Magazine article International Trade Forum

The Digital Disruption of International Trade Has Already Begun: Estonia's E-Residency Enables Allows E-Commerce Businesses in Developing Countries to Set Up Virtual Shops in the European Union

Magazine article International Trade Forum

The Digital Disruption of International Trade Has Already Begun: Estonia's E-Residency Enables Allows E-Commerce Businesses in Developing Countries to Set Up Virtual Shops in the European Union

Article excerpt

Digital disruption is one of the hottest topics in the business community at the moment. From the boardrooms of the world's largest companies to small co-working hubs filled with small businesses and startups, there's a growing sense that the internet is changing the world so quickly they must quickly understand how they can take advantage or risk losing their business.

Today no business is unaffected by digital disruption. I recently called a plumber to fix a leaking tap in my kitchen and he told me the biggest challenge he now faced running his company is search-engine optimization. Though his customers may be local, they immediately go online to find a plumber and he has never been trained in how to get his service to appear near the top of search engine results. I only found him because the companies listed before his, which were considerably larger, were unavailable.

Jack Ma, founder of online retailer Alibaba, predicts that a staggering 90% of all business will be online in the next 30 years. That means there are enormous new opportunities emerging, although this digital disruption is creating losers as well as winners.

LOWERING BARRIERS

E-commerce has opened new opportunities for micro, small and medium enterprises (MSMEs) to conduct business globally by lowering traditional barriers to trade, enabling them to compete in the global market.

However, a significant proportion of the world's population is presently unable to benefit from e-commerce--often simply because of where they live. The greatest challenges are currently faced by people in developing countries, women and other marginalized groups. Many of them are already financially excluded because services like banking are unavailable or unaffordable to them. The advance of digital technology can sometimes exacerbate this problem, as well as exclude people who don't have the skills to succeed in the digital era.

A recent International Trade Centre (ITC) survey showed the key obstacles to cross-border trade facing MSMEs are establishing an online business; international e-payment; access to payment service providers; and a robust services sector that supports the growth of e-commerce.

These challenges of digitization in trade are most noticeable in parts of the world where the benefits are most needed. Developing and least developing countries typically have a nascent digital and legal infrastructure and lack the services to support MSMEs that wish to engage in trade. Financial and administrative barriers to establishing and managing a business may be too high, their business may not be trusted online or they may have difficulty accessing necessary tools such as international payment providers.

ESTONIA CODES

Estonia is far ahead of the curve. Children are taught to code from primary school and everyone receives a digital ID card so they can access almost all government services entirely online. This is also why Estonia is one of the best places in the world to start a company: because costs and hassle are low, yet the opportunities to access services and trade online globally are high.

As a result, Estonia is home to a disproportionate number of successful companies despite its small population and few natural resources. Business stalwarts such as communications provider Skype, funds processor TransferWise, software maker Pipedrive and transport firm Taxify all started here. …

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