CIAO DATE: 07/02

Electronic Commerce in Developing Countries: Issues for Domestic Policy and WTO Negotiations

Abstract

Electronic commerce and its related activities over the internet can be the engines that improve domestic economic well-being through liberalization of domestic services, more rapid integration into globalization of production, and leap-frogging of available technology. Electronic commerce integrates the domestic and global markets from its very inception. Negotiating on trade issues related to electronic commerce will demand self-inspection of key domestic policies, particularly in telecommunications, financial services, and distribution and delivery.

Technical aspects of electronic commerce, its complexity and the characteristic of network externalities should change the way that developing countries approach the external negotiating process to depend more on cooperative effort through their regional forums (APEC, FTAA). Second, since electronic commerce is characterized by “network externalities,” developing countries should take advantage of the technical leadership coming out of the private sector in the most advanced countries (and their own private sector, even if nascent) and “draft” in behind.

E-commerce is not a service, nor a good, but something that is comprised of both. In the context of WTO commitments, embracing this idea could lead to a liberalizing bias in favor of electronic delivery of goods and services as compared to delivery by a scheduled mode. Rather than view this outcome with alarm, developing countries should encourage it as a positive force that furthers the development both of electronic commerce, as well as engenders deeper liberalization and deregulation throughout the economy.

Full text (PDF format, 16 pages, 138.5kb)