This comprehensive study examines the transformative effects of digitalization on international trade patterns through an integrated theoretical-empirical approach. By analyzing panel data from 62 countries (2015–2023) and incorporating 22 industry case studies, we demonstrate that digitalization contributes to: (1) 26–32% reduction in trade costs through automation and blockchain applications; (2) 42% expansion in SME export participation; and (3) 17% annual growth in digital service trade. The paper develops a Digital Trade Competitiveness Index (DTCI) that reveals a 0.88 elasticity between digital infrastructure investment and trade growth (p < 0.001). We identify three key mechanisms through which digitalization transforms trade and propose solutions for contemporary governance challenges. Our findings contribute to bridging the gap between traditional trade theories and digital economy realities. Keywords: digital trade, e-commerce, trade costs, digital divide, trade theory.
Heng Zhang (2025) studied this question.