China, Russia Are Most Restricted Countries For Digital Trade, Index Says

A new European index measuring the extent to which 64 countries restrict digital trade found China at the top of the list, while New Zealand was the most open.

The Digital Trade Restrictiveness Index was developed by the European Centre for International Political Economy (ECIPE). ECIPE espoused the view in the report that restricted trade drives up costs for businesses and consumers, while free digital trade gives more access to consumers and helps business become more efficient and reach more customers.

“China applies sweeping regulatory measures in all aspects of digital trade, including trade in digital goods and services, investment in the information and communications technology (ICT) sector, as well as the movement of data and ICT professionals,” the report says. “China is followed by Russia, India, Indonesia and Vietnam. They all have very restrictive regimes for digital trade.”

It continues: “Generally, the countries that are most restrictive in digital trade are emerging economies. China belongs to that group, but it is also an outlier because the country imposes substantially higher restrictions on digital trade than other emerging economies. Just like China, Russia also applies more burdensome digital trade restrictions than could be expected given its level of economic development.”

On the other end of the spectrum, the most open country in digital trade, with only a few digital trade restrictions, is New Zealand, the index found. Others among the most digitally open are Iceland, Norway, Ireland and Hong Kong. These are the least restricted economies in digital trade and have free trade policies applied in most fields of the digital economy, it said.

“All Top Five countries in digital openness are comparatively small economies and therefore more
dependent on global markets,” the report notes. “Generally, they also have a larger services sector than other countries, which reinforces the role of open digital markets for their economic growth. All five countries have a
tradition of being open to international trade and investments.”

“Their digital openness boosts productivity and investments in so-called knowledge-based intangibles
such as research and development (R&D), design, (digital) training and data, which spurs growth in
digital and non-digital sectors,” it continues. “And the reality for all countries is that the combination of open digital borders and a friendly domestic regulatory climate for businesses expands economic prosperity.”

In Europe, the most restrictive countries are France and Germany, it said. France is in the top 10 most restricted worldwide. And for its part, the United States is about average for the world, having various restrictions that hold back certain sectors of its digital economy, the report said.

According to the report summary: “The Digital Trade Restrictiveness Index (DTRI) measures how countries in the world restrict digital trade. The DTRI is based on a wide spectrum of digital trade policies covering more than 100 policy measures across 64 countries worldwide. The index is the first global initiative to provide transparency of applied digital trade restrictions and sheds light on how countries compare with each other. The index is based on the Digital Trade Estimates (DTE), a database that ECIPE has developed and that is freely available for anyone to use.”