Developing countries should take full advantage of the falling cost of gathering, processing and transmitting information and the wider availability of information technologies. In such strategies, which constitute the core of the concept of trade efficiency, the promotion of electronic commerce in developing countries should be given full consideration.
Electronic commerce shrinks economic distances between producers and consumers and could transform industry structures to the potential advantage of developing country suppliers. But for them to take advantage of this potential, they need access to modern telecommunications infrastructures and networks at low cost. Moreover, electronic commerce could provide a means of exporting labour-intensive services, but only if adequate access to technology is obtained.
Strategies to establish more efficient trade-supporting services and a greater involvement of private sector players represent a useful area for development assistance to support sustainable development efforts. They should also take full advantage of the falling cost of gathering, processing and transmitting information and the wider availability of information technologies. In these strategies, which constitute the core of the concept of trade efficiency, the promotion of electronic commerce in developing countries should be given full consideration.
It is estimated that by 2002 electronic commerce will exceed 10 per cent of total world trade. Many analyses and projections stress that developing countries and small and medium-sized enterprises could be among the main potential beneficiaries of the opportunities it will generate.
The benefits of electronic commerce could stay out of reach for many developing countries if obstacles and issues such as the following are not addressed: (1) access: the Internet often remains too expensive for smaller users in developing countries; (2) human resources: the sensitization of Governments and business to the importance of electronic commerce and the dissemination of relevant skills (technical and managerial) remain priorities; (3) content: the ability (specially for SMEs) to benefit from electronic commerce implies an acceleration in the production of local content and marketing on the World Wide Web; (4) appropriate legal and regulatory frameworks: issues like certification, authentication, protection of intellectual property, and encryption will need to be considered, with the involvement of developing countries in the relevant discussions and negotiations; (5) financial and fiscal dimensions: payment guarantee mechanisms and trade financing techniques will be radically affected by the expansion of electronic commerce; the impact of electronic payments on monetary creation should also be considered; the implications of various electronic commerce fiscal scenarios for developing countries are still unclear and need to be further explored; and (6) security and governance: the respective roles of Governments, international organizations and the private sector in defining some of the underpinnings of electronic commerce (Internet top-level domain names, trademarks, content control, for example) need to be further defined.
The ongoing international debates on a 'global framework for electronic commerce' are starting to include a development dimension. Unless such a dimension is properly taken into account, electronic commerce could still result in a broadening rather than a narrowing of the gap between the 'haves' and the 'have nots' of the emerging global information society.
With the appearance of new technologies and liberalization of foreign investment, productive activities can be segmented and spread around the world in different locations, and thus more countries have potential opportunities to participate in international production and trade. But these opportunities are not easily tapped by all countries. Countries with a broad range of technological capabilities are better positioned to host specialized activities in the various segments of goods and services production. Created technological assets, in conjunction with appropriate policy and regulatory environments, more than traditional factor endowments, determine comparative advantage in today's knowledge-based world economy.
The experience of countries that have been successful in this area often includes an effective mobilization of civil society to attain the objectives of a knowledge-based economy: Governments, enterprises and local communities have participated in different kinds of "national task forces". This is an experience that can be shared with other countries through exchanges and debates among various parts of civil society. International support will also be necessary. Priority should be given to direct exchanges of experience among institutions and enterprises involved in electronic commerce.
Through a radical shift among the relative prices of transferring factors of production across borders (information-intensive ones in particular), electronic commerce has started to affect in a profound and irreversible manner the nature and rationale of a significant portion of international trade flows.
Electronic commerce should not be seen as a substitute for easing restrictions on the supply of services through temporary movements of natural persons.