Digitalizartion of World Trade: Scope, Forms, Implications

858
DOI: 10.20542/0131-2227-2020-64-1-15-25

I. Strelets (i_strelets@mail.ru),
MGIMO University, 76, Vernadskogo Prosp., Moscow, 119454, Russian Federation;
S. Chebanov (scheb@imemo.ru),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation

Abstract. The authors undertake an in-depth analysis of how process of digitalization, namely, wide-scale introduction of powerful information and communication technologies, affects and redefines the international trade. It is pointed out that, according to fresh UN and WTO data, the scope of transborder deliveries within the segment of e-commerce is expanding at a noticeably faster pace than the traditional global trade. The increasing application of ICT-technologies significantly accelerates export and import transactions. This allows to significantly expand the range of participants in cross-border turnover of goods and services. Moreover, it makes possible to involve into this turnover the resources that had been traditionally considered as internationally non-tradable. Thus, new comparative advantages of trading nations are formed. Global trading platforms based on sophisticated Internet solutions have become particularly important due their convenience for involved parties. The sectoral composition of e-commerce is of special interest. Available statistics shows that B2B transactions noticeably prevail over B2C globally and in the leading trading nations. The only important exception from this general trend is presented by China, most possibly thanks to its huge 1.5 billion consumers’ domestic market. In addition to the many positive effects, the digitalization of trade poses a number of conceptual and practical problems. Concerning the theory, there are growing doubts in the analytical appropriateness of the gravity model that had been traditionally applied for explaining and predicting the geographical distribution of international trade flows. Within the modern global economy with its close digital connectivity and powerful transportation-logistic networks the trades can interact in the almost real-time mode. Respectively, the importance of geographical proximity factor seems to be fading away. In terms of practicalities, an major negative implication of digitalization is that it creates additional preconditions for the monopolization of trade exchange between countries by a handful of Big-tech companies. At last, the fundamental issues of regulating this new area of international cooperation need to be resolved. The governmental policies and rules should be adjusted to the ongoing digital transformations. First of all, this relates to the taxation of e-commerce. The temporary moratorium on imposition of import tariffs was adopted by WTO member-states in 1998 and extended in 2017. In the conditions of a virtual burst of B2B and B2C trade such an approach is increasingly disputed by developing countries. The issue needs to be resolved on a consensus basis. The adoption of recently proposed of Agreement on digital products and other services (ADPOS) may give the WTO a chance to revitalize its role in the global economy.

Keywords: digital economy, global trade, ICT technologies, digitalization, e-commerce, Internet platforms, global value chains (GVC), USA, China, developing countries


REFERENCES

1. Negroponte N. Being Digital. New York, Alfred A. Knopf, 1995. 243 p.

2. Tapscott D. The Digital Economy: Promise and Peril in the Age of Networked Intelligence. New York, McGraw-Hill, 1995. 342 p.

3. World Trade Organization. Work Programme on Electronic Commerce Draft Ministerial Decision of 13 December 2017, WT/MIN(17)/65 WT/L/1032, Ministerial Conference Eleventh Session, Buenos Aires, December 10–13, 2017. 5 p.

4. Afontsev S. Novye tendentsii v razvitii mirovoi ekonomiki [New trends in global economy]. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2019, vol. 63, no. 5, pp. 36-46. DOI:10.20542/0131-2227-2019-63-5-36-46

5. Ivanova N., Mamed’yarov Z. Nauka i innovatsii: konkurentsiya narastaet [R&D and innovation: competition is growing]. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2019, vol. 63, no. 5, pp. 47-56. DOI:10.20542/0131-2227-2019-63-5-47-56

6. Shapiro C., Varian H. Information Rules: a Strategic Guide to the Network Economy. Boston, Harvard Business School Press, 1999. 352 p.

7. Shy O. The Economics of Network Industries. New York, Cambridge University Press, 2001. 315 p.

8. Freund C., Hufbauer Cl. G., Jung E. Enhancing Export Opportunities for Small and Medium-Sized Enterprises. Available at: https://piie.com/system/files/documents/pb16-7.pdf (accessed 30.07.2019).

9. Evans D. The Internet of Things: How the Next Evolution of the Internet Is Changing Everything. CISCO White Paper. April 2011. Available at: http://www.cisco.com/web/about/ac79/docs/innov/IoT_IBSG_0411FINAL.pdf (accessed 20.07.2019).

10. Church J., King I. Bilingualism and Network Externalities. Canadian Journal of Economics, 1993, no. 26, pp. 337-345.

11. Rysman M. The Economics of Two-Sided Markets. Journal of Economic Perspectives, 2009, no. 23(3), pp. 125-143.

12. Kaiser U., Wright J. Price Structure in Two-Sided Markets: Evidence from the Magazine Industry. International Journal of Industrial Organization, 2006, no. 24(1), pp. 1-28.

13. Hodgson C. Can the Digital Revolution Be Environmentally Sustainable? Available at: https://www.theguardian.com/global/blog/2015/nov/13/digital-revolution-environmental-sustainable (accessed 30.07.2019).

14. Freund C., Weinhold D. The Internet and International Trade in Services. American Economic Revue, 2002, no. 92(2), pp. 236-240.

15. Freund C., Weinhold D. The Effect of the Internet on International Trade. Journal of International Economy, 2004, no. 62, pp. 71-189.

16. Tang L. Communication Costs and Trade of Differentiated Goods. Revue of International Economy, 2006, no. 14(1), pp. 54-68.

17. Trade and Development 2018. Power, Platforms and Free Trade Delusion. New York, Geneva, UNCTAD, 2018. 132 p.

18. Status. Opportunities and Challenges of BRICS E-commerce. Vienna, UNIDO International Trade Centre, 2017. 73 p.

19. Global E-commerce Sales Surged to $29 Trillion. UNCTAD, March 29, 2019. Available at: https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2034 (accessed 30.08/2019).

20. Digital Economy Report 2019. Value Creation and Capture: Implications for Developing Countries. New York, Geneva, UNCTAD, 2019. 172 p.

21. Beckerman W. Distance and the Pattern of Intra-European Trade. Review of Economics and Statistics, 1956, vol. 38, pp. 31-40.

22. Cairncross F. The Death of Distance. How the Communications Revolution Will Change Our Lives. Boston, Harvard Business Review Press, 2001. 320 p.

23. Blum B., Goldfarb A. Does the Internet Defy the Law of Gravity. Journal of International Economics, 2006, vol. 70, pp. 384-405.

24. Cowgill B., Dorobantu C., Martens B. Does Online Trade Live Up to the Promise of a Borderless World? Evidence from the EU Digital Single Market. European Commission Joint Research Centre Institute for Prospective Technological Studies, Digital Economy Working Paper 2013/08. Available at: http://www.jrc.ec.europa.eu/ (accessed 25.08.2019).

25. Aid for Trade in Asia and the Pacific: Thinking Forward about Trade Costs and the Digital Economy. Mandaluyong City (Philippines), Asian Development Bank, 2015. 54 p.

26. Technological Innovation, Supply Chain Trade, and Workers in a Globalized World. Global Value Chain Development Report 2019. Washington, World Bank, April 2019. 196 p.

27. Who’s Smiling Now? OECD Observer, no. 296, Q3, 2013.

28. Ming Ye, Bo Meng, Shang-jin Wei. Measuring Smile Curves in Global Value Chains. IDE Discussion Paper, no. 530, Aug 27, 2015.

29. Made in the World: how Value Affects Trade Policy. OECD Observer, no. 294, Q1, 2013.

30. Duch-Brown N., Martens B. A New Perspective on the Exporter Productivity Premium: Online Trade. Routledge Journals, 2018, August, vol. 25(14), pp. 989-993.31. The World of 2035. Global Outlook. Dynkin A., ed. Moscow, Magistr, 2018. 304 p.

32. Dugiel W., Latoszek E. Electronic Trade in the World Trade Organization – Difficulties in Negotiating an Agreement? The International Journal of Economic Behavior, 2018, vol. 8, pp. 133-143.

33. Wallace Ch., Brandi C. Governing Digital Trade – a New Role for the WTO. Bonn, Deutsches Institut fur Entwicklungspolitik (DIE). Briefing Paper no. 6/2019. Available at: http://hdl.handle.net/10419/199841 (accessed 02.07.19).


Registered in System SCIENCE INDEX

For citation:
Strelets I., Chebanov S. Digitalizartion of World Trade: Scope, Forms, Implications. World Eñonomy and International Relations, 2020, vol. 64, no. 1, pp. 15-25. https://doi.org/10.20542/0131-2227-2020-64-1-15-25



Comments (0)

No comments

Add comment







Indexed

 

 

 

 

Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies

 

Current Issue
2024, vol. 68, No. 3
Topical Themes of the Issue:
  • Bretton Woods 2.0: Towards a New Global Financial Architecture
  • Transformation of the EU Political Party System on the Eve of the 2024 European Election
  • South Asia in Regional and World Politics
Submit an Article
INVITATION FOR PUBLICATION
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.