Digital platforms create new opportunities for companies of all sizes to engage in trade. They can lead to efficiency gains through lower transaction costs and reduced information asymmetries supported by rating systems.
Other benefits include lower consumer prices, increased market access, more competition, better use of underutilized resources and increased flexibility for the providers of services. However, gains are not automatic, and there are growing concerns over the rising market power of certain platforms and the related implications for competition, data protection and ownership, consumer protection and taxation and employment policies.
Economic policies and regulations will need to maximize the benefits while at the same time minimizing the costs of digital platforms.
Key points:
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For developing countries, digital platforms generate both opportunities, to engage in trade and to develop, as well as challenges.
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In order to maximize development gains from digital platforms, policies and regulations need to address in a holistic manner diverse challenges, including those related to competition and consumer protection, data protection and privacy, taxation and employment and working conditions.
This policy brief is based on the Information Economy Report 2017: Digitalization, Trade and Development and the 2018 publication: Fostering development gains from e-commerce and digital platforms.
