Home Latin America 2007 E-commerce, the international trading system and developing economies

E-commerce, the international trading system and developing economies

by david.nunes
Bruno MasierIssue:Latin America 2007
Article no.:5
Topic:E-commerce, the international trading system and developing economies
Author:Bruno Masier
Organisation:The World Trade Point Federation
PDF size:224KB

About author

Bruno Masier is President of the World Trade Point Federation, WTPF, a non-governmental organization based in Geneva, deriving from an innovative United Nations Conference on Trade and Development, UNCTAD, programme. Through a network of over 100 Trade Points, the WTPF assists SMEs, small and medium enterprises, in more than 70 countries to trade internationally using electronic commerce technologies. In the past, Mr Masier served as the General Director of International Affairs for the Municipality of Vicente Lopez in the Province of Buenos Aires, the General Director of the Association of Exporters in Buenos Aires, the Director of Trade Point Buenos Aires, the Secretary of the Argentine Foreign Trade Club, and as a consultant for the United Nations Conference on Trade and Development office in Geneva. Mr Masier has twice received awards from the President of Argentina for running the best international trade promotion office in the country. Mr Bruno Masier holds a degree in International Trade.

Article abstract

Internet penetration has an enormous impact on the ability of businesses to compete in global markets and upon the growth rate of countries where they are located. Information is todayís ultimate strategic tool and the Internet is the way to get it and, as well, reduce transaction costs. The Trade Point Programme, part of UNCTADís Trade Efficiency Initiative, facilitates low-cost access by SMEs to the latest in information and communication technology so they can participate in the emerging electronic marketplace.

Full Article

With the onset of globalization, information became perhaps the most important strategic tool for traders and the Internet is the fast track for accessing the required information, for reducing geographical distances and for bringing down trade transaction costs. Equal and easy access to information, especially for small companies engaging in trade in less developed countries, is crucial for achieving an equal footing in international trade. Internet penetration has an enormous impact on the ability of businesses to compete in global markets and consequently upon the growth rate of the countries where they are located. It is within this context that exclusion from the world marketplace of companies with limited or no access to Internet becomes alarming. One of the most striking impacts of the digital divide is the fact that millions of potential traders who might otherwise have a competitive edge in global markets cannot compete – without the Internet they cannot access trade-related information, they have problems marketing their goods and with finding trade partners. Small companies in less developed regions often lack the equipment and software necessary for an Internet connection. Internet affordability also appears in the equation; 60 per cent of the worldís Internet users live in the G-7 countries (Canada, France, Germany, Italy and Japan, the UK and USA) – among the worldís most developed nations. The Internet can be 150 times more affordable in high-income countries such as these than in low-income countries. In most low-income countries, the cost of a slow, unreliable Internet connection is higher than the cost of the fast, reliable service found in most high-income countries. The need for affordable, reliable Internet access in all countries is clear. It is precisely this challenge that the United Nations Conference on Trade and Development, UNCTAD, sought to address as early as 1992, when it created the Trade Point Programme as a key component of its Trade Efficiency Initiative aimed at facilitating low-cost access by SMEs, small and medium enterprises, to the latest in information and communication technology, ICT, to enable them to participate in the emerging electronic marketplace. The Trade Point Programme In 1993, UNCTADís Trade Point Development Centre initiated the Electronic Trade Opportunity, ETO, System, the first-ever attempt to collect offers and demands for products, services and investment and disseminate them to subscribers worldwide. Within three years, ETO traffic throughout the Global Trade Point Network had increased sharply from 5 Gigabytes of information for the period June 1993 – January 1995 to some 25 Gigabytes for the month of February 1996 alone. Unlike former systems that posted information on bulletin boards or relied on country-to-country exchanges at the official level, such as through embassies and consulates, the new and truly innovative ETO system involved point-to-point and company-to-company distribution, and a fast track to trade transactions. In the meantime, global trade boards and trade leads have become common on the Internet carrying the concept of electronic trade opportunities to new heights. The Trade Point Programme under the World Trade Point Federation continues to foster new trends in trade practices and consolidating its commitment to UNCTADís goals of economic development and poverty reduction through trade. To this end, the Federation has entered into partnerships with international organizations and private sector players. The Internet, economic development and trade The Internet is a vehicle for building links, collaboration and commercial relations between businesses that lead to increased competitiveness. By incorporating new ICT-related trade tools as they appear, Trade Points help SMEs to chart a dynamic export path. Economic development and social measures tailored to a countryís needs results in welfare enhancement and poverty reduction. Long-term trade growth substantially enhances economic development and income growth. Trade expansion has been the principal driving force behind the rapid growth of the world economy in recent decades. This underlines the importance of facilitating trade in countries with little participation in international markets. Trade facilitation measures are increasingly significant in trade development. Border procedures and market conditions vary widely from one country to another, and it has become extremely difficult in many cases for small companies to know what to expect with cross-border transactions. Smaller businesses need help to understand the requirements associated with goods or services in such transactions and to find reliable trade partners in other parts of the world. ICT, the Internet, can help small companies in less developed countries learn about the intricate matrix of information required to get their goods across borders in a timely and cost-efficient manner. This enables small companies to take full advantage of trade opportunities on a more equitable and sustained basis. Apart from improving infrastructure, facilities and data accessibility in the trade arena, facilitating trade through ICT applications also involves simplifying and, where possible, eliminating formalities and procedures, harmonizing widely divergent laws and regulations, standardizing and integrating the sometimes vastly different information and definition requirements, and identifying international physical distribution liability hotspots. Latin America From an historical perspective, the market share of world imports from Latin American countries has deteriorated by over 50 per cent between 1948 and 20052. Currently, the region is performing well below potential, and its recuperation requires the incorporation of knowledge, innovation and value-added services to increase competitiveness. The Global Competitiveness index, calculated by the World Economic Forum, encompasses a great variety of institutional, technological and economic factors. The 2006 Global Competitiveness Ranking covers 125 countries and shows that – with the exception of Chile at position 27 – all Latin American countries rank below the 52nd place. This highlights Latin Americaís need to build competitiveness and gain greater market share. Internet use plays a major role promoting competitiveness and developing the capacity to identify and act on trade opportunities. Access to up-dated information on market conditions can make it possible to sell at a better price. The use of Internet in commerce is conventionally associated with fixed line telephones. In Latin America, however, the statistics show that mobile telephony has become the main form of telecommunications and that mobile phone lines now outnumber fixed lines. Mobile telephones now have extensive penetration in the poorer socio-economic segments of society, and have become their main means of telecommunications in developing countries the world over. According to an UNCTAD report, well over 80 per cent of small businesses, including taxi drivers on the move, tradesmen and other business sectors in Egypt and South Africa, rely totally on mobile phones. Thanks to mobile phones many workers have become micro-entrepreneurs, gaining access to banks and financing, gaining better contact with their customers, and so on. In Latin America, mobile phones have far outpaced the growth in fixed line telephony. Governments now have to take mobile usage into account to successfully gear up Internet use for economic development and welfare enhancement. Until recently, policies to promote connectivity concentrated almost exclusively on fixed line Internet access. Studies show that mobile phones promote development and provide a platform for increasing economic prosperity; mobile in combination with Internet technology will lead to even greater gains for the lower income population and help level the economic playing field. Education is one of the indirect benefits of mobile phones, especially among the young who are eager to join the text-messaging culture. Text messaging has encouraged many largely illiterate mobile phone users to acquire rudimentary reading and writing skills3. Overall, the Internet has proven itself to be an essential tool for enabling SMEs in developing countries to increase their participation in global markets. Although, e-commerce reduces geographical distances, there are still great problems when it comes to the logistics of getting traded goods to their final destinations. The distance of Latin American countries from the worldís main markets, except the USA, implies considerably higher transport costs. This makes it essential that all the other factors involved in commercial transactions work as smoothly and cost-effectively as possibleÖ. and this is where ICT and e-commerce come into their own.

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