International digital trade in E7 countries: The role of national digital innovation capacity in international trade transformation

Digital trade has developed as a transformative force in the global economy, transforming traditional trade patterns through seamless exchanges of digital trade worldwide. In light of this transition, a crucial question is how national digital innovation capacity (DI) and its various developmental stages (access, usage, and skills) among the E7 emerging economies (Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) affect digital trade. This study aims to fill this research gap by exploring the effect of national digital innovation capacity and its developmental stages on digital trade, specifically in the presence of economic freedom, population, economic growth, and institutional quality in the E7 emerging economies. The cointegration analysis shows a long-run association between the analysed variables, where the Method of Moment Quantile Regression (MMQR) analysis reveals that population, economic growth, DI, and its developmental stages significantly increase digital trade, while institutional quality significantly reduces digital trade in E7 emerging economies. Digital skills are found to be more important than digital access and usage for digital trade. However, the impact of economic freedom on digital trade is insignificant. Policymakers and regulators should prioritize strengthening national digital innovation capacity across developmental stages while improving institutional quality to promote digital trade in the E7 emerging economies.