The Impact of Digital Trade Barriers on Global Value Chains: A Perspective from Developing Countries

Abstract

This study examines the impact of digital trade barriers on Global Value Chains (GVCs), with a focus on developing countries. The rapid development of the digital economy is reshaping the operational models and division patterns of GVCs. As a new form of non-tariff barriers, digital trade barriers—including data localization requirements, foreign equity restrictions, and source code disclosure mandates—significantly increase transaction costs for developing countries participating in GVCs. Through a combination of theoretical analysis and case studies, this paper explores the mechanisms by which digital trade barriers constrain the division of labor status of developing countries within GVCs. The findings reveal that restrictions on data flows, divergences in technical standards, and market access barriers collectively undermine the position of developing countries in GVCs. Focusing on the interplay of technology, data, and policy dimensions, this study demonstrates how digital trade barriers hinder developing countries’ ability to upgrade their roles in GVCs. For instance, Southeast Asian countries face 12%-18% higher export costs for digital services due to data localization policies, while Latin American nations lose approximately 23% of cross-border digital orders owing to technical standard disparities. To address these challenges, the paper proposes strategies such as policy innovation (e.g., digital free trade zones), international cooperation on digital governance frameworks, and enterprise capacity-building through digital infrastructure upgrades. This research provides critical insights for developing countries to navigate digital constraints and enhance their integration into GVCs.