productivity growth. By analyzing sector-specific effects, temporal dynamics, and cross-country comparisons, the research seeks to provide a comprehensive understanding of how regulatory uncertainties and trade tensions in the digital realm affect economic efficiency and competitiveness. A multi-dimensional case study approach was adopted, focusing on three prominent digital trade disputes: e-commerce regulations, data localization requirements, and intellectual property rights in digital trade. Data were collected from WTO case documents, international economic and trade reports, and expert interviews. The analysis included assessments of pre-and-post dispute TFP levels and qualitative evaluations of policy changes and economic conditions. The study revealed that digital trade disputes have significant, albeit varied, impacts on TFP levels across different sectors and countries. The findings underscore the importance of sector-specific analyses and highlight the critical role of effective policy responses in mitigating negative impacts on productivity. This research fills a critical gap in the literature by providing detailed insights into the long-term productivity effects of digital trade disputes. It offers practical recommendations for policymakers to enhance economic resilience and productivity growth in the digital age, emphasizing the need for targeted, sector-specific interventions and robust trade governance mechanisms.