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Digital import-export trade potential remains untapped as more than half the world’s population lack internet access.

Barriers to Digital Import-Export Trade: Internet ServiceARTICLE

By Zack Andresen

The continuous rise of digital technology and its impact on the way people and businesses interact has led to what the World Economic Forum (WEF) calls the “Fourth Industrial Revolution.” Like its three predecessors in modern history, this new wave of innovation – which centers on the increasingly seamless integration of advanced technology into the daily lives of global citizens – holds tremendous promise for boosting global import-export trade and improving the quality of life for people across the world.1

Research highlights the influence of digital technology in import-export trade: the total value of cross-border transactions (goods, services and finance) increased from $5 trillion (or 24 percent of world GDP) in 1990, just before the rise of the commercial internet, to $30 trillion (39 percent of world GDP) in 2014, according to the McKinsey Global Institute.2 Projected digital cross-border spend in the U.S. alone exceeded $500 billion in 2016, PayPal estimates.3

But despite the growth of digital import-export trade around the world, a number of barriers exist that currently inhibit cross-border e-commerce from reaching its full potential. One such barrier is access to the mechanism itself that drives digital e-commerce: the internet.4 In 2016, over four billion people5 – more than half the global population – did not have internet access.

The untapped potential of more than half the world’s population to increase digital import-export trade remains to be seen. But in the U.S., Statista estimates that in 2017, 78.3 percent of the adult population has internet access and the average spend per person will exceed $1,700.6

Barriers to Internet Service Slow Digital Import-Export Trade Growth

According to WEF, four primary barriers exist in expanding global internet access: lack of infrastructure; cost; skills and cultural acceptance; and local adoption.7 Overcoming these barriers would likely accelerate import-export e-commerce.

Infrastructure can be subdivided into a lack of adequate coverage, a lack of coverage altogether, and inconsistent access to electricity, the latter of which affects about 600 million people in sub-Saharan Africa and 370 million in South Asia.8 That said, a report from the International Telecommunication Union (ITU) shows 84 percent of the global population now covered by mobile-broadband service.9 Despite that, the same report states only 47 percent actually use the internet, so infrastructure is only one part of the problem.

Cost stands as a significant barrier, not just for the 10.7 percent of the global population living in extreme poverty, but also for the 2.7 billion people around the world who live on less than $2.50 per day.10 Cost includes both the price of internet service as well as the cost of a device with the ability to get online, both of which often remain unreachable for citizens of developing countries.11 In Africa, for example, one gigabyte of data costs nearly 18 percent of an average citizen’s monthly income.12 And while smartphone unit sales in emerging Asia-Pacific markets were second only to China in global volume for 2016,13 44 percent of the global population still does not have a mobile device in 2017.14

Perhaps less in the spotlight are issues around education and general cultural acceptance. Just under 14 percent of the world’s 15-and-older population is illiterate, with more than three-quarters of those people living in sub-Saharan Africa and South Asia.15 Two-thirds of the illiterate adults are women,16 and so it’s likely no coincidence that 12 percent more men around the world had internet access in 2016.17 Data supplied by The Alliance for Affordable Internet found women suffer from a “digital gender gap” that increases in rural areas and among older generations.18 The assertion was also made that less quantitative cultural factors – like gender wage gaps and uneven access to education – play a part in restricting access to the internet for women.19

Finally, there’s the issue of local adoption,20 which is rooted in language barriers between online content and the nearly 7,000 languages spoken around the world.21 The World Bank estimates that only 10 languages make up at least 80 percent of online content.22 English alone makes up over 20 percent, despite the fact that only 5 percent of the global population speak it as a first language.23 Without the ability to comprehend content, for many, no incentive exists to access the internet. Even in the U.S., 34 percent of those who do not use the internet cite a lack of relevancy to their daily life as the reason.24

The Takeaway

Though the global economy continues to benefit from the growth of digital import-export trade, four billion people lack internet access. Overcoming the access barrier through improved infrastructure, lower costs, better education, and increased relevancy through diversified content, has the potential to bring digital import-export trade to a whole new level of growth.

Zack Andersen - The Author

The Author

Zack Andresen

Zack Andresen is a business technology writer based in Brooklyn, NY, but currently traveling the world with his wife and son. Learn more at ZackWrites.com.

Sources

1. “The Fourth Industrial Revolution: what it means, how to respond,” World Economic Forum; https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
2. Digital globalization: The new era of global flows (full report), McKinsey & Company; http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/digital-globalization-the-new-era-of-global-flows
3. Paypal Cross-Border Consumer Research 2016, Paypal; https://www.paypalobjects.com/digitalassets/c/website/marketing/global/shared/global/media-resources/documents/passport-citation.pdf
4. “Key Barriers to Digital Trade,” Office of the United States Trade Representative; https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2017/march/key-barriers-digital-trade
5. “4 billion people still don’t have internet access. Here’s how to connect them,” World Economic Forum; https://www.weforum.org/agenda/2016/05/4-billion-people-still-don-t-have-internet-access-here-s-how-to-connect-them/
6. “E-commerce Highlights: United States, 2017,” Statista; https://www.statista.com/outlook/243/e-commerce#
7. Internet for All: A Framework for Accelerating Internet Access and Adoption, World Economic Forum, http://www3.weforum.org/docs/WEF_Internet_for_All_Framework_Accelerating_Internet_Access_Adoption_report_2016.pdf
8. Ibid.
9. Measuring the Information Society Report 2016, International Telecommunication Union; http://www.itu.int/en/ITU-D/Statistics/Documents/publications/misr2016/MISR2016-w4.pdf
10. “Regional aggregation using 2011 PPP and $1.9/day poverty line,” The World Bank; http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx
11. Internet for All: A Framework for Accelerating Internet Access and Adoption, World Economic Forum, http://www3.weforum.org/docs/WEF_Internet_for_All_Framework_Accelerating_Internet_Access_Adoption_report_2016.pdf
12. 2017 Affordability Report, Alliance for Affordable Internet; http://a4ai.org/affordability-report/report/2017/#executive_summary
13. “Emerging markets power smartphone sales,” GfK; http://www.gfk.com/insights/press-release/emerging-markets-power-smartphone-sales/
14. Digital in 2017: Global Overview; Hootsuite; https://www.slideshare.net/wearesocialsg/digital-in-2017-global-overview
15. The World Factbook: Field Listing: Literacy, Central Intelligence Agency; https://www.cia.gov/library/publications/the-world-factbook/fields/2103.html
16. Ibid.
17. “Digging into Data on the Gender Digital Divide,” Alliance for Affordable Internet; http://a4ai.org/digging-into-data-on-the-gender-digital-divide/
18. Ibid.
19. Ibid.
20. Internet for All: A Framework for Accelerating Internet Access and Adoption, World Economic Forum, http://www3.weforum.org/docs/WEF_Internet_for_All_Framework_Accelerating_Internet_Access_Adoption_report_2016.pdf
21. “How many languages are there in the world?” Linguistic Society of America; https://www.linguisticsociety.org/content/how-many-languages-are-there-world
22. “Internet Access, Yes, But in my Mother Language!” The World Bank; http://www.worldbank.org/en/news/feature/2014/07/03/internet-access-yes-but-in-my-mother-language
23. “Unlocking relevant Web content for the next 4 billion people,” GSMA & Mozilla; https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/02/Unlocking-relevant-Web-content-for-the-next-4-billion.pdf
24. “Who’s Not Online and Why,” Pew Research Center; http://www.pewinternet.org/2013/09/25/whos-not-online-and-why/

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