E-COMMERCE AS A TOOL FOR DEVELOPMENT : ANALYTICAL AND REGIONAL PERSPECTIVE ARUN JACOB

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1 E-COMMERCE AS A TOOL FOR DEVELOPMENT : ANALYTICAL AND REGIONAL PERSPECTIVE ARUN JACOB

2 CONTENTS Context Defining e-commerce Analysing digital trade : challenges and approaches Regional trends in digital trade: overview PTAs in the region and digital trade Emerging policy issues Implications for sustainable development

3 Per 100 inhabitants CONTEXT Key ICT Indicators 90.0 Mobile subscription -Asia- Pacific 80.0 Mobile subscription-world Billions (USD) Mobile broadband -Asia Pacific Mobile broadband- World 40.0 Internet users -Asia Pacific Internet users -World Global E-commerce Market Source : UNCTAD (2015) Fixed broadband subscription-asia pacific Fixed broadband subscription-world Source : ITU

4 DEFINING E-COMMERCE WTO (1998) electronic commerce' is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means UNTCAD Information Economy Report 2015 purchases and sales conducted over computer networks can involve physical goods as well as intangible (digital) products and services that can be delivered digitally OECD (2013) the sale or purchase of goods or services, conducted over computer networks..., but the payment and the ultimate delivery of the goods or services do not have to be conducted online

5 TYPES OF E-COMMERCE Business to Business (B2B) -15 trillion US$ (2013) -Highest market share (90%) Business to Governments (B2G) -Public e- procurement Business to Consumers (B2C) -1.2 trillion US$ (2013) -fastest growth Consumers to Consumers (C2C) -modern day classified ads Egs. E-bay, Taobao

6 ANALYTICAL ISSUES Lack of an official commonly agreed definition Limited official statistics Highlights the overall data limitations of international trade in services Need to depend on proxy variables Reliance on data provided by big private firms or industry associations Difficulty with cross-country comparisons

7 E-COMMERCE PERFORMANCE INDICES Most of the available e-commerce performance indices exclude trade data Focus on ICT, logistical and financial infrastructure access data

8 QUANTIFYING DIGITAL TRADE Digital infrastructure goods Example Computers, network devices, and mobile phones Analytical strategy used in APTIR 2016 forthcoming Trade in IT goods Digital infrastructure service Digitizable products Electronically enabled services Basic and value-added telecommunications services, and computer and related services. Software, books, music, movies, and games Insurance, customer care Share of IT infrastructure services embedded in exports (TiVa) International trade in services Classification source : Markle Foundation (2005)

9 WORLD EXPORTS OF DIGITAL-INFRASTRUCTURE GOODS 3, , , , ITA Extension (effective after 2016) Parts and accessories of IT equipment Data storage media and software provided on physical media Instruments and apparatus EXPORTS OF DIGITAL- INFRASTRUCTURE GOODS Dominance of exports from China and East Asian economies in the Asia- Pacific region. 1, , Source: APTIR 2016 forthcoming Seminconductor manufacturing equipment Semiconductors Telecommunication equipment Computers AP account for more than 64% of the world exports on the original ITA product list and 57.5% of products covered by the extension of ITA.

10 WORLD EXPORTS OF DIGITIZABLE GOODS Source: APTIR 2016 forthcoming Printed materials Sound Media Software Games Movies TRENDS IN DIGITIZABLE PRODUCTS 0.3% of world merchandise trade in 2014 Asia-Pacific economies account for 30% of world exports Significant underestimation of trade

11 Education Pulp, paper, paper products, Textiles, textile products, Wood and products of wood Real estate activities Rubber and plastics products Other non-metallic mineral Renting of machinery and Motor vehicles, trailers and Hotels and restaurants Food products, beverages and Mining and quarrying Post and telecommunications Construction Agriculture, hunting, forestry Wholesale and retail trade; Other transport equipment Fabricated metal products Machinery and equipment, nec Transport and storage Basic metals Electrical machinery and Chemicals and chemical products Other community, social and Computer, Electronic and R&D and other business activities Electricity, gas and water supply Manufacturing nec; recycling Financial intermediation Computer and related activities Health and social work CHANGE IN THE SHARE OF DIGITAL CONTENT IN EXPORTS BY SECTOR, 1995 TO 2011 SHARE OF DIGITAL CONTENT IN EXPORTS & IMPORTS 250.0% 200.0% 150.0% 100.0% 50.0% 0.0% Asia-Pacific Asia-pacific increase in share of digital content in exports was faster than the world average in most industries. Globally, import share of digital infrastructure services in total exports increased from 14% in 1995 to 22% in Source: APTIR 2016 forthcoming For Asia-Pacific exporters, the import share is higher than the world average (23% in1995 to 25% in 2011)

12 TRENDS IN TRADE IN DIGITAL INFRASTRUCTURE SERVICES Intraregional digital trade opportunity is growing, but major markets for digitalinfrastructure services remain outside the region From 1995 to 2011, intraregional imports of digital-infrastructure services grew faster than the imports from non-regional partners and domestic sourcing China has caught up with USA as an important user of telecommunication services to facilitate its export activities Links between country s competitiveness in digital-infrastructure services and export competitiveness? Need for open trade environment

13 PREFERENTIAL TRADE AGREEMENTS AND PROVISIONS FOR DIGITAL TRADE Out of 155 PTAs analysed 37 PTAs recognized some aspects of digital trade/e-commerce Source: ESCAP calculation based on APTIAD Note: * includes PTAs currently under negotitation Since 2010, about 30 % of PTAs initiated (and currently negotiated ) have special provisions for e-commerce 1/3 has a chapter on e- commerce recognition of importance of e- commerce; call for greater collaboration; sharing of best practices; and to work towards removal of barriers in cross border digital trade

14 EMERGING THEMES IN DIGITAL TRADE POLICIES Open trade and investment rules Localization rules, de-minimis rules Complementary national strategies Data openness Cyber laws, privacy laws, consumer protection laws, hard and soft infrastructure to enable digital trade New areas of international cooperation

15 IMPLICATIONS FOR SUSTAINABLE DEVELOPMENT Some evidence that e-commerce has reduced spatial inequality in some parts of world The risk of digital divide transforming into a development divide Need for further research and continuous monitoring on the impacts on existing structures of production and trade Impact on environment Large data centers use up energy equivalent of small US towns

16 THANK YOU Arun Jacob (PhD) Trade Policy and Analysis Section Trade, Investment and Innovation Division United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

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