Private sector representatives from various regions of the world took stock at a webinar on 1 June of how trade in goods has evolved in the digital era, with a view to sharing with policymakers the impact of their work and leveraging the full potential of the digital revolution. At the event organized by the Market Access Division of the WTO and the International Chamber of Commerce (ICC), participants shed light on what has changed since the COVID-19 pandemic, discussing examples of good practices and the way forward.
The event, moderated by Suja Rishikesh Mavroidis, Director of the Market Access Division, highlighted how the COVID-19 pandemic lockdowns compelled businesses and organisations to move many of their functions online and to accelerate their digital transformations. These included processes related to the movement of goods across borders and dealing with customs issues. Participants also looked at how this digital transformation has affected trade in goods and discussed whether trade has become as a result more efficient, safe and sustainable.
John Bescec, Director of Customs and Trade Affairs at Microsoft and Chair of the Global Customs and Trade Facilitation Commission at the ICC, explained how the pace of digitalization has increased significantly around the globe since the pandemic and stressed how digital solutions were the tools that enabled trade to continue.
From a significant reliance upon paper and manual processes that slowed down trade during COVID-19, countries and companies transitioned to updated digital-based operating models to handle modern post-pandemic world trade. Further digitalizing process and incorporating modern technologies such as artificial intelligence (AI) machine learning will reduce risks in trade and will allow better targeting to reduce intentional and unintentional fraud. The reality is humans can no longer process the amount of data generated in international trade, said Mr Bescec.
Asako Shibata, Global Trade Compliance Manager at Bell Textron Inc and Vice-Chair of the ICC Global Customs and Trade Facilitation Commission, provided an example of the changes in the way trade is conducted as a result of the pandemic. She spoke of one particular facet of Japanese business culture, which is the custom of stamping trade paperwork with a personal seal. Despite being deeply rooted, since the pandemic the private sector and customs office have moved to a paperless operation, having a positive impact on trade.
Dr Bimal R. Kantaria, Managing Director at ELGON Kenya Limited and Chairman of Agriculture Sector Network (ASNET) in Kenya, spoke of a revolutionized business environment stemming from the quick technological adaptation of companies to the reality imposed by the pandemic, reducing the cost of doing business and significantly improving efficiency. This revolution is speeding up, offering endless business and economic opportunities, he said.
He pointed to the huge jump in internet speeds in Africa and to the success of platforms such as M-PESA (a mobile phone-based money transfer service) as an example of how technology has leaped forward in recent years, allowing companies to double in size in a matter of years just by engaging online and trading worldwide. He also underlined the impact of the government’s decision to be fully online for administrative procedures, such as passport applications, visas, etc.
Alejandro Terzián, Head of the Center of Excellence for International Trade and Customs Compliance at Bayer Latam (Argentina), and Vice-Chair of the ICC Global Customs and Trade Facilitation Commission, referred to the pharmaceutical industry in Latin America. Despite the pandemic, operational levels were not only maintained, but there was an acceleration and easing of import clearance at customs, he said.
However, Mr Terzián indicated that there has been a recent regression to pre-pandemic levels and suggested that the digitization of PDF customs documents be re-authorised with an ex-post control — the performance evaluation process after the activity or project have been fully completed — for those operators who are safe and reliable. He also underlined the considerable progress in electronic phytosanitary certificates (ePhyto) in several countries in the region, which have been of significant help to international trade.
Panelists addressed other issues key to the evolution of trading goods in the digital area, including the role of blockchain in managing data privacy, and the importance of the interaction between public officials and professionals in the implementation trade facilitation agreements. They also addressed the contribution of digitalization to environment sustainability and the role of the WTO in the digital data revolution.
The event was closed by Andrew Wilson, ICC Global Policy Director, who stressed the importance of the exchange of information to learn what is happening on the ground, particularly for policymakers. He said ICC is intensively working with businesses and industry associations across the supply chain to look at the adoption of trusted technologies, interoperable systems and common digital standards for trade documents.
Underscoring that more effective border processes translate into more environment-friendly trade and economic gains through lower trade costs, Mr Wilson said fully embracing the digital era requires a collaborative journey, especially when it comes to market access. It is key that the private sector works hand in hand with government partners as only through collective efforts will it be possible to face the challenges ahead, he said.
Most of the products that we consume every day wouldn’t reach us were it not for logistics — the network of services that supports the movement of goods across or within national borders: transportation, warehousing, distribution, express delivery, and much more. Producers also rely on logistics to move parts and components like keyboards and computer chips from far-flung suppliers along global value chains. So the performance of a country’s logistics industry matters a great deal for its competitiveness on export markets, and its ability to reliably and affordably secure the importation of the goods it needs for production and consumption.
That is why the World Bank developed the Logistics Performance Index (LPI) to help economies identify areas where logistics could be improved.
Supply chain reliability is at the core of logistics performance. The LPI measures the ease of establishing reliable supply chain connections and the structural factors that make that possible, such as the quality of logistics services, trade- and transport-related infrastructure, and border controls.
The latest edition of Connecting to Compete, the Logistics Performance Index (LPI) shows that performance around the world proved broadly resilient after three years of unprecedented supply chain disruptions during the COVID-19 pandemic. Top-rated countries – all high-income – maintained a high caliber of services, while the weakest performers were not rated any worse. Advanced economies took the top spots, with Singapore and Finland in the lead with scores of 4.3 and 4.2 on a 5-point scale. Promisingly, large emerging economies such as India and South Africa significantly improved their scores, as did mid-level performers: Many more countries are now clustered around a score of 3.5, several of them being middle-income countries in two regions—Europe and Central Asia as well as the Middle East and North Africa.
The index is based on a survey of logistics professionals around the world that was conducted from September to November, 2022, at the tail end of the global supply chain crisis. Logistics professionals provided 4,090 country assessments and rated the 139 countries with which they trade in six areas: trade- and transport-related infrastructure; customs and border management; logistics services quality; timeliness of shipments; ability to track and trace; and the availability of competitively priced international shipments. The survey is typically conducted every two years but was delayed for more than two years due to the COVID-19 pandemic.
What lessons does the LPI hold for policy makers? Countries that score highly show strength in all six areas of logistics. Broad-based strength helped some developing countries outperform wealthier ones – China and South Africa did better than the United Kingdom, for example; Malaysia outperformed New Zealand.
Viewed across all six LPI components, the “Timeliness of shipments” component tends to see the highest scores in most countries (except the ones at the top), whereas the performance of customs and border agencies shows the lowest scores in most countries. The lowest ranking countries also tend to be low income, isolated, landlocked, or beset by conflict.
For landlocked countries, addressing bottlenecks requires coordinated interventions across borders, such as transit regimes similar to Europe’s Transports Internationaux Routiers (TIR). Small island states need more reliable connections and a greater choice of competitively priced transshipment hubs. The index also showed that
Many countries are turning to digital solutions to improve supply chain visibility, and here’s where Big Data comes in. This year the LPI included key performance indicators (KPIs) based on datasets that track the movement of containers and cargo by sea, air, and postal services in real time.
, with a standard deviation of 10.5 days. That span represents 60 percent of the time it takes to trade goods internationally. The biggest delays occur at seaports, airports, and multimodal facilities.
Surprisingly, the KPIs show that emerging economies tend to have shorter delays at ports than industrialized ones. This could be because the data on container movements were collected from May to October 2022, when the disruptions in Europe caused by Russia’s invasion of Ukraine were at their height and the United States was still struggling with maritime supply chain disruptions. It could also be that emerging economies have been quicker to adopt cutting edge solutions, such as a new generation of end-to-end supply chain digitalization.
YetBuilding capacity, ensuring access to appropriate technologies, and supporting infrastructure are all part of the policy agenda.
Rising geopolitical tensions and efforts to reshore production of goods seen as vital to national security are adding to the uncertainty. This new trade landscape heightens the importance of efficient supply chain management and logistics.
Digitizing G2P payments is a cross cutting agenda. The G2Px Initiative brings together the knowledge and expertise across various World Bank Group’s global practices and units–covering social protection, payments systems, financial inclusion, digital development, governance and gender–to improve G2P payments at scale. In this piece they are being represented by three directors for Digital Development, Social Protection and Jobs, and Finance, Competitiveness and Innovation.
DPI not only allowed governments to reach an unprecedented number of new beneficiaries, it also allowed them to make payments to them remotely. This brought millions of people into the social protection and financial system for the first time. Countries now have the opportunity to learn from, and build on, these experiences to implement G2P (government-to-people) payment ecosystems that are efficient, responsive and inclusive.
The restricted economic activity during the COVID-19 crisis created the need to support vast numbers of people, including urban informal populations, who generally were not receiving any existing social assistance program.
The role of Digital in the COVID-19 Social Assistance Response,” illustrates how governments met these challenges most successfully when they could leverage existing digital infrastructure – digital databases, ID systems and payment systems.Our new G2Px research report, “
The unique challenge of reaching new beneficiaries
Registering new beneficiaries during a pandemic and determining their eligibility was a significant challenge. Urban informal workers — as well as other newly vulnerable individuals in need of social assistance — were often hard to identify because they were not part of existing registries. An estimated 1.7 billion people in low- and middle-income countries lived in households that received COVID-response social assistance payments, and in most regions, over half had never had government support before.
These systems allowed countries to match potential beneficiary information, in a secure and privacy-preserving manner, across different databases to assess eligibility and also to verify their identity throughout the process. Thailand, for example, only asked for a national ID number (and basic demographic information for identity verification) in their COVID-response social assistance program online applications. Using only this unique number, they were then able to make checks against a range of databases and quickly approve applications from over half of the working-age population.
Countries which couldn’t use existing digital databases or ID systems to cross-check or verify individuals registering remotely reached, on average, only 16 percent of their population with COVID-response support. In contrast, countries with existing digital databases and trusted data-sharing reached an average of 51 percent of their population.
Governments that did not have DPI in place instead had to rely on collecting information at the local level, which translated into error-prone and lengthy processes. The Philippines, for example, initially had to use local government officials to collect data from 18 million households for its first round of COVID-response social assistance payments because its social registry was out of date and its digital ID system, PhilSys, was still in the process of registration. The process led to delayed payments, substantial numbers of duplications (at least 5 percent), and made it harder to reach new beneficiaries. This experience prompted authorities to accelerate their efforts to roll out PhilSys, which has registered more than 72 million Filipinos to date and will be piloted for easing G2P payments by the Department of Social Welfare and Development.
The opportunity for inclusion
Once beneficiaries were registered and their eligibility verified, governments faced the second challenge: delivering payments quickly and safely. Many countries used digital payment methods, in several cases for the first time. Sometimes this took the form of transfers into mobile money or traditional accounts. In other cases, individuals received payments through mobile vouchers or tokens they could then use to cash out.
In Colombia, almost 3 million beneficiaries of the country’s COVID-response social assistance program received their payments through an account, and over 1.3 million new mobile accounts were created for that purpose. Around 70 million beneficiaries received a payment through Brazil’s COVID-response social assistance program, for which the government set up a digital savings account which allowed individuals to access funds remotely. An estimated 40 percent of these beneficiaries didn’t have an account before the pandemic.
However, other countries missed opportunities to broaden financial inclusion – for example, some sent the payment into a limited account or used a token that could only be used to withdraw cash, instead of also allowing beneficiaries to make digital payments, save, or transfer money.
The collective experiences of countries which embraced digitization during the pandemic to deliver social assistance payments represents a unique opportunity for progress, but that progress cannot be guaranteed without coordinated action, learning, and investment.
Significant strides were made in digitizing government-to-person payments during the COVID-19 crisis, but there is still a long path ahead to ensure this translates to long-term development outcomes. For instance, while many countries leveraged digital payments during the pandemic, not all leveraged accounts which can accelerate financial inclusion and contribute to women’s economic empowerment. Neither does the fact that digital systems were used for COVID-response programs mean they will be scaled up — many of these programs were temporary.
Ensuring DPI is developed to support the digitization of government payment schemes across countries and programs will require decisive action by stakeholders across the public and private sectors. It will also require learning from the successes and pitfalls from the COVID-response experiences to ensure programs can support long-term development goals, including the need to increase financial access points and improving financial products and services.
During the COVID-19 pandemic, digital technologies have helped to mitigate some of its negative effects, to combat the virus and ensure the continuity of many economic activities. Lockdowns and other preventive measures that Governments have put in place to curb the spread of the virus have disrupted economic activity in ways for which societies were often unprepared. Amid the slowing economic activity, the pandemic led to a surge in e-commerce and accelerated digital transformation. While this transformation was already taking place, COVID-19 served as a catalyzer of digitalization.
But countries are unevenly prepared for “going digital”. Due to persistent divides in infrastructural, technological and human capabilities, the accelerated shift towards greater reliance on digital solutions has in some respects resulted in wider rather than more narrow divides and inequalities. This is of particular concern to the least developed countries (LDCs).
There are multiple digital divides that need to be overcome. According to the International Telecommunication Union, about 27 per cent of people in LDCs used the Internet in 2021, compared with 90 per cent in developed countries.  And where connectivity exists in the LDCs, it is typically offered at relatively low bandwidth and with a relatively high price tag attached. For example, the average mobile broadband speed is about 3 times higher in developed countries than in the LDCs. And while more than 80 per cent of Internet users in Europe shop online, in many LDCs, fewer than 10 per cent do so.
Recently released data from the World Bank’s Global Findex database sheds light on the extent to which LDCs have adopted e-commerce in the past few years (figure 1). For the 18 LDCs for which data exist, the picture varies. By far the largest increase in the share of adults who shopped online using a mobile or the internet between 2017 and 2021 was observed in Myanmar, where it surged from 3% to 20%. Other countries with significant increases include Senegal, Liberia, Uganda and Lao PDR. But for most of the countries, increases were limited and in some cases, the share even declined (South Sudan, Togo and Zambia).
In the area of trade, although global ICT goods trade has grown significantly during the pandemic, the LDCs as a group saw their exports and imports of such goods fall sharply. Similarly, the increase of the share of digitally deliverable services in total services exports was considerably smaller in LDCs than in more advanced economies. In other words, LDCs in general have fallen further behind during the pandemic, raising the risk of widening inequalities. So, doubling the share of LDCs in world trade – as stipulated in Sustainable Development Goal target 17.11 – is likely to be even more difficult unless the ability of countries to participate in and benefit from digital trade is strengthened.
Source: World Bank Global Findex Database
A multi-faceted challenge
To create more opportunities for LDCs to take advantage of the fast-evolving digital opportunities, it is essential to look beyond the connectivity aspect. Most LDCs lack sufficient financial, technical and other resources to capture value from digitalization. While significant advances in law adoption have been made since 2015 in many LDCs, the share of LDCs with relevant laws in data and privacy protection and consumer protection is still low (48 and 41 per cent, respectively). In addition, the pandemic’s negative impact on economic growth has also strained public funds that might be available for developing capacities needed in multiple areas.
Coping with digitalization is particularly difficult for governments as the issues involved are cross-cutting in nature and thereby touch upon multiple government ministries. The speed at which technologies are evolving adds a further challenge for policy makers as they often find it hard to determine the most appropriate policy responses. In order to manage the risks and seize the opportunities associated with digitalization, including e-commerce, there is a need for a whole-of-government approach.
Many LDCs can benefit from international financial and technical support in this area. More resources are badly called for to help countries meet increasing financing needs at a time when fiscal space is shrinking and debt burdens are growing in many countries, making the mobilization of domestic resources even more difficult. Current financial support from the international community is far from enough, as shown in recent Aid for Trade commitments. UNCTAD calculations, based on OECD data, show that the share of Aid for Trade resources allocated to the ICT sector increased from 1.2 per cent in 2017 to 2.7 per cent in 2019 and remained unchanged in 2020. In absolute terms, the resources allocated to the ICT area rose by $300 million that year.
Assessing and enhancing eTrade readiness
The scale and complexity of this challenge require new forms of international collaboration. At the United Nations Conference on Trade and Development (UNCTAD), we have identified two main problems to address. The first concerns the limited readiness of many developing countries to engage in and benefit from e-commerce and the digital economy. The second relates to insufficient and ineffective support from the international community to address issues related to the digital economy.
One response to the first problem is UNCTAD’s eTrade Readiness Assessments, launched in 2017. While awareness of the importance of digitalization is growing, many governments are struggling to determine what measures to take first to strengthen a country’s digital readiness. Without a clear understanding of the priorities, it is difficult for a government to indicate the type of support that might be sought from development partners. This has sometimes been mistakenly interpreted as a lack of demand for development assistance in the digital area.
Each eTrade Readiness Assessment reviews the state-of-play of the e-commerce enabling environment in the country and provides specific recommendations on how to address existing weaknesses through concrete actions on the ground. As of August 2022, a total of 32 such assessments had been completed, 24 of which are LDCs (covering 15 of the LDCs included in figure 1). Support for the implementation of the recommendations contained in the assessments is provided through an Implementation Support Mechanism (ISM).
The extent to which LDC governments are acting upon the recommendations contained in the assessments varies considerably. Our follow-up analysis confirms Cambodia as the top-performer, with an implementation rate of 92 per cent of all recommendations, followed by Bhutan, Senegal and Togo (all standing at 81 per cent). In Cambodia, the Ministry of Commerce recognizes the catalytic role played by the eTrade Readiness Assessment for several government initiatives in support of the e-commerce ecosystem. One recommendation prioritized by the Royal Government of Cambodia was to develop a national E-commerce Strategy. The growing importance of e-commerce in the South-East Asian nation has also prompted the Government to develop a Digital Economy and Society Policy Framework 2021-2035, which sets out a long-term vision to build a vibrant digital economy and society. But as indicated in figure 1, uptake of e-commerce in Cambodia was still limited in 2021.
In following up on the recommendations, each assessment identifies potential partners that could offer technical support if needed. For example, UNCTAD has partnered with several LDCs to develop a national e-commerce strategy (Benin, Myanmar, Rwanda, Solomon Islands), to strengthen the legal and regulatory framework for e-commerce (in ASEAN and EAC), empower women digital entrepreneurs in LDCs (e.g. in Rwanda), and boost the capacity to measure e-commerce and various aspects of the digital economy (e.g. in the Pacific). And if UNCTAD does not have the expertise required, the assessments will point to other partnering organizations that may be in a better position to support them. Many of them are members of the eTrade for all initiative.
To respond to the second problem mentioned above, UNCTAD in 2016 launched eTrade for all. It is a global initiative of 35 partners (September 2022) that seeks to connect the dots among organizations, donors and beneficiaries to foster more inclusive e-commerce development. By reaching beyond sector-by-sector silos and taking a comprehensive approach to various policy challenges that countries are facing when they develop their e-commerce ecosystems, the initiative seeks to facilitate more inclusive development outcomes. Its online platformOpens a new window serves as a single gateway to organizations offering technical assistance and capacity building related to e-commerce in English, French and Spanish, and allows potential beneficiaries to connect directly with any offering partner.
More is needed
As countries gradually and unevenly emerge from the pandemic, a return to business as usual is no longer an option. Work, education, entertainment and communications are likely to be more dependent on digital technologies than before. This accentuates the need for public policies that can maximize opportunities and address challenges and concerns related to digitalization, including policies and regulations that ensure that the digital economy works for the benefit of people and the planet.
In this context, there will be a need for more rather than less coordination and collaboration. The eTrade for all initiative, with its focus on information sharing to leverage the strengths of different actors, has enhanced mutual understanding of what each partner is doing and where there are opportunities for synergies.
Given the urgency to bridge the gaps in digital capabilities and the insufficient levels of development assistance, development organizations (including the Technology Bank) and bilateral donors, will need to develop new and innovative ways of working together. It takes time to develop and implement solutions for improving legal and regulatory frameworks to enhance trust online, building skills for the digital economy, strengthening women’s digital entrepreneurship and facilitating digital financial inclusion.
 See e.g. https://unctad.org/system/files/official-document/tdb_ede5d2_en.pdfPDFOpens a new window
 See e.g. https://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspxOpens a new window
 See https://unctad.org/webflyer/digital-economy-report-2021Opens a new window
 UNCTAD (2021). Impacts of the COVID-19 Pandemic on trade in the digital economy. UNCTAD Technical Notes on ICT for Development No. 19. https://unctad.org/system/files/official-document/tn_unctad_ict4d19_en.pdfPDFOpens a new window
 https://unctad.org/system/files/official-document/dtlstict2022d1_en.pdfPDFOpens a new window
 See https://unctad.org/system/files/official-document/dtlstictinf2022d2_en.pdfPDFOpens a new window
 For more information, see https://unctad.org/topic/ecommerce-and-digital-economy/etrade-readiness-assessments-of-LDCs