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    National E-trade Strategies: Beyond Access


    © International Trade Centre, International Trade Forum - Issue 3/2003

    To increase exports and improve national competitiveness, developing countries need specific e-trade strategies that go beyond the issue of access.

    Companies trade, not countries. Unless national trade strategies can be expressed in company-level impacts such as new business startups; the number of companies online; e-transacted export sales; and total new jobs, then they are not worth developing. The question for senior government officials responsible for trade is, "Will the growth in computer networks change the way trade is conducted?" If the answer is yes, then e-trade matters.

    From access to application

    The e-readiness debate has focused on information content, connectivity and access on the one hand, and the application of "e" to the health, education, and business sectors on the other. Among these applications, very few studies have focused on applying "e" to the practice of international trade. What are the goals of e-trade and how do we know if we are achieving them?

    At ITC, we define e-trade as the appli-cation of information and communications technologies (ICT) to improve export competitiveness of companies. Firms can take advantage of these technologies to transform business processes so that they can compete more profitably, as well as to conduct trade electronically across national borders.

    Export assets, e-trade choices

    ICTs are transforming the way companies do business, but they are an engine of trade in their own right. The worldwide trade in ICT products and services by developing countries in the past decade has outperformed trade in general by a ratio of 2:1. At present, this trade is highly concentrated in only a few countries. Meanwhile, the bulk of developing countries' export earnings continue to come from commodity sectors, including agriculture, minerals, wood and fisheries.

    Clearly, developing countries have strategic choices to make. They can introduce the benefits of ICT to traditional export sectors or shift resources to "new economy" sectors, where ICT is either the product or is integral to the product/service value. These choices will determine the distinctive nature of e-trade in terms of export sales, employment and the alleviation of poverty.

    Measuring e-trade performance

    Assume for a moment that a functioning e-commerce legal framework and telecommunications infrastructure exists in your country. What would you expect from a dynamic, burgeoning e-trade economy? It would include:
    • growing trade in ICT hardware and software products and services;
    • growing trade in e-friendly or information-rich sectors (for example, media, publishing, finance and tourism);
    • growing trade in commodity products through business-to-business (B2B) e-marketplaces;
    • shift in country trading partners to those that are using ICTs well;
    • fewer imports of web services through the development of a competitive national Internet support industry;
    • more companies using e-transaction tools or having an e-transaction capacity; and
    • rising real incomes in those sectors where ICT is strategically deployed.
    To achieve this "ICT-enabled" trade vision, national trade strategy-makers need to set specific and measurable targets. Instead of saying, "we must increase B2B e-trade" the target should be expressed in quantifiable terms. For example, "we must increase e-trade in commodity products through B2B e-marketplaces by 20% to US$ 215 million by 2004". Moving from the broad vision to specific values allows strategy-makers to determine the resources needed to achieve the goal.

    Scenarios for e-trade development

    The origin of the word strategy comes from the Greek strategia or "generalship". As in battle, there is no one plan that will marshal resources to deliver victory. The same can be said for strategies to deliver e-trade success. In China, for example, the primary flavour of e-trade is digitization with a heavy secondary emphasis on technology, business incubation and rural development. In Costa Rica, the decision by Intel to invest there allowed the country to develop an internationally-competitive software and ICT services industry.

    Each country must examine its own e-tradeable assets in relation to world trade trends and the offers of competitor countries. There are as many different faces to e-trade as there are countries. Depending on the priorities of the country, the e-trade strategy-maker may need to consider policies that concern poverty reduction, domestic e-commerce, the knowledge society, small and medium-sized enterprise (SME) development or agricultural reform. Countries should align e-trade strategies with other policy initiatives between relevant ministries.

    Because there are so few e-trade strategy models as opposed to general, e-readiness strategy models, ITC developed a two-day "E-trade Bridge" training programme to help national trade strategy-makers consider alternative scenarios and strategies for e-trade development. The aim is to bring together key public and private sector strategy-makers from the ICT and trade communities to define a vision for e-trade and establish how success will be measured. This training programme was piloted in Viet Nam (Hanoi and Ho Chi Minh City) with the support and cooperation of the Ministry of Trade and Vietrade. It will be launched in another six countries within the next two years. The complete E-trade Bridge programme is underway in 27 countries.

    ITC's approach to developing national e-trade strategies features the experience of practitioners. We are currently exploring partnerships with private and public sector partners who can help devel-oping countries bridge the gap between e-trade vision and e-trade practice.

    WSIS Action Plan

    Developing countries still hold out hope that information and communications tech-nology will deliver tangible improvements in their standard of living. It is important, therefore, that national e-trade strategies contribute to economic performance and social justice. They are an integral part of the World Summit on the Information Society (WSIS) Action Plan to develop national e-strategies.

    By specifically addressing the impact of e-trade on national development, ITC's programmes complement those of other international organizations. Notable among these are the Digital Opportunity Initiative of the UN's ICT Task Force (led by the United Nations Development Programme) and the World Bank's Poverty Reduction Strategy Paper Process and its Information for Development Programme (infoDev).

    ITC will redesign its e-related programmes to incorporate the recommendations from the WSIS Action Plan formulated in Geneva in 2003. At the WSIS 2005 event in Tunis, ITC will report on implementation of its e-trade strategy training and e-trade development programmes.

    Questions for the e-trade strategy-maker

    • Is your country losing market share in key export sectors as a result of trade diversion to countries better able to use ICTs?
    • How much estimated revenue is lost annually to foreign web hosting and web design companies due to the absence of domestic competition or ICT skills?

    • Is e-trade an integral part of your national export strategy?
    • Do you have a strategy for applying ICT benefits to traditional export sectors?
    • Do you have a strategy to diversify production into niche ICT product or service markets (for example, basic software code, data processing, data storage and geographic information systems)?
    • What is the total value of trade from your ICT product and service sectors?
    • How many SMEs use ICT to improve their trade performance?
    • How many SMEs have a web presence through their own web site or a national or sectoral trade portal?
    • Are the dimensions of e-trade integrated into your annual export survey of businesses?
    • What is the total volume of sales transacted electronically with foreign partners?
    • What percentage of e-trade is conducted through sector-specific or other e-trade marketplaces?
    • How many companies have access to online payment facilities either directly or through third party suppliers of e-payment systems?

    For more information on the issues raised in this article or on ITC's National E-trade Strategy Training Programme, contact John Gillies (gillies@intracen.org), ITC Senior Trade Training Officer.

    For more information about the E-trade Bridge, contact etradebridge@intracen.org