The growing role of data and cross-border

ecommerce in the world economy and Latin

America and the Caribbean

Intergovernmental Group of Experts on E-Commerce (IGE) and the Digital EconomySebastián Rovira, ECLAC

Geneva, 3 April 2019

• Trends on digital globalization and barriers to

cross-border data flows

• The unexploited dimension: intraregional

flows

• Factors to improve cross-border e-commerce

• Regional cooperation: Digital agenda for Latin

America and the Caribbean eLAC2020

Content

Trends on digital globalization and barriers to

cross-border data flows

0

1000

2000

3000

4000

5000

6000

7000

-

100

200

300

400

500

600

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Exports of goods   Service exports

  Foreign direct investment   Other financial flows

  International bandwidth (right axis)

Only one thing is certain, the world economy

has experienced intense digital globalization

Source: ECLAC based on data from IMF, WTO, McKinsey Global Institute and TeleGeography.

Cross-border global flows(2003 Index = 100 and Tbps)

Digital trade has become increasingly more

important globally but also regionally

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Latin America and the Caribbean: Digital trade (services potentially enable by ICT) and merchandise exports, 2005-2017

(Index 2005=100)

Digital trade (Services potentially enabled by ICTs exports) Merchandise exports

Source: ECLAC, based on WTO (2019)

Global B2C e-commerce is growing fast, especially

cross-borderGlobal B2C e-commerce: growth and participation of domestic and cross-border trade, 2014-2021

(In billions of dollars and percentages)

1 3361 548

1 8452 304

2 842

3 453

4 135

4 878

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

20

14

20

15

20

16

20

17

20

18

p

20

19

p

20

20

p

20

21

p

Notes Data : from 2018 to 2021 are projections in the case of panel A and data from 2016 to 2021 in the case of panel B.Source: ECLAC, on the basis of data from eMarketer (panel A) and AliResearch and Accenture (2016), Global Cross Border e-Commerce Market 2020 (panel B).

85 84 82 79 76 73 71

15 16 18 21 24 27 29

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014

20

15

20

16

p

20

17

p

20

18

p

20

19

p

20

20

p

Domestic Cross border

A. Global e-commerce B. Participation of domestic and cross-border trade

Barriers to cross-border

data flows

Local Storage

A copy of data must be stored locally to be transferable

Data can be processed outside the country

Local Processing

Data must be stored and processed domestically

It implies the construction of local data centres for businesses

Illegal transfers

Data must be stored, processed and accessed domestically

Data transfer is prohibited even within the same firm (holding to partner)

Conditionality

Data cannot be transferred unless the receiving countries guarantees a determined level of data protection

If conditions apply:

no restrictions to data transfer

Barriers to cross-border data flows

Policy responses to digitalization have been very

diverse

The Digital Trade Restrictiveness Index (DTRI) • The index shows that policy

responses to digitalisation

have been very diverse.

• China is the most restricted

country in digital trade, follow

by Russia, India, Indonesia and

Vietnam.

• In the top five group of the

most digitally open economies,

New Zeland is followed by

Iceland, Norway, Ireland and

Hong Kong.

0 0,2 0,4 0,6 0,8

Paraguay

Rep. Of Korea

United States

Argentina

China

Brazil

Tax restrictions

0 0,2 0,4 0,6 0,8

Colombia

Brazil

United States

Germany

Ecuador

China

Establishment restrictions

0 0,2 0,4 0,6 0,8

Peru

Colombia

Mexico

Rep, Of Korea

Germany

China

Data restrictions

0 0,2 0,4 0,6 0,8

Mexico

Rep, Of Korea

Ecuador

Brazil

Argentina

China

Commercial restrictions

Different types of restrictions The Digital Trade Restrictiveness Index (DTRI)

The unexploited dimension: intraregional flows

Key findings of the empirical evidence

Language is the main

determinant for cross-

border ecommerce

2

The effect of distance is

reduced but not

eliminated online (home-

bias)

3Payment systems and

package delivery matter1

➔ Transaction costs associated

with language barriers

increase when moving from

traditional to online

commerce

➔ To what extent can the

policy affect this variable?

➔ Even if the costs of

transport, search and other

trade barriers are reduced,

the effect of distance

persists

➔ The effect varies according

to product: Physical / digital

goods

➔ Taste matters (music and

software)

➔ The improvement of online

payment systems and parcel

delivery offer the best

option in terms of policy

➔ Due to diseconomies of

scale in the delivery of

packages and physical

transport costs can increase

online

36

64

GOODS

Short haul (intraregional)

Long haul (interregional)

4753

SERVICES

Short haul (intraregional)

Long haul (interregional)

4654

FDI

Short haul (intraregional)

Long haul (interregional)

67

33

DATA

Short haul (intraregional)

Long haul (interregional)

65

35

PEOPLE

Short haul (intraregional)

Long haul (interregional)

The unexploited dimension: intraregional flows

SOURCE: UNCTAD; UN World Tourism Organization; TeleGeography, Global Internet Geography; IMF; McKinsey Global Institute analysis

Distribution of flows between intraregional (short haul) vs. interregional (long haul), 2014, % of world flow

Potential for cross-border e-commerce at regional

level

57

62

66

82

97

43

38

34

18

3

0 20 40 60 80 100

Asia-Pacific

European Union

United States

Latin America and theCaribbean

Rest of the world

%

Domestic Cross-border

6

7,5

7,7

8,4

9,1

9,5

11,8

16,1

22,4

56,3

Buscapé

Google Shopping

Walmart

Apple sites

Cnova

eBay

Alibaba

B2W Digital

Amazon sites

MercadoLibre

Domestic vs. cross-border e-commerce marketplaces,

2017

Top ecommerce sites in Latin America, ranked by unique

visitors (millions), May 2018

Source: Forrester and Channel Advisor. Source: eMarketer based on Comscore, 2018

The deepening of regional integration offers answers

to several challenges the region is facing today

• Enhancing export diversification and value addition

• Reducing vulnerability to commodity prices

• Promoting the internationalization of SMEs

• Reducing exposure to an escalation of protectionism

• In mining, plurinational technology centers to develop new applications

of shared resources such as lithium

• Advancing towards a regional digital market that promotes the

diversification of the region's exports

Factors to improve cross-border e-commerce

Human capital: digitalization

increased faster than human capital supply

for advanced ICT sectors

Regulatory convergence: trade

and integration agreements lack

adequate provisions on cross-border e-

commerce

Inefficiencies in logistics, customs

and postal services: generate delays and increase the costs of

international shipments

International payment systems are inadequate: there is

a lack of banking interoperability and

high transaction costs persist

To improve its participation in cross-border e-commerce, the region faces 4 challenges

20 2124

26 25

3033

3538

4043

4649 50 51

21 21 22 23 2320 21 21 22 22 22 22 22 22 22

0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

digitization index human capital index

#1: human capital

Source: ECLAC, on the basis of Katz, F. Callorda and M. Lef (2016), Business initiatives and public policies to accelerate the development of a Ibero-American digital ecosystem, Madrid, Ibero-American Council for Productivity and Competitiveness (CIPC) / Cotec Foundation for Innovation.

Latin America and the Caribbean: Level of development of digitalization and human capital for advanced ICT(Composite indices, where 50 is similar to advanced countries)

Argentina

Bolivia

Brazil

Chile

Colombia

Costa Rica

Dominican Rep.

Ecuador

GuatemalaHonduras

Mexico

Nicaragua

Panama

Paraguay

Peru

El Salvador

Uruguay

0

1000

2000

3000

4000

5000

6000

20,00 30,00 40,00 50,00 60,00 70,00 80,00 90,00

Avera

ge N

um

ber

of Tra

nsa

ctio

ns

% Internet Users (ITU 2017)

#1: human capital

Latin America and the Caribbean (selected countries): Transactions and Internet users

#2: convergence of national regulations

Latin America and the Caribbean: Provisions on electronic commerce

in selected agreements (Percentages of total agreements)

Sources: ECLAC, on the basis of Giordano (Cord.) (2017), Beyond recovery. Competition for markets

in the digital age. Washington, DC: IDB

0

0

14

17

17

34

38

38

38

41

48

59

0 10 20 30 40 50 60

Original codes

Location of computer facilities

Protection of personal information

Brand for national electronic transactions

Spam

Protection of online consumers

Non-discriminatory treatment of digital…

Cross border transfer of information

Electronic authentication and signature

Cooperation

Customs duties

Trade without paper support

%

Andean Community

Mercosur

Central AmericaCommon Market

PacificAlliance

BO, ECU

COL,

PER

CHL,

MEX

ARG,

BRA,,

PRY,

URY,

VNZ

GTM, SLV, HND, NIC, CRI

Intra-regional trade in Latin America and the

Caribbean

0

20

40

60

80Reliability

Accessibility

RelevanceResilience

Total

Africa Latin America and the Caribbean Asia Pacific Industrialized countries

# 3 logistic inefficiencies

Selected countries and regions: Postal development, 2018(Index from 0 to 100 from the lowest to the highest level)

Source: ECLAC, on the basis of Universal Postal Union (2018), Postal Development Report 2018

# 4: adequate international payment systems

• Low bank penetration

• The difference between the country

with the highest and lowest

penetration is, in credit cards of 36.3

p.p. and on debit cards of 47.9 p.p.

• The compensatory payment systems

of ALADI, ALBA and MERCOSUR are

currently in disuse.

• Private initiatives like PayPal have an

incipient or nonexistent presence, as

in the cases of Google Wallet, WePay,

Stripe, and Dwolla.

Source: World Bank. 2014. Global Finance Inclusion Database.

Selected countries: over 15 years with a credit o debit card, 2014(As a percentage of the total of people over 15 years)

0 10 20 30 40 50 60 70

Haiti

Paraguay

Honduras

Guatemala

Peru

El Salvador

Domenican Republic

Bolivia

Panama

Ecuador

Mexico

Colombia

Uruguay

Argentina

Venezuela

Chile

Brazil

Trinidad & Tobago

Credit card (% age 15+) Debit card (% age 15+)

Regional cooperation: Digital agenda for Latin

America and the Caribbean eLAC2020

Digital agendaeLAC2020

IT HAS THE OBJECTIVE OF BEING A CATALYTIC INSTRUMENT FOR THE COORDINATION OF THE EFFORTS OF REGIONAL COOPERATION IN DIGITAL MATTERS.

At the Ministerial Conference of Cartagena, Colombia (April 2018), the eLAC2020 Agenda was defined with the participation of 23 ECLAC countries, 17 from Latin America and 6 from the Caribbean, and Germany and Spain as observer countries. Likewise, they accompanied representatives of UNESCO, UNIDO, ITU, OAS, IDB, CAN and the EU, among others.

In this instance, Colombia assumed the

Chair of the eLAC mechanism until 2020.

eLAC emerged in 2005 as a regional response to the World Summit on the Information Societyand constitutes a political commitment to reduce the digital divide and promote access anduse of ICTs to enhance the social, economic and cultural development of the countries of LatinAmerica and the Caribbean.

Start and evolution of eLAC

WSIS2003 . 2008

Gineva-Tunis

eLAC2007ActionPlan

Rio de Janeiro

eLAC2010ActionPlan

San Salvador

eLAC2015ActionPlan

Lima

eLAC2015ActionPlan Montevideo

eLAC2018Digital agenda

México2030SDGs

eLAC2020Digital agenda

Colombia

eLAC2022Brasil

2008

2005 2010

2013

2015

2018

2020 2030

The Digital Agenda includes 7 areas of action with

their respective Working Groups, 30 Objectives and

a Regional Cooperation Activities Program.

Digita agendaeLAC2020

In the framework of these Action Areas, different activities are carried out, such as the identification of good practices in different topics, the formulation of

recommendations, the preparation of guides, the holding of workshops, studies and reports and the exchanges of experiences, among others.

Digital infraestructura - Paraguay

Digital transformation and digital economy –Colombia

Regional digital

market - Brasil

Digital egov– RED GEALC

Culture, inclusión and skills– México

Emerging technologies forsustainable development– RED GEALC

Governance for theinformation society -Argentina

1. 2. 3. 4.

5. 6. 7.

Actions to promote cross-border e-commerce

• Promote the regional digital market (e-LAC Agenda)- Generate conditions for international data exchange- Promote trust and the security of digital space

• Improve the interoperability of digital regulations

• Promote and simplify trade financing- Digitization and alternative finance (blockchain)- Payment platforms and online financing (FinTech)

• Modernize logistics in general and postal services in particular- Expand the “Exporta Fácil” (Easy export) program to express services- Modernize customs processes

• Reduce the costs of cross-border online payments

Thank you!

https://www.cepal.org/es/proyectos/elac2020

@eLAC_CEPAL