Digital Economy

What is the digital economy?


According to the Organisation for Economic Co-operation (OECD), “the Digital Economy incorporates all economic activity reliant on, or significantly enhanced by the use of digital inputs, including digital technologies, digital infrastructure, digital services and data. It refers to all producers and consumers, including government, that are utilizing these digital inputs in their economic activities.” In essence, this broad definition captures all aspects of our new digitally supported world, from e-commerce to digitally developed and delivered services like web design. The United Nations Conference on Trade and Development (UNCTAD) works to measure e-commerce and the digital economy, with information available here.


What is the state of play of e-commerce discussions under the WTO?


Issues related to the digital economy are discussed at the WTO in various bodies, including under the Work Programme on E-Commerce, which was established in September 1998, and the Joint Statement Initiative on E-Commerce, which was launched at the 11th Ministerial Conference (MC11) in Buenos Aires in 2017. In addition, since 1998 WTO Members have agreed not to impose customs duties on electronic transmissions. For more information on such discussions, see the dedicated WTO page on e-commerce. Information on other WTO discussions related to the digital economy can be found on the WTO Digital Technologies & Trade page.


What trade opportunities does the digital economy hold for MSMEs?


The digital economy provides many important business tools and trade opportunities for businesses, especially MSMEs. Some of these include: 

  • Digital banking and e-payments: Electronic finance can provide individuals with easier, cheaper, and safer access to financial services. Additionally, e-payments have made it possible to conduct transactions online, making it easier to transfer money across accounts for a good bought or a service rendered. For more information see the guide on electronic cross-border payments and visit the International Chamber of Commerce website. 
  • Digital platforms: The new digital economy is based around platforms – search systems, marketplaces, application development software, and some others. These platforms have applications for all businesses, opening the doors to new industries and players, from micro firms to digitally connected businesses in every digitally connected economy of the world. For more information, see the 2021 Global Value Chain Development report.
  • Blockchain: Blockchain, or distributed ledger technology (DLT), is a decentralized digital network of records that can be simultaneously accessed by all permitted users and that are automatically updated and validated if an authorized change is made. Blockchain technology holds the potential to facilitate trade transactions and access to finance as well as to reduce costs. See the Guide on Blockchain for more information.
  • E-commerce: This covers goods and services sold and bought online, including transactions done through marketplaces. It reduces trade barriers and increases opportunities for businesses by expanding their sales. In order for businesses to access these benefits, it is important that national economies be e-commerce ready. For more information, see the Guide on e-commerce readiness. Visit UNCTAD’s Digital Economy Report.
  • E-documents/e-signatures: Electronic documents can speed a transaction. For example, electronic trade documents, such as for customs and trade transactions, reduce submission errors and the costs of paperwork and procedures. For more, visit Trade Finance Global.  


Risks and inequities of the digital economy 

The digital economy has many risks, especially for MSMEs, that need consideration and care. A value chain is only as secure as its weakest link and businesses of every size are targets for cybercrime, which is why it is essential for MSMEs to be prepared. Visit the Cyber Readiness Institute and see the guide on cyber readiness.

Another important note about the digital economy is its uneven access. Many are excluded from the digital economy either because of access to technology or lack of training and understanding of these new resources. For MSMEs in particular, lack of access to capital can prevent integration of new digital technologies.

Where can I access further resources?

  •  eTrade for all, initiated by UNCTAD, is a global partnership to make the digital economy and its opportunities more accessible. eTrade for all links to several resources, including publications on digitalization and e-commerce. It also has information on development solutions, including in seven key policy areas, with contact information for interested policymakers to learn more. 
  • The OECD published a report on The Digital Transformation of SMEs. This report looks at the need for SMEs to be prepared to adopt digital technology, the gaps that persist in technology adoption, and recent trends. The OECD Digital for SMEs Global Initiative provides links to reports, the programme of work for this initiative, and related events.
  • UNCTAD’s Digital Economy Reports cover themes ranging from software and cloud computing to value creation and cross-border data flows. These reports provide an in-depth look at the various aspects of the digital economy. UNCTAD also hosts many dialogues and conferences related to digitalization and SMEs. More information is available on their website.
  • WTO’s Regional Trade Agreements (RTAs) Database: Is a repository of the legal texts and annexes of all RTAs notified by WTO members, including preferential tariffs and trade data provided by RTA parties, and other related documents. The database also provides information on a number of provisions related to the digital economy, such as e-commerce. For more information on RTA provisions, visit the WTO’s Glossary on RTA provisions and the WTO RTA Database.

Businesses & Entrepreneurs

Find a concise overview of key aspects of international trade for micro, small, and medium-sized enterprises with our Businesses & Entrepreneurs Guides.

Policymakers & Researchers

Find a concise overview of key aspects of trade and MSME-related policymaking with our dedicated library of Policymakers & Researchers Guides.