Globalization has entered a new phase, led by the increasing digitalization of international trade. Data flows are the conveyer belt of this transformation. New avenues for trade, innovation, and productivity growth are being created, but there are also risks. In my chapter in the just-published book “Growth in a Time of Change,” I examine the new opportunities and policy challenges.
Access and use of data can be a driver of trade, innovation, and productivity growth
Data are driving innovation, with opportunity for a new wave of productivity growth. Currently, approximately half of the world is online. Between 2005 and 2021, global internet traffic will increase 127fold. The rollout of the 5G network will support the ”internet of things” (IoT), such that by 2021, the number of devices connected to the internet will be triple the global population.
The ability to move data seamlessly and globally is supporting new business models, spurring research and development, facilitating international collaboration, and transforming international trade. Already, around 12 percent of global goods trade is via international e-commerce. E-commerce provides a potentially significant opportunity to increase small businesses’ participation in international trade, as having a website gives them an instant international presence, and e-commerce platforms provide embedded services such as financial payments and support with logistics. In Korea for instance, 100 percent of firms on eBay have cross-border sales, compared with 20 percent of offline firms.