skip to content

Digital Economics & Policy


Digital Economics & Policy In Focus

Garcia Macia and Goyal (2021), "Decoupling in the Digital Era"

Daniel Garcia Macia and Rishi Goyal write that technology wars are becoming the new trade wars. Without multilateral cooperation, they argue, the global digital economy could splinter. We already see signs of this, such as the import and export bans of 5G network technologies, semiconductors, social media platforms, and data-based security applications across multiple countries. Trade liberalization in digital services is giving way to increased restrictions:

Importantly, these dynamics deviate from classical economics; in traditional sectors, barriers to trade would lower economic well-being in all countries involved. In the digital era, however, leadership in emerging technologies bestows outsize profits, global market shares, and the ability to set standards. This creates an incentive to promote domestic firms above foreign competitors.

The authors argue that technology wars possess a winner-takes-most dynamic, rooted in economies of scale and scope. This has led to under-regulation as countries would seek to attract and expand domestic tech firms. Only coordinated action can prevent a race to the bottom. This would be a new Bretton Woods moment for the digital age and could govern areas such as creating a charter of technological rights, uniform statistics for the digital economy, and international data trusts to collect and guard individual data for designated purposes, such as health research.

Previously published reviews


User login

Have a Raven account? You can log in with Raven instead.