This paper examines the impact of digital inequality and domestic and cross-border data policies on trade flows in the financial and ICT sectors. While existing literature has broadly explored the impact of the Internet and trade restrictions on trade flows in goods and services, this study introduces three novel independent variables: an asymmetric digital divide index, derived from Principal Component Analysis on Internet World Development Indicators (WDI) and a policy variable and cumulative policy index constructed from the Digital Trade Integration (DTI). The former quantifies disparities in the Internet diffusion between countries, while the latter assesses the presence and intensity of domestic and cross-border data policies. 

Using a panel-gravity model on bilateral trade data from ITPD-E (2000-2017), results show that harmonised data policies promote ICT and financial services trade flow, while unilateral policies, particularly by exporters, restrict them. The study also reveals mixed effects of policy intensity: negative for financial services but positive for ICT. Additionally, results highlight a digital divide across sectors and data governance models, with exporters showing digital superiority over importers. 

This paper contributes to the literature by developing and applying three new independent variables that provide a detailed assessment of data policy and digital inequality, thus offering policy implications for an environment conducive to trade.