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Digital trade

How has digitisation created digital trade?

The process of digitisation has transformed trade – in some cases by simply shifting offline activities online, and in others by driving entirely new forms of commerce. Here we outline the primary examples.

  • Online activity predominates in relation to information-based services, eg financial services, audiovisual services, professional and business services, retail and education.
  • Digitisation has also led to new types of online services, ranging from platform business models (eg Uber) to services taking advantage of big data which is processed by algorithms (for online activity) or sensors (for offline activity).
  • Thanks to sensors, robotics, and virtual and augmented reality, it is possible (or soon will be) for even some physical services to be supplied online, at least in part (eg surgery).
  • Economic activity based on information products (eg books, films and music) has been digitised, although in 2018 the WTO estimated that the share of trade in these digital information products fell.
  • There is also a subtler question of reclassification relating to economic activity that involves a mix of goods and services, for example Schiphol Airport’s arrangement with Philips whereby it receives LED lighting as a service, rather than buying bulbs.
  • Finally, with the advent of additive manufacturing (ie 3D printing), digitisation may reduce trade in physical products (ie by allowing consumers to download designs and print their own goods), though by how much is contested.

Digitisation inevitably leads to the internationalisation of economic activity, as these online services can, at least in part, be supplied from anywhere in the world. All of this has significant implications for those engaged in digitised economic activity.