WTO Conference The Use of Data in the Digital Economy

Joshua P. Meltzer Senior Fellow, Brookings Institution Washington D.C.

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Digital Trends

• 3.7 billion people have access to the internet

• Internet access is mobile

• Entire economies are becoming digital

• Transformation in international trade

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Digital Opportunities

• Economic Growth

» Productivity

» Jobs

• Transformation in international trade

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What is the Digital Economy?

U.S. International Trade Commission:

“U.S. domestic commerce and international trade in which the internet and internet-based technologies play a particularly significant role in ordering, producing, or delivering products and services.”

WTO E-commerce Work Program

"electronic commerce" is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means. Digital trade includes the use of the internet to search, purchase, sell, and deliver a good or service across borders and includes how internet access and cross-border data flows enable digital trade.

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How important is the digital economy?

USITC:

• Digital trade has added 3.4-4.8 percent to US GDP

• Internet use has increased wages by 4.5-5.0 percent

• The internet has been a catalyst for the creation of up to 2.4 million jobs

McKinsey Global Institute:

• Global data flows have increased global GDP by at least 3.5 percent

Cisco:

• The internet-of-everything between 2013-2022 is a $14.4 trillion opportunity

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Challenges measuring the digital economy

• Extent of digitization

• The effect of digitization on productivity and growth

» Digital Platform

» Free Services

» Improved quality

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Extent of Digitization • Not merely IT

• Digitization happening across goods and services

• ITC Report - digitally intensive industries

– Communications

– Finance and insurance;

– Retail

– Wholesale

– Manufacturing

– Content

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What has been the impact on productivity?

• “Productivity isn’t everything but in the long run it is almost everything.” (Krugman)

• ICT contribution to strong US productivity growth in 1990s-2000

• Currently – low productivity in the US and globally

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How business uses data

Examples of innovation:

• Cloud computing

• Internet of Things

• Big Data

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Cloud computing

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Internet of Things

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Big Data

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Content layer

Logical layer

Physical layer

Digital Platforms

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Platform markets

E.g. Uber, Airbnb, booking.com

How big?

• Airbnb is 2% of US accommodation market – 10% by 2025

• Uber – 5% of global taxi market

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Free Services • E.g. email, skype, navigation

• Value according to advertising revenue

• What about consumers willingness to pay?

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Better quality • Phones are now cameras, videos

GPS

• How to value a better Google search

• Cloud computing, big data?

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Digital Economy and Trade Project

www.brookings.edu/digital-economy-and-trade-project/