Digital technology could boost annual trade by a third
A new report from the World Trade Organization (WTO) says that digital technologies will add up to 34 percentage points to trade growth by 2030 thanks to lower costs and higher productivity.
Blockchain solutions can reduce the time spent on customs compliance and logisticsThe 2018 edition of the WTO’s flagship publication, the World Trade Report, added that innovation in the form of the Internet of Things, artificial intelligence, 3D printing and blockchain will have a profound impact on global trade. They could also create a challenging environment for those seeking to keep up with the latest innovations.
In a speech to launch the report, WTO Director-General Roberto Azevedo, said: “This is structural, this is here to stay … It is a revolution.”
The report shows that digital technologies are likely to further reduce trade costs and boost trade significantly, especially in services and for developing countries. Global trade is projected to grow by an additional 2 percentage points annually between 2016 and 2030 as a result of digitalization, falling trade costs and the increased use of services. This corresponds with a 31-34 percentage point higher trade growth over 15 years.
The share of services in global trade is projected to grow from 21% in 2016 to 25% in 2030. The report also finds that the reduction in trade costs could be especially beneficial for micro, small and medium-sized enterprises (MSMEs) and firms from developing countries, provided they have the ability to keep up with the adoption of digital technologies.
In the best scenario, developing and least-developed economies’ share in global trade is predicted to grow to 57% by 2030, from 46% in 2015, whereas if they cannot keep up, this share is predicted to rise to 51%.
The report discusses how digital technologies can unlock savings, such as through better route planning, autonomous driving and smart inventories made possible by artificial intelligence and robotics. For example, blockchain solutions can reduce the time spent on customs compliance and logistics.
The Internet of Things, the networking and processing capabilities of everyday objects, can help to improve operational efficiency through better preventative maintenance of machinery and products. These technologies can therefore reduce transportation and storage costs, which represent a major share of overall trade costs.
The report concluded that, overall, the expansion of digital trade holds the potential to generate considerable benefits if it takes place under conditions that adequately address important public policy challenges. Issues concerning inclusiveness, privacy protection and cybersecurity are likely to figure prominently in debates on the future governance of digital trade.