The digital, or Internet, economy has transformed many aspects of our lives over the past two decades. How we communicate, entertain ourselves, make decisions, and do business continues to evolve as the digital economy grows in size and importance. Given this transformation, it is becoming even more important for policymakers to consider how the Internet affects our lives and the economy as a whole.
The Department of Commerce has played an instrumental role in developing policies that facilitate the digital economy. The Department’s Internet Policy Task Force identifies leading public policy and operational challenges in the Internet environment. The Task Force is committed to maintaining the global free flow of information online. This report provides a framework for understanding the size and nature of some cross border data flows. We do not forecast how data flows would change in response to any given policy decision.
Our analysis uses digitally-enabled services categories identified in previous research as a starting point for identifying “digitally-deliverable” services—i.e., services that may be, but are not necessarily, delivered digitally. These service categories are the ones in which digital technologies present the greatest opportunity to transform the relationship between buyer and seller from the traditional in-person delivery mode to a digital one. The aggregate trade data used in this report capture a mix of transactions that are entirely digital, somewhat digital, or entirely non-digital; our estimates focus on those transactions that are most likely to be done digitally. Because we do not have a direct measure of services that are digitally traded within each service category, it is difficult to precisely estimate how much this percentage has increased over time. Instead, this paper presents an upper-bound estimate of the percentage of services exports that are digitally-deliverable.
We also know that there is a great deal of interest in understanding the economic value related to digitally-enabled data and services delivered to users at no price. An exact number of bytes associated with these data flows may not be known, but the number is large and growing. Data flows related to subscribers’ use of Facebook, Google, Twitter, and other free online services are not covered in this report because they are not captured as monetary transactions in Federal cross-border trade statistics. However, traditional services trade related to the operation of these free services—such as advertising services, Internet access services, and legal services—are included in our analysis if they are exported to other countries from the United States.
Our analysis reveals that in 2011:
- The United States exported $357.4 billion in digitally-deliverable services. This represented over 60 percent of U.S. services exports and about 17 percent of total U.S. goods and services exports.
- The United States imported $221.9 billion in digitally-deliverable services. This represented 56 percent of U.S. services imports and about 8 percent of total U.S. goods and services imports.
- The United States had a digitally-deliverable services trade surplus of $135.5 billion.
- The total value of digitally-deliverable services in the supply chain of total U.S. goods and services exports was $627.8 billion, or about 34 percent of total export value.
- The majority of U.S. digitally-deliverable services exports went to Europe and to the Asia and Pacific region.
- Specifically, the United States exported the highest value of digitally-deliverable services to the United Kingdom, Canada, Ireland, and Japan. The highest values of digitally-deliverable imports came from the United Kingdom, Bermuda, Switzerland, and Canada.
 For consistency with the input-output tables, Table 1 in this report excludes re-exports and presents a larger number (20 percent) for the digitally-deliverable share of total exports. In contrast, official statistics include re-exports.