Digital Trade - Research Proposal Assignment Solution

Introduction and Background 

Over the recent years, digital technologies have received enormous growth based on development of artificial intelligence, internet of things, additive manufacturing and Blockchain. The digital era has brought changes in consumerism by offering the consumers access to online markets through internet based and digitally enabled devices (Savage & Bruce, 2015). The cost of cross border transactions and communication has substantially declined due to digitalization, which has led to emergence of polymorphic aspect of digital trade.  It has been highlighted by López González (2017) that each aspect of trade has undergone change as results of digitalization, such that product delivery is made more efficient, physical production as well as value chains are catalyzed and a significant connection is established between consumers and products at international level. All of these changes are huge and complex in their nature and thus it is becoming challenging for economists as well as for trade organizations to devise mechanism through which digital challenges can be catered well (Timmer et al., 2014). The following research proposal has thus chosen to investigate the ways through which World Trade Organization (WTO) responds to these digital challenges. The proposal has first explained the changes brought by digitalization in global trade, which is being followed by discussion of challenges of digitally enabled trade and response of WTO. Followed by this, the discussion has moved to significance of research and methods which will be implied to collect and analyze data on this specific research issue. 

Digitalization and world trade

In the era of digitization, many disruptive technologies have emerged, such as cloud computing, big data, internet of things and virtual currencies among others, which have brought intense development in global trade. It has been highlighted by Timmer et al. (2014) that changes are expected in ways of trading at international level, on the goods and services which are being traded and on the actors who are engaged in trade. The world trade organization (WTO) has presented in its recent report that distance is decreasing substantially, either it is related to space, time, linguistic or regulations (World Trade Organization Report, 2018).  Consumers are at relative ease of finding matching products with their interests and major changes are witnessed at business side of transactions (UNCTAD, 2017). For instance, use of artificially enabled devices has substantially declined the cost of transportation, cost of storage of goods and cost of delivering the goods to final consumers. The reduction in overall cost of trade is considered to enhance existing as well as potential flow of trade at global level. 

In addition to this, the changes are witnessed in the sources of comparative advantage, which have undergone substantial change based on digital advancements and are expected to change even further (Van Ark, 2015). For instance, 3D and artificial intelligence technologies can substantially subordinate the part of labor as basis of comparative advantage (Timmer et al., 2014). Likewise, the role of physical infrastructure and geographical factors can also be declined as results of digitalization and thus economies who are disadvantages in terms of these resources might gain substantial benefit (Passaris, 2015). On the other hand, new factors of comparative advantage might emerge in digitalized markets, such as energy infrastructure, market size, credible institutions for regulation of privacy rights and intellectual property rights (World Trade Organization Report, 2018). Therefore, it can be maintained that in digital age, fast network access and ability to manage high quality digital data are becoming core sources of comparative advantage.  With emergence of many opportunities, substantial challenges are likely to emerge as well which required WTO to play its role for management of those digital challenges.