Definition of Digital Trade

‘Digital trade’ is a relatively young and developing aspect of trade and many of the broader implications of it are not yet fully understood. This can in part be explained by the absence of a common understanding and measure of the impact of digitalisation, and the need to use a narrower definition of digital trade to identify, size, and sometimes determine public policy.[1]

Digital technologies are serving to expand existing markets and create new trade possibilities, in both cases, contributing to the creation of new jobs, increased labour opportunities and wages, and contributing to a higher standard of living. For instance, the OECD is developing a framework for digital trade that highlights that digital technology is changing the speed, scope, and scale of trade, as well as increasing the value of trade.[2]

The term ‘digital trade’ is sometimes used interchangeably with that of ‘e-commerce’, or other similar proxies. Digital trade in fact has far broader scope, encompassing the increasing digitalisation of almost all economic and social sectors, the use of digital technologies in supply chains and logistics, the invention of new, commercially valuable communications and market access channels, and the value of the data that is created, transferred, and processed—not least because the data itself is increasingly both an asset input into the supply chain process, and is being traded as its own discernible commodity.

There are at least four components of digital trade for which economic impact needs to be measured. These categories are not mutually exclusive and may in combination be a part of a single transaction, product, or service. In addition, the ever-expanding use and application of digital technologies means that there is an ongoing shift as the proportion of digital goods and services to tangible products continues to grow. 

We consider digital trade to include the following:

Digital trade components

There are at least four components of digital trade for which economic impact needs to be measured. These categories are not mutually exclusive and may in combination be a part of a single transaction, product, or service. In addition, the ever-expanding use and application of digital technologies means that there is an ongoing shift as the proportion of digital goods and services to tangible products continues to grow. 

We consider digital trade to include the following:

• Digital goods are those that are stored, delivered, and used in electronic format.

• Digital services that are delivered via the Internet (and typically accessed via platforms or email), or an electronic network.

• The delivery and/or purchase of a product can be online/via a digital platform, but the good or service may be consumed physically.

• Hard and soft infrastructure (cables and wires, platforms, and devices) to regulations that protect data and IT systems which support digital trade transactions.

• Faciliate trade ‘invisibly’ to provide greater efficiencies, security, transparancy, and traceability (Auditability) for transactions

• Technologies that are transforming, or have the potential to transform aspects of trade practices

[1] Some governments may have their own definitions of trade.

[2] López González, J. and M. Jouanjean (2017) Digital Trade: Developing a Framework for Analysis, http://dx.doi.org/10.1787/524c8c83-en

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