Understandingtheeconomicimpactofdigitalisationon

digitaltrade

EvidencefromAPECeconomies

APECDigitalEconomySteeringGroup

December2024

UnderstandingtheEconomicImpactofDigitalisationonDigitalTrade

EvidencefromAPECEconomies

APECDigitalEconomySteeringGroup

December2024

APECProject:DESG012024S

Producedby:

AAAccessPartnershipPteLtd

AsiaSquare,Tower2#11-21

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Singapore018961Contributors:

MarcusNg,DirectorandPracticeLead

WanLingKoh,SeniorManagerDarylTeo,Consultant

JunLeKoay,AnalystWithsupportof:

DepartmentofForeignAffairsandTrade,

RGCaseyBuilding,JohnMcEwenCrescent,BartonACT0221Australia.

Website:

.au/

For:

Asia-PacificEconomicCooperationSecretariat

35HengMuiKengTerraceSingapore119616

Tel:(65)68919600

Fax:(65)68919690

Email:info@Website:

?2024APECSecretariatAPEC#224-CT-01.21

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partnership

Contents

ExecutiveSummary· ·6

1.DigitaltradeanddigitalintensitytrendsinAPEC· ·12

1.1.DigitaltradedevelopmentsinAPEC· ·12

1.2.DigitalisationofeconomiesinAPEC· ·17

2.Understandingimpactofdigitalisationondigitaltrade· ·29

2.1.Thelinkbetweendigitalisationanddigitaltrade· ·29

2.2.ImpactofdigitalisationondigitaltradeflowsinAPECeconomies· ·33

3.Unlockingdigitaltradethroughdigitalisation· ·40

4.Appendix· ·49

4.1.Methodologyanddatasourcestoapproximatedigitaltrade· ·49

4.2.Methodologyanddatasourcestoapproximatedigitalisation· ·51

4.3.Structuralgravitymodel:Specificationandresults· ·55

Glossaryofterms

ASEAN

AssociationofSoutheastAsianNations.

Digitalintensity

Theshareofinputsfromdigitalsectorsacrossallintermediateandcapitalinputs.Itisusedinthisstudyasanapproximationfor

digitalisationintheproductionprocess,thereforeitisusedinterchangeablywithdigitalisation.

Digitaltrade

Alltradethatisdigitallyorderedand/ordigitallydelivered.ItsmeasurementisdefinedinSection1.1ofthestudy.

Digitallyorderedtrade

Goodsandservicesthatarepurchasedbutnotnecessarilydeliveredthroughdigitalmeans.

Digitallydeliveredtrade

Usedinterchangeablywithdigitallydeliverableservices–Servicesthatcanbedelivereddigitally(e.g.,financialoradministrative

services)butnotnecessarilyorderedviadigitalplatformsorchannels.

E-commerce

Salesorpurchaseofgoodsorservices,conductedovercomputernetworksbymethodsspecificallydesignedforthepurposeof

receivingorplacingoforders.

FTA

FreeTradeAgreement.

GDP

GrossDomesticProduct–themonetaryormarketvalueofallfinalgoodsandservicesproducedandsoldwithinthebordersofagiveneconomyinagivenperiodoftime.

GVA

Grossvalueadded.Thisisthevaluegeneratedbyproducinggoodsandservicesandismeasuredasthevalueofoutputminusthe

valueofintermediateconsumption.Itisameasureofeconomiccontribution.

IMF

InternationalMonetaryFund.

Inputs

Resourcesusedtocreategoodsandservices(e.g.,rawmaterials,financialcapital,humancapital,etc.).

OECD

OrganisationforEconomicCo-operationandDevelopment.

WTO

WorldTradeOrganization.

UNCTAD

UnitedNationsConferenceonTradeandDevelopment.

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ExecutiveSummary

Digitalisationhassignificantlychangedhowinternationaltradeisconducted,bothviatheuseofdigitalplatformstofacilitatetheexchangeofnon-digitalgoodsandservices,aswellasthroughtheincreaseindigitallydeliverableexports,includingfinancialandprofessionalservices,andmobileappsandcontent.

TheimpactofdigitalisationoftradeisofparticularsignificancetoAPECeconomieswhichalreadybenefitsubstantiallyfromcross-bordertrade.Asabloc,intra-APECtradeinmerchandiseandcommercialservicestradegrewalmostfivefoldbetween1994and2019.1In2022,intra-APECtradevolumesreachedUSD30trillionoralmosthalf(47%)ofglobaltrade.AnearlierstudycommissionedbyAPECfoundthatin2018,APECintra-regionaldigitaltradecontributedUSD2.1trilliontoeconomiesintheAPECregion,approximately4.1%ofregionalGDP.

Governmentsrecognisetheenormousopportunitypresentedbydigitaltradeandhavetakenstepstocreateaglobalrules-basedsystemtoharnesstheopportunity.Pastresearchdiscussedtheoverallbenefitsofdigitaltradeparticipationtoaneconomy,andtheimportanceofdigitaltraderulesindrivingdigitaltradegrowth.2However,increasingparticipationinthedigitaltradeecosystemalsodependsonthereadinessofthedomesticbusinessenvironment,includingbusinessesandconsumers.Thereisalreadygrowingrecognitionofthis,asdigitaleconomyagreements(e.g.,DigitalEconomyPartnershipAgreement(DEPA)areincreasinglygoingbeyonddigitaltraderuleswhichsupport“at-the-border”tradeliberalisation,tolookathoweconomiescanworktogethertostrengthen“behind-the-border”capabilities(e.g.,strengtheningdigitalinfrastructureorskills)tosupportdigitaltrade).

Pastresearchhasgenerallyacknowledgedthatincreaseddigitalisationisbeneficialfordigitaltradeparticipation,giventhelinkbetweenoveralldigitaladoptionandtheincreaseduseofdigitaltradetoolsaswellastheabilitytoproducedigitalgoodsandservices.3However,theempiricalevidenceonthestrengthofthisrelationshipremainslimited,largelyduetothelackofsufficientlygranulardataondigitaltradeflows.Furthermore,pastmeasuresofdigitalisationhavereliedonindicatorssuchasInternetuseorbroadbandcoverage.Suchdatahasnotbeenconsistentlyavailableacrosseconomiesandsectors,andwhereavailable,mightnotbedirectlycomparableduetodifferencesincollectionmethods.

ThisstudyaimstoaddressthisgapintheexistingbodyofliteraturebyusinganovelmethodologytoestimatedigitalisationlevelsamongAPECeconomies.Thiswillallowforacloserstudyontheextentofdigitalisationacrosseconomiesandsectorsaswellassupportamorein-depthexaminationoftherelationshipbetweendigitalisationanddigitaltrade.Itreliesonthefollowingmeasuresfordigitalisationanddigitaltrade:

1APECPolicySupportUnit(2020),ResearchOutcomes:SummaryofResearchProjectsandCOVID-19PolicyBriefs2020.Availableat:

/docs/default-source/Publications/2021/7/Research-Outcomes-Summary-of-Research-Projects-and-COVID-19-Policy-Briefs-2

020/221_PSU_Research-Outcomes-2020.pdf

2APECCommitteeonTradeandInvestment(CTI)(2023),EconomicImpactofAdoptingDigitalTradeRules:EvidencefromAPECMemberEconomies.Availableat:

/publications/2023/04/economic-impact-of-adopting-digital-trade-rules-evidence-from-apec-member-economies

3SeeFreundandWeinhold(2004);Choi(2010);Lin(2015);López-GonzálezandFerencz(2018);HermanandOliver(2022);Benz,JaaxandYotov(2022);López-González,SorescuandKaynak(2023).

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(a)Digitalisation

Thestudyreliesondigitalintensityasanapproximationfordigitalisation.Thiscanbeexpressedastheshareofinputsfromdigitalsectorsacrossallintermediateandcapitalinputs.ExistingstudiestypicallymeasuredigitalisationthroughdigitalconnectivityindicatorssuchastheextentofInternetaccessorusage.Thisisunabletoprovideadirectindicationoftheextenttowhichthebusinessleveragesdigitaltoolstoimproveortransformtheprocessofproducinggoodsandservices.Digitalintensitycapturesamorefocusedperspectiveofhowdigitalisationenterstheproductionprocessthroughoneoftwoseparateinputcomponentsusedinproduction:(i)rawmaterials(intermediateinputs);and(ii)machineryandequipment(capitalinputs).Thisprovidesamoreconsistentmeasureofdigitalisationacrosssectorsaswellaseconomiesandenablesanalysistobeconductedatthesector-levelcomparedtoconnectivityindicatorswhicharetypicallyavailableonlyattheeconomy-level.

Itisimportanttoacknowledgethatthisapproachhasminorconceptuallimitations,whichhavebeennotedfortransparencyandtoguidefutureresearch.Sectorscurrentlyclassifiedasproducing‘digital’productsalsoproducenon-digitalintermediateinputs,albeitinsmallerproportions.Additionally,thismethodologydoesnotaccountfordifferencesinthequalityofdigitalproductsemployedasintermediateinputs,nordoesitcapturethelabourcontributionforthein-housedevelopmentofdigitalassets.

(b)DigitalTrade

ThisstudyreliesonthedefinitionestablishedintheOECD-WTO-IMFHandbookonMeasuringDigitalTrade(SecondEdition)andleveragesthesameapproachfromapreviousAPECstudy(alsodevelopedbyAccessPartnership)toprovideanestimateofdigitaltrade.4Broadly,themethodologyrecognisesthattherearetwokeycomponentsthatformdigitaltrade.

Component1coversgoodsandserviceswhicharedigitallyorderedbutnotnecessarilydeliveredthroughdigitalmeans.Examplesofsuchtransactionsarepurchasingawalletthroughane-commerceplatform,orbookingahotelstayabroadviaanonlineportal.Italsocoversdigitalcontentsuchasmusic,gamesormobileapplicationsorderedviadigitalplatformintermediaries.Component2coversservicesthataredigitallydeliverablebutnotnecessarilydigitallyordered.Thisincludesservicessuchasfinancialservicesandtelecommunicationsservices.

Byexaminingtheimpactofdigitalisationondigitalexportsforaneconomy,theresearchaimstosupportpolicymakersinadoptingevidence-basedapproachestostrengthendigitaltradeparticipation.Itseekstoprovideinsightsintothefollowingareas:

(a)Howdoesdigitalintensitydifferacrosseconomies?(b)Howdoesdigitalintensitydifferacrosssectors?

(c)Whatistheimpactofdigitalisationondigitaltrade?

4APECCommitteeonTradeandInvestment(CTI)(2023),EconomicImpactofAdoptingDigitalTradeRules:EvidencefromAPECMemberEconomies.Availableat:

/publications/2023/04/economic-impact-of-adopting-digital-trade-rules-evidence-from-apec-member-economies

7

A.Differencesindigitalintensityacrosseconomies

High-incomeeconomieswithadvantagesindigitalinfrastructure,humancapitalaswellasmoreresourcestoformulaterobustdigitalpolicyhavehigherdigitalintensity.Pastresearchsuggeststhesefactorsasdeterminantsoftheextentofdigitalisationinaneconomyandthathigh-incomeeconomiesgenerallyexhibithigherlevelsofdigitalinfrastructureandhumancapitaldevelopmentaswellashavemoreresourcestoputinplacerobustdigitalpoliciesandgovernanceframeworks.In2020,theaveragedigitalintensityforhigh-incomeeconomiesstoodat8.5%,whiletheaveragefornon-high-incomeeconomiesstoodat5.7%.TheaveragedigitalintensityacrossAPECeconomiesis7.2%.

However,non-high-incomeeconomiesareprogressingquickly.Non-high-incomeeconomiesoutpacedhigh-incomeeconomiesinprogressfordigitalisationbetween2000and2020.Between2000and2020,non-high-incomeAPECeconomiesoutpacedhigh-incomeeconomiesindigitalisationprogress,withaveragedigitalintensityincreasingby46%comparedto41%inhigh-incomeeconomies.Overall,APECeconomiessawa43%riseindigitalintensity,from5.1%in2000to7.2%in2020.Thisrapidprogresscanbeattributedtofactorssuchastheleapfroggingeffect,whereemergingeconomiesadoptnewertechnologieswithouttheburdenoflegacysystems,decreasingcostsofdigitaltechnologies,andproactivegovernmentalpoliciespromotingdigitalinfrastructureandskillstraining.

B.Differencesindigitalintensityacrosssectors

Servicessectorshavehigherdigitalintensitythannon-servicessectorsanddigitalisedatafasterpacebetween2000and2020.In2020,servicessectorsacrossAPECeconomiesexhibitedhigherlevelsofdigitalintensitycomparedtonon-servicessectorslikemanufacturing.Thehigherlevelofdigitalintensityinservicesisprimarilydrivenbythehighlevelsofdigitalisationintheinformationandtelecommunications(ICT)(29.3%)andthefinancialservices(21.0%)sectors.Thepaceofdigitalisationwasalsofasterincommercialservicessectors,withthedigitalintensityofthesesectorsincreasingby59.6%between2000and2020,comparedtoa44.0%increasefornon-commercialservicessectorsanda12.5%increasefornon-servicessectors.

ThereissignificantscopeforAPECeconomiestostrengthendigitalintensityinkeyeconomicsectors.SixAPECeconomies–BruneiDarussalam;Chile;Indonesia;Peru;thePhilippines;andRussia–hadalowerdigitalintensitythantheAPECaveragefortheirthreelargestsectorsmeasuredbygrossvalueadded(GVA)totheeconomy.WhilemanufacturingisoneofthemostimportantsectorsforAPECeconomiesandofthetopthreecontributorstoGVAforthemajorityofAPECeconomies,themanufacturingsectorlagscommercialservicessectorsindigitalintensity.In2020,commercialservicessectorsrecordedanaverageof9.9%indigitalintensitycomparedto6.8%forthemanufacturingsector.Inparticular,forthe12APECeconomiesforwhichmanufacturingisthetopGVAcontributor,fiverecordeddigitalintensitylevelswhichwerebelowtheAPECaverage.

C.Impactofdigitalisationondigitaltrade

Overall,higherdigitalintensitycorrelateswithhighertradevolumesofdigitallydeliverableservicesasdigitalisationimpactsthedemandandsupplyfunctionsfordigitaltrade.Theanalysisfoundthatdigitallydeliverableservicesexportsincreasedby2.5%(p<.011)forAPECeconomiesforeverypercentagepointincreaseindigitalintensity.Fromthedemand-sidechannel,digitalisationcreatesmorepossibilitiesforthecreationofdigitallydeliverableservicesandcontent,increasesusageofdigitalorderingplatformsthatextendsmarketreachtonewconsumers,andenhancesproductandservicequalityforproductdifferentiation.Fromthesupply-sidechannel,digitalisationstreamlinesbusinessprocessestoreduceproductioncosts,reducesentrybarrierstoincreasenumberofnewparticipatingfirms,andreducescostofreplicationtoscaleproductsandservices.

Theimpactofincreasingdigitalintensityondigitallydeliverableservicestradedoesnotvaryacrosseconomiesofdifferentlevelsofdevelopment.Theanalysisfoundnostatisticallysignificantdifferencebetweenhigh-incomeandnon-high-incomeeconomiesintermsofhowdigitalintensityimpacteddigitaltradeflows,suggestingthatbothhigh-incomeandnon-high-incomeeconomiescanbenefitsimilarlyfromincreasingdigitalisation.Priorresearch(e.g.,Dietal.,2022)foundthatdigital

8

infrastructure,humancapital,andcapacitytoinnovatewereimportantdriversoftradethatwerealsocorrelatedwithaneconomy’slevelofdevelopment.Thatincomelevelswerenotfoundtohaveanobservableeffectontherelationshipbetweendigitalintensityanddigitaltradeintheanalysissuggeststhatthelevelofincomedoesnotinherentlyconstrainaneconomy’scapacitytobenefitfromdigitalisation.Instead,investmentstodrivedigitalisationwillbenefiteconomiesofdifferentlevelsofdevelopment.

Theimpactofdigitalisationondigitaltradevariesdependingonthesector,withtheICTsectorexperiencingthemostpronouncedeffects,followedbythefinancialservicesandprofessionalservicessectors.Theanalysisfoundthatapercentagepointincreaseindigitalintensitycorrelateswith2.3%higherexportsofICTservicesand1.7%higherexportsoffinancialservicesandprofessionalservicesrespectively.Thedifferenceinimpactmaystemfromfundamentaldifferencesinthedriversofdemandfortheircoreservices.WhilethecostsavingsandinnovationthatdigitalisationdeliverscaninduceadditionaldemandforICTservicesduetogreaterprice-elasticity,itislikelytohaveamoremodesteffectondemandforfinancialservicesandprofessionalservices,wherethecorevaluepropositionmaybedrivenbyotherelementssuchashumanexpertise,personalisedadvice,andtrust-basedrelationships.

CriticalareasofcollaborationamongstAPECeconomies

Throughtheinsightsabove,fourkeyinsightsfromthestudythattranslateintopotentialactionitemsforAPECpolicymakershavebeenidentified.Theseactionitemsincludeareasfor(A)regionalcollaborationacrossAPECeconomies;and(B)developmentofeconomy-levelandsector-levelpolicywithinAPECeconomies.

Keyfindings

A.Actionitemsforregional

collaborationacrossAPECeconomies

B.Actionitemsfor

economy-levelandsector-levelpolicy

withinAPECeconomies

1.Increaseddigitalisationdrivesincreased

participationindigitallydeliverabletrade

APECpolicymakerscouldfocusdigitaltradeagreementsand

regionalcollaborationeffortsondomesticdigitalisation(“i.e.,behindtheborder”)initiatives

Domesticstrategies

orframeworkstodrive

digitalisationcouldsupportdigitaltradegrowth

2.Increaseddigitalisationhasnosignificant

impactonthevolumeofdigitallyorderedexports

Strengtheningregional

collaborationone-commercecouldsupportthegrowthofdigitallyorderedexports

Supportforsmalland

mediumenterprises(SMEs)toparticipateindigitaltradecoulddriveinclusivegainsfromthedigitaleconomy

3.Economieswith

developeddigital

infrastructure,robust

digitalpolicyandstronghumancapitalhave

higherdigitalisationlevels

Capacitybuildingeffortsto

drivedigitalisationcouldfocusondigitalinfrastructureandhumancapital

Non-high-incomeeconomiescanreapsignificantbenefits

throughpoliciesto

strengtheninvestmentindigitalinfrastructureandhumancapital

4.APECeconomiesare

notcapturingthefull

potentialofdigitalisationinprioritysectors

Regionalcollaborationto

supportdigitalisationinkey

sectorssuchasmanufacturingcouldbenefitdigitaltrade

growthinAPEC

Thedevelopmentoftargetedsectoralroadmapscould

bridgedigitalisationgapsinprioritysectors

9

1.DigitaltradeanddigitalintensitytrendsinAPEC

ThissectionprovidesanoverviewoftherecentdevelopmentsindigitaltradeandcurrentstateofdigitalisationacrossAPECeconomies.

1.1.DigitaltradedevelopmentsinAPEC

TheadoptionofdigitaltechnologiesbybusinessesandgovernmentsinAPEChavetransformedthewaythatgoodsandservicesarebeingcreatedandtraded.Digitaltechnologieshaveenabledtheproliferationofe-commerceplatformsthatlinksmall-scaleretailersdirectlytoconsumersinothermarketsaswellassupportedthecross-borderprocurementandprovisionofvariousservicessuchasthoseinthefinancial,professional,educationandhealthcaresectors,whichcanbedelivereddigitally.

TheimpactofdigitalisationontradeisofparticularsignificancetoAPECeconomieswhichalreadybenefitsubstantiallyfromcross-bordertrade.Asabloc,intra-APECtradeinmerchandiseandcommercialservicestradegrewalmostfivefoldbetween1994and2019.5In2022,intra-APECtradevolumesreachedUSD30trillionoralmosthalf(47%)ofglobaltrade.APECpolicymakersrecognisethepotentialbenefitsoftradedigitalisationandtheroleofdigitaltradeinsupportingthedevelopmentofAPECeconomies.AnearlierstudycommissionedbyAPECfoundthatin2018,APECintra-regionaldigitaltradecontributedUSD2.1trilliontoeconomiesintheAPECregion,approximately4.1%ofregionalGDP.6

ThefacilitationofdigitaltradeisalreadyanintegralpartofAPEC’sfutureworkplanswithAPECLeaderspledging,in2017,to“worktogethertorealisethepotentialoftheInternetanddigitaleconomy”andwelcomingtheadoptionoftheAPECInternetandDigitalEconomyRoadmap(AIDER).7TheAIDERidentifies11keyfocusareas(KFA)andwithKFA11focusingonthefacilitationofe-commerceandadvancingcooperationondigitaltrade.ThefindingsfromthisstudywillfurthersupportAPECeconomiesindevelopingevidence-basedapproachestofacilitatethegrowthofdigitaltradeinasustainableandinclusivemanner.

1.1.1DigitaltradedevelopmentsinAPEC

TheOECD-WTO-IMFHandbookonMeasuringDigitalTrade(SecondEdition)releasedin2023definesdigitaltradeasalltradethatisdigitallyorderedand/ordigitallydelivered.8TheHandbookseekstoaddressatleastinpartthechallengesinestimatingdigitaltradevolumestodateduetothelackofgloballyaligneddefinitionsandapproaches.ThisstudyreliesonthedefinitionestablishedintheHandbookandleveragesthesameapproachfromapreviousAPECstudy(alsodevelopedbyAccessPartnership)toprovideanestimateofdigitaltrade,againstthebackdropofexistingdataconstraints.9Broadly,themethodologyrecognisesthattherearetwokeycomponentsthatformdigitaltrade:

5APECPolicySupportUnit(2020),ResearchOutcomes:SummaryofResearchProjectsandCOVID-19PolicyBriefs2020.Availableat:

/docs/default-source/Publications/2021/7/Research-Outcomes-Summary-of-Research-Projects-and-COVID-19-Policy-Briefs-2

020/221_PSU_Research-Outcomes-2020.pdf

6Asia-PacificEconomicCooperation(2023),EconomicImpactofAdoptingDigitalTradeRules:EvidencefromAPECMemberEconomies.Availableat:

/docs/default-source/publications/2023/3/economic-impact-of-adopting-digital-trade-rules-evidence-from-apec-member-econo

mies/223_cti_economic-impact-of-adopting-digital-trade-rules.pdf?sfvrsn=e1021415_2

7Asia-PacificEconomicCooperation(n.d.),“DigitalEconomySteeringGroup”.Availableat:

/groups/committee-on-trade-and-investment/digital-economy-steering-group

8OECD,WTOandIMF(2023),HandbookonMeasuringDigitalTrade,SecondEdition.Availableat:

/trade/handbook-on-measuring-digital-trade-second-edition

_ac99e6d3-en

9APECCommitteeonTradeandInvestment(CTI)(2023),EconomicImpactofAdoptingDigitalTradeRules:EvidencefromAPECMemberEconomies.Availableat:

/publications/2023/04/economic-impact-of-adopting-digital-trade-rules-evidence-from-apec-member-economies

.

10

Component1coversgoodsandserviceswhicharedigitallyorderedbutnotnecessarilydeliveredthroughdigitalmeans.Examplesofsuchtransactionsarepurchasingawalletthroughane-commerceplatform,orbookingahotelstayabroadviaanonlineportal.Italsocoversdigitalcontentsuchasmusic,gamesormobileapplicationsorderedviadigitalplatformintermediaries.Component2coversservicesthataredigitallydeliverablebutnotnecessarilydigitallyordered.Thisincludesservicessuchasfinancialservicesandtelecommunicationsservices.

Specifictothisstudy,Component1(tradeindigitallyorderedgoodsandservices)wasestimatedforonly2016to2020duetoalackofrobuste-commercedatabefore2016.ThepreviousstudyhadsimilarlyestimatedComponent1for2016to2018.Component2wasestimatedfrom2000to2020.10

Duetothelimitationsofpublishedtradedata,theseestimatesdonotprovidetheabsolutevalueofalldigitaltradeflowsinagivenyearastheydonotencompassallaspectsthatconceptuallycomprisedigitaltrade11;butareinsteadusefulproxiesbasedoncurrentlyavailabledatatoshowoveralltrendsindigitaltradeflows,specificallytradeindigitallyorderedgoodsandservicesandtradeindigitallydeliverableservices.

Exhibit1showshowthesecomponentscoverdifferentaspectsofdigitaltrade.ThedetailedmethodologytoestimateeachcomponentisintheAppendix.

EXHIBIT1

Ourmethodologytomeasuredigitaltradecoversthedigitallyorderedanddigitallydeliveredcomponentsofdigitaltrade

Keytakeawaysfrom

OECD-WTO-IMF

HandbookonMeasuringDigitalTrade,2ndEdition

1.Digitaltradeisall

(international)tradethatisdigitallyorderedand/or

digitallydelivered

2.Digitaltrade

transactionsarein

principleincludedin

existingtradestatistics,although:theyarenotvisible,andthereare

severalchallengestorecordthem

Nature(How)

Typeofproduct(What)

Services

Goods

Digitallyordered

C1

Component1:Tradeindigitallyorderedgoodsand

services(i.e.,cross-bordere-commerce-purchasingawalletorbookingahotelstayabroadviaanonlineportal)

Digitallyordered

anddelivered

C1

C2

Component1:Tradein

digitalcontent(i.e.,

Component2:Tradeindigitallydeliverableservices(e.g.,

financialservicesandtelecommunications

services)1

music,gamespurchasedondigitalplatforms)

Note:BasedondefinitionsintheOECD-WTO-IMF

handbook,onlyservicescan

bedigitallydelivered.However,thisstudymakesanexceptiontoincludedigitalcontent2

(digitallydeliveredgoods)underComponent1

Digitallydelivered

Notes:

1.Thisincludesinsuranceandpensionservices;financialservices;telecommunications,computer,andinformationservices;andotherbusinessservices.

2.OECD-WTO-IMF(2023).Availableat:

/trade/handbook-on-measuring-digital-trade-second-edition

_ac99e6d3-enSource:LiteraturereviewandAccessPartnershipanalysis

10PapuaNewGuineawasexcludedfromthedatasetduetolackofdata.

11Forinstance,componentssuchasnon-monetarydigitalflowsareconceptuallyrelevantfordigitaltradebutnotmeasuredindomesticaccountsnorinternationalgoodsandservicestradestatisticsandhenceexcluded.Oneexampleisdataflowstosearchenginesandsocialnetworks,whichdonotentailadirectmonetarytransactionbutdosupportthem.SeeOECD,WTOandIMF(2023),HandbookonMeasuringDigitalTrade,SecondEdition.Availableat:

/trade/handbook-on-measuring-digital-trade-second-edition

_ac99e6d3-en

11

1.1.2TrendsindigitaltradeinAPEC

Trend1:Intra-regionaltradeinAPECdoubledbetween2016and2020withtradeindigitallyorderedgoodsandservicesleadinggrowth

APECintra-regionaldigitaltradein2020wasestimatedatUSD2.12trillion(Exhibit2)andconstituted28%ofAPECtotalintra-regionaltrade.ThisisnearlydoublefromUSD1.17trillionin2016atacompoundannualgrowthrate(CAGR)of16.0%.In2020,tradeindigitallyorderedgoodsandservices(e.g.,cross-bordere-commerce)comprisedalmostthree-quarters(74%)ofAPECintra-regionaldigitaltrade,withtradeindigitallydeliverablese