With respect to rules related to cross-border data transfers, there are 39 countries that follow the open model, representing a share of 34 percent of the 116 countries analysed; 66 countries follow the conditional transfers model, representing 57 percent of the total country sample; whereas only 11 countries follow the limited transfers model, representing a share of 9 percent. When considering the EU as one entity, the share of countries following the open transfers and conditional transfers models becomes almost equal.

Regarding the rules on the domestic processing of data, Table A1 shows that the number of countries pursuing the open processing model drops to 29, representing a share of 25 percent of all countries considered. Conversely, the number of countries following the conditional processing model goes up to 79, representing a share of 65 percent. Last, only 12 countries in the sample follow the model with limited data processing, with a share of 10 percent. Again, when counting the EU as one entity, the share of the conditional processing model is substantially reduced but nonetheless remains higher than the share of countries that follow the open processing model.

As such, the distribution of the three models in the dataset shows a fair amount of variability, which facilitates the econometric analysis this paper employs, which is described below.

# **3.3 Descriptive Analysis**

Before turning to the econometric assessment, this section presents some descriptive analysis. In particular, it shows the share of global digital services trade that is captured by each of the three data models (section 3.3.1); the top 10 country-pairs of digital services trade that have the same data model in place (section 3.3.2); and show how the categorization of the three data models relates with digital services trade and various other development variables (section 3.3.3). Given that the econometric analysis uses the gravity model, it also relate the main variable of interest with various gravity determinants such as distance and market size (section 3.3.4), and finally with some variables related to the internet (section 3.3.5).

The analysis is conducted using the trade data available in the TiVA database, in particular the underlying gross exports data. This data source covers bilateral goods and services trade up till the year 2015.<sup>11</sup> The analysis focuses on digital services trade, which covers different sectors. First, it includes the purely digital services such as publishing, audio-visual and broadcasting services, telecommunications, and IT and other information services, which correspond to ISIC Rev. 4 numbers 58-63. Second, it adds a series of business services that have become substantially digitalized in recent years in order to capture the so-called digital-enabled or digitally delivered services trade (see also UNCTAD, 2019; López González and Jouanjean, 2017; and Borga and Koncz-

> 11 To main reasons stand out in preferring the OECD TiVA database over other databases such as the ITPD-E database. One, in the econometric analysis the OECD trade data is used for reasons set out in Section 4. Even though the ITPD-E database provides data for more developing countries, it is preferable to use consistent trade data throughout all sections of the paper. Second, the OECD TiVA trade data distinguishes between more sub-categories of digital sectors, whereas the ITPD-E database lumps up digital services into one aggregate sector, namely ISIC Rev. 4 code “J”, which covers information services, telecommunications, and IT, computer and other information services combined (i.e. ISIC Rev. 4 codes 58-60, 61, 62, 63 respectively). However also data from the ITPD-E database is used for a robustness check and found largely similar results.

11