Data Flows and the Digital Economy

This paper aims to analyze the direction and balance of transnational information flows and look at how nonpriced digital information exchanges related to international trade in goods and services. The authors obtained quantitative data about Web-related data flows between countries and regions using Telegeography data on “Server Location as a Percentage of Top Websites.” They then explore how those flows are correlated to trade in goods. Web traffic is highly transnational. More than half of the top 100 websites in 9 of the world’s 13 sub-regions are hosted in the USA. More than 15 per cent of the top 100 websites in 9 of the 13 subregions are hosted in Western Europe. East Asia has the largest negative balance in the relationship between incoming and outgoing Web requests. The authors found a very strong negative correlation (−0.878) between Web traffic balances and the balance of trade in goods across all subregions. A similarly strong positive correlation was found with services trade; however, the incompleteness of the data does not allow for strong conclusions yet.