Advance digital services trade, Asia-Pacific economies told

Among the inputs affecting competitiveness, traditional factors of production, digital infrastructure, and the policy environment are the most important.

The prospects for developing economies in Asia and the Pacific to participate in digital services trade are promising, requiring them to evaluate their competitiveness and formulate strategies to create opportunities in the digital economy.

A book titled “Unlocking the Potential of Digital Services Trade in Asia and the Pacific,” published by the Asian Development Bank, said growth in digital services trade in Asia and the Pacific had outpaced other regions for more than a decade.

“Opportunities are likely to intensify in the postpandemic period as consumers and producers continue to embrace online purchasing, digital transactions, and remote delivery of services,” it said.

In a book chapter, authors Jong Woo Kang, Rolando Avendano, Pramila Crivelli, Dominique Hannah Sy and Won Hee Cho said one benchmark to assess a country’s competitiveness in digital services is their export performance given that competitiveness reflected in high

productivity could translate into more significant outputs and further into better export performance.

Kang is a principal economist, while Avendano and Crivelli are economists at the ADB’s Regional Cooperation and Integration Division, Economic Research and Cooperation Department.

Sy is a co-founder of a social enterprise based in the Philippines and a former economic analyst (consultant) on financial integration. At the same time, Cho is a former senior economics research associate (consultant) in the same department of ADB.

Based on an earlier paper, they identified factor endowments such as human and physical capital and country institutions and policies in explaining trade flows based on comparative advantage.

“Among the inputs affecting competitiveness, traditional factors of production, digital infrastructure and the policy environment are the most important,” it said.

They added that the assessment of competitiveness in digital services must examine the factors of human capital, digital connectivity, investment in information and communication technology, and the policy and regulatory environment.

As the ecosystem for digital services trade requires a conducive overall business and regulatory environment, they said stakeholders typically highlight the importance of transparency in regulations, the ease of data transfers, an open trade and investment regime and supporting incentives for innovation.

“Many countries are also making efforts to build trust in supporting data flows. Creating trust should come with regulatory cooperation between countries and developing trade agreements or other arrangements that bolster privacy and consumer protection,” they added.