With the COVID-19 pandemic accelerating the opening of the services sector and the digitalization of the economy, firms have revisited their business models, leveraging digital technologies to produce and deliver goods and services. To fully benefit from these new opportunities, the Asia and Pacific region still must live up to the existing challenges and narrow digital divides resulting from limited or uneven access to digital technologies, education, and financing. Inadequate policies may also reduce the potential benefits from digitalization for services. Using a structural gravity model, this paper provides a first attempt to empirically assess the impact of these factors on digitally deliverable services exports in Asia and the Pacific with a special focus on the complementarity between local and foreign determinants, a key conduit of regional cooperation.

JEL codes: F10, 13,14, L8