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Achieving global trade through ICT

United Nations Conference on Trade and Development (UNCTAD)

“E-commerce is one of the most visible examples of the way in which information and communication technologies (ICT) can contribute to economic growth. It helps countries improve trade efficiency and facilitates the integration of developing countries into the global economy.”

Kofi Annan, Secretary-General of the United Nations, in his Foreword to the UNCTAD E-commerce and Development Report 2002.

E-Commerce Around the World
The number of Internet users worldwide is in the region of 655 million compared to 500 million at the end of 2001, and a growing share of new Internet users are in developing countries.

There is little doubt about the role of ICT and e-commerce in driving the global economy and reshaping existing business structures. Business to Business (B2B) transactions comprise 95 per cent of all e-commerce. B2B development is slower in developing countries than it has been in the most advanced markets. The main impediment to the takeoff of B2B in the developing world is has almost as much to do with traditional, physical infrastructure (ports, railways, roads), logistics services and trade facilitation measures that are essential for supply chains to work as it does with ICT infrastructure. Foreign direct investment flows and the linkages between local producers and transnational corporations will be important determinants of the growth of B2B e-commerce in developing countries.

The Domain Name System
Domain names have evolved very rapidly into a common feature used to identify a website’s location while at the same time expressing the name, brand or other identifying features of the person, business or organisation using the domain name.

The development of a national domain name system infrastructure (as well as the reform of international monitoring organisations) is an important means of facilitating the online exchange of information in developing countries, thus creating a valuable resource for trade.

Gender, E-Commerce and Development
ICT and e-commerce are attractive to women entrepreneurs (who in many developing countries account for the majority of small and medium-size enterprise owners). Success stories in business-to-consumer retailing or e-retailing are heard from all developing-country regions, demonstrating how women have used the Internet to expand their customer base in foreign markets while at the same time being able to combine family responsibilities with lucrative work. But barriers still exist.

Policy-makers will have to play a key role in creating an environment favourable to the participation of women in the digital economy.

M-commerce is often defined as the buying and selling of goods and services using wireless handheld devices such as mobile telephones or personal data assistants. In the 4 years leading up to 2002 growth in the number of mobile telephone users has exceeded fixed line, expanding from 50 million users to almost one billion.

However, difficulties in making electronic payments and concerns over the security and privacy of transactions are limiting the conduct of m-commerce, which may have to await third-generation wireless technologies and fully Internet-enabled handsets.

The IT Industry
The information technology (IT) industry is one of the world’s largest industries and accounts for 22 per cent of developing countries’ exports.

IT investment from multinationals might make an important contribution to increasing e-commerce in developing countries, and governments can play a role in creating a nurturing environment for e-business.

If global trade is to be achieved it is essential for developing countries that the payment and settlement services for their SMEs, operated by banks in developed countries, be integrated into these global systems.

Some key challenges need to be addressed:

  • Adapting global technology to local requirements
  • Strengthening public support
  • Creating adequate regulatory and institutional frameworks
  • Mainstreaming SMEs towards e-finance.

E-insurance is the application of Internet and related technologies to the production and distribution of insurance services. Insurance is needed for successful trade and commerce; it improves the creditworthiness of trading partners and can reduce the risk of failure for start-ups and SMEs.

E-insurers face 3 serious challenges:

  1. to redefine relationships between insurers and their agents and brokers
  2. to bring existing pre-Internet computerised data systems back online
  3. to interface the business process of insurance to a fully functional website given the fact that most existing customers are unlikely to make frequent repeat visits to a site.

As an important financial sector, insurance requires prudential supervision and regulation.

ICTs have been particularly influential in the trade of services. The Internet has allowed companies to outsource activities and services to more cost-effective locations or access new clients in foreign markets.

Policy measures to support exporters of e-services should focus on increasing market access in e-services for exporters from developing countries, as well as addressing a number of domestic obstacles related to technology, payments, infrastructure (telecommunications) and standards.

Adapted from the UNCTAD E-commerce and Development Report 2002 (UNCTAD/SDTE/ECB/2) produced by the UNCTAD Electronic Commerce Branch

UNCTAD E-commerce Branch is headed by Zhongzhou Li, Officer-in-Charge, Division for Services Infrastructure for Development and Trade Efficiency, UNCTAD

For more information, please contact: ecommerce@unctad.org

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