The 2018 edition of the World Trade Organisation’s (WTO) flagship publication, the World Trade Report, finds that digital technologies, such as the internet of things, artificial intelligence, 3D printing, and blockchain - will have a profound impact on global trade, adding up to 34 per cent to trade growth by 2030 thanks to lower costs and higher productivity.
However, they could also create a challenging environment for those seeking to keep up with the latest innovations, a report launched on Wednesday (3) at the WTO public forum said.
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 two per cent annually between 2016 and 2030 as a result of digitalisation, falling trade costs and the increased use of services. This corresponds with a 31-34 per cent higher trade growth over 15 years, WTO said in the report.
The share of services in global trade is projected to grow from 21 per cent in 2016 to 25 per cent 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 per cent by 2030, from 46 per cent in 2015, whereas if they cannot keep up, this share is predicted to rise to 51 per cent.
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.
The report argues that new technologies are likely to change the established ways the world trades, with comparative advantages predicted to change across economies. Artificial intelligence, 3D printing and advanced robotics could reduce the role of labour as a source of comparative advantage, while factors such as the quality of digital infrastructure and market size as well as institutional and regulatory determinants of comparative advantage, including intellectual property protection, might become more relevant.
3D printing, furthermore, may to some extent reduce the need for outsourced assembly, the number of production steps and other factors related to global value chains.
The report concludes 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.
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