Abstract: With the deepening development of the digital economy on a global scale, cross-border data flow has a significant impact on the global value chain division of labor in the productive service industry. Based on the Digital Trade Restrictions Index database of the European Centre for International Political Economy (ECIPE), this study quantifies the cross-border data flow restrictions of five major production service industries in 42 economies from 2014 to 2018, and further conducts an empirical analysis on their specific impact on the global value chain division of labor position of the production service industry. The findings show that cross-border data flow restrictions significantly inhibit the advancement of the global value chain division of labor in the productive service industry. The heterogeneity analysis shows that the global value chain division of labor position of wholesale and retail (including motor vehicle repair), transportation and warehousing, leasing, and other business service industries is significantly more suppressed than that of postal and telecommunications industries and financial insurance industries; compared to developed economies, the position of productive services in the global value chain division of labor in developing economies is more inhibited, while economies with higher economic freedom can effectively cope with the negative impact of cross-border data flow restrictions. The mechanism analysis shows that cross-border data flow restrictions reduce the global value chain division of labor position of productive service industries through three paths: inhibiting research and development innovation, causing imbalances in human capital structure, and increasing trade costs. Therefore, the government should further improve the data flow governance framework that balances security and efficiency, and strengthen factor support by incentivizing technological innovation, optimizing human capital structure, and reducing trade costs. At the same time, it should promote the integration of international data standards and enhance policy flexibility and economic freedom, thereby promoting the high-quality development of productive service industries under cross-border data regulation.

Key words: cross-border data flows, producer services, global value chain division