The Rise of the Digital Economy: WTO and Technology

Digital technologies can potentially transform almost every aspect of society and the economy. The “fourth industrial revolution” – a phrase coined by Nobel laureate economist Klaus Schwab – is driven by artificial intelligence, big data, the Internet of things, and virtual reality. These technologies are reshaping entire industries and redrawing supply chains across all sectors of the economy. Consequently, digital transformation has become a strategic imperative for businesses in all industries and geographies. Recent estimates suggest that the value captured from this transformation could reach $20 trillion annually by 2025. This blog post aims to provide an overview of where we are today concerning the digital economy and technology, as well as the WTO’s role going forward. 

The Digital Economy Today 

Digital technologies are increasingly touching all aspects of our lives, from how we communicate and consume content to how we shop and conduct business. But, for all the hype around “disruption”, it is important to remember that technology’s impacts are not evenly distributed. In particular, digitalization has had a disproportionate impact on specific sectors, such as retail and media, as well as on specific regions. This has brought significant economic gains and created new opportunities, but it has also raised challenges in terms of income distribution, social inclusion, and rising inequality. 

WTO’s Role in the Digital Economy

The rules-based multilateral trading system created by the WTO aims to spur global economic growth, foster economic interdependence, and promote inclusiveness. It is a system that was built to help lift hundreds of millions of people out of poverty, tackle climate change, and promote peace and security. Furthermore, this system has been at the forefront of facilitating digital transformation. It has provided for a level playing field in terms of trade, investment, and intellectual property protection. It has also spurred innovation and the development of new technologies and services. While the system has benefitted from the rise of digital technologies, it has also had to adapt to the new realities. Now, more than ever, it is essential to adapt the rules and the organization to meet the challenges of the digital age.
 While digital transformation is already impacting the economy, the biggest changes are still to come. The potential for digital technologies to drive change is huge. The technologies are expected to significantly reduce costs, provide better customer services, and generate new sources of revenue. The challenge, however, is to ensure that such changes are inclusive.

Key Issues for the Digital Economy 

As the digital economy continues to expand, it is important to promote a multi-stakeholder approach to ensure that its benefits are shared by all. This requires addressing a range of policy issues, such as:

• Access, inclusion, and the digital divide: The digital economy relies on a robust, competitive, and reliable infrastructure. This includes a network of networks – such as the internet, mobile communications networks, and a modern and resilient power grid – as well as a certain level of standardization, interoperability, and digitization. A key challenge is to ensure that all segments of the population have access to these technologies, enabling them to participate fully in the digital economy. The digital divide not only has economic consequences but also limits innovation, creativity, and productivity.

 • Openness and data flow: Digital technologies have opened up new markets, created new business models, and enabled the outsourcing of services. They have also enabled new forms of collaboration and the sharing of ideas. However, the rapid growth of digital services and the growing dependence on data flows have raised concerns about data sovereignty, cross-border access to services and data, cybersecurity, and privacy and data protection. 

Conclusion 

The digital economy is here to stay, and the WTO must adapt to this new reality and address the challenges outlined above. To do so, the WTO must be in a position to negotiate and enforce trade rules in the digital economy. The WTO must ensure that its rules and institutions allow for new technologies and business models. It must also be able to guide countries on how to apply existing WTO rules in the digital economy. The WTO’s membership must be fully engaged in this effort, as the benefits of the digital transformation can only be fully realized if all countries have a seat at the table.