World Economic Forum Davos Agenda session on accelerating digital trade
29 January 2021
The pandemic has boosted digital trade. Restrictions on movement and social distancing to protect public health have reduced economic activity across sectors and countries. At the same time, the global economy has witnessed strong uptake in digitally enabled activities, which has partially mitigated the economic downturn caused by the pandemic, paving the way for lasting changes in our lives.
Soon-to-be released findings of a survey by UNCTAD’s eTrade for all partnership shows:
- 58% of consumers spent more time on entertainment sites during the pandemic.
- Online gaming sales across fifty major markets rose by 63 per cent during Q1 2020.
- Online retail sales increased in almost all sectors, particularly for goods used for teleworking
Indeed these increases were seen across the world. Latin America’s Mercado Libre sold twice as many articles per day in 2020 Q2 than the previous year. The African e-commerce platform, Jumia, saw a 50 per cent jump in transaction volumes during the first six months of 2020. E-commerce and digital trade are playing a key role maintaining economic activity, and these shifts will have long-term effects.
There is no doubt that many smaller businesses around the world have been able to keep their operations running by enhancing online offerings. Businesses with established online presence have been better equipped to take advantage of increased demand, along with traditional businesses that have been sufficiently agile to embrace the digital transformation.
However, it is also clear that the ability to go digital still varies a lot. Huge digital divides mean further digital shifts, which will likely result in even greater inequalities. In many of the poorest economies of the world, capitalizing on e-commerce has not always been possible due to various bottlenecks and barriers. For example, UNCTAD research shows that disruptions in supply chains and trade logistics, costly broadband services, reliance on cash, skill deficits and inattention to e-commerce by governments limits the capacity of e-businesses to leverage the growing demand for digital trade.
By contrast, the pandemic has benefited the world’s leading digital platforms more than others. Most digital solutions being used for e-commerce, teleworking, social media and cloud computing solutions are provided by a relatively small number of large companies, based mainly in China and the United States. The increased market power of this handful of players fuels concerns about the distribution of value created and consumer protection and fair competition.
We see a need for greater efforts in three critical areas to begin closing the widening digital divides:
- Governments need to prioritize national digital readiness in order for local businesses to be producers in the digital economy, more than mere consumers.
- Digital entrepreneurship must become a central focus of efforts to capture value from digital trade.
- And the international community needs to find new, bold and smart ways to work with governments and the private sector to leverage these opportunities.
The pandemic has further set back efforts towards achieving the 17 SDGs. Despite UNCTAD and many other organizations having sounded the alarm well before the pandemic struck, deepening fractures in global economic conditions have thwarted progress. COVID-19 crisis accentuates the need for smarter integrated approaches and stronger global platforms for dialogue on digitalization.
UNCTAD and its partners in the eTrade for all initiative, including the World Economic Forum, will continue to play our part by calling for a stronger collective response on the road to recovery. We must turn this greatest challenge into an unprecedented and unique opportunity to create a more digital, more inclusive and more sustainable future for all.
