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High Technologies, Policies Will Help Unlock Great Economic Potential of E-Commerce

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E-commerce is enabling small and medium-sized enterprises (SMEs) of Asia and the Pacific to reach global markets and compete on an international scale, creating many jobs in the process, according to a report launched jointly by the Asian Development Bank (ADB) and the United Nations Economic and Social Commission for Asia and the Pacific at an international conference in Tashkent today. However, the region has to first tackle difficult issues of information technology infrastructure and strengthening the regulatory frameworks.

“Emerging digital technologies are transforming the e-commerce landscape and offer a new set of modern solutions and opportunities to build more inclusive growth and spur innovation,” ADB Vice-President for Knowledge Management and Sustainable Development Mr. Bambang Susantono said. “It offers a chance to narrow development gaps—whether demographic, economic, geographic, or cultural. It also helps narrow the rural-urban divide. However, realizing the full potential of e-commerce calls for coordinated regional and global efforts.”

The report, Embracing the E-commerce Revolution in Asia and the Pacific, examines how Fourth Industrial Revolution technologies—blockchains, the Internet of things, machine learning, artificial intelligence, and fifth generation wireless networks, among others—will transform the e-commerce industry and help unlock its dynamic potential.

Asia and the Pacific is the world’s largest business-to-consumer (B2C) e-commerce marketplace and continues to grow rapidly, the report says. By the end of 2015, the size of e-commerce relative to gross domestic product was 4.5% in Asia and the Pacific compared to 3.1% and 2.6% in North America and Europe. The Internet retailing market share of Asia and the Pacific is expected to reach around a half of the global total by 2020.

There is wide diversity in ICT infrastructure development and socioeconomic readiness to join the e-commerce marketplace in the region, highlighting the need for the governments to make stronger efforts to catch up, the report says. Despite remarkable progress in basic Internet access and availability, the region lags behind the world average in terms of the speed and affordability of broadband services as well as availability of secure Internet servers. Fixed and mobile broadband subscriptions are more numerous in Asia and the Pacific than in other developing regions. There is a wide variation in affordability of broadband access, with the irony being that the poorer the economy, the higher the cost of broadband.

Availability of alternative payments also varies widely across countries in the region, according to the report. The top four economies in the region spend around 200 times the bottom four economies spend in credit card payments per capita. With limited online payment options, many economies in the region still rely on cash-on-delivery to make online purchases. On the legal front, most economies in the region have some type of electronic transaction and cybercrime legislation. However, the laws related to privacy, data protection, and consumer protection remain laggard.

Lack of awareness of potential opportunities digital businesses offer, and low computer literacy and English proficiency in the context of the English-centric nature of websites, software, and computer interfaces pose additional challenges to many developing economies in the region.

The report offers policy recommendations to help lower barriers to e-commerce development. Developing a viable e-commerce ecosystem requires a holistic approach and concerted efforts by all stakeholders in e-commerce development, including national governments and international development institutions, trade associations and industry bodies, businesses (e-commerce vendors, payment service providers, and logistics service providers, among others), and consumers. Policy priorities should be on establishing a legal and regulatory framework for e-commerce, harmonizing international laws and standards, promoting ICT infrastructure development, broadening Internet access and affordability, and supporting financial and e-payment infrastructure.

In Central Asia, trade and transport facilitation has formed the backbone of Central Asia Regional Economic Cooperation (CAREC) program since its launch in 2001. Out of total cumulated investments of $31 billion, trade and transport facilitation related infrastructure amounted to 80% of the total. Infrastructure in conjunction with trade facilitation has led to a significant reduction in clearing time at border crossings by 68% since 2010, through reducing travel time and increasing travel speed. Given the important role of trade for economic growth and poverty reduction in Asia, ADB will continue to provide robust support for the region’s trade facilitation initiatives.

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Public Transport Can Bounce Back from COVID-19 with New and Green Technology

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Public transport must adapt to a “new normal” in the wake of the coronavirus disease (COVID-19) pandemic and adopt technologies that will render it more green and resilient to future disasters, according to a new report by the Asian Development Bank (ADB).

The report, Guidance Note on COVID-19 and Transport in Asia and the Pacific, details the profound impact of the pandemic on transport, as swift lockdowns forced millions this year to work from home overnight, schools to shift to e-learning, and consumers to flock to online shopping and food delivery.

While public transit may have been previously perceived as a mostly green, efficient, and affordable mode of travel, initial trends in cities that have re-opened have indicated that public transit is still considered to be relatively unsafe and is not bouncing back as quickly as the use of private vehicles, cycling, and walking.

“The two key challenges ahead are addressing capacity on public transport to maintain safe distancing requirements, and how best to regain public confidence to return to public transport,” said Bambang Susantono, ADB Vice-President for Knowledge Management and Sustainable Development. “In the short term, more effort is needed to reassure public transport users of safety and demonstrate clean and safe public transport. In the longer term, technological advances, big data, artificial intelligence, digitalization, automation, renewables and electric power can potentially offer fresh innovations to tackle changing needs, giving rise to smarter cities.”

While drastic lockdown measures around the world have brought world economies to their knees, satellites have recorded data on how the concentrations of CO2 and air pollutants have fallen drastically, bringing clear blue skies to many cities.

But as cities have reopened, traffic levels have increased. For example, Beijing traffic levels, by early April 2020, exceeded the same period in 2019. If this trend is seen on a wide scale, it could set back decades of effort in promoting sustainable development and more efficient means of urban mobility.

The report says there is a short window of opportunity for cities to promote the adoption of low-carbon alternatives to lock-in the improved air quality conditions gained during the peak of the pandemic lockdown. Public transport can play an important role through more active promotion of clean vehicles, provision of quality travel alternatives in public transport, and a better environment for non-motorized modes such as walking and cycling to enhance overall health and wellbeing.

The confidence of passengers on public transport should be restored through protective measures such as cleaning, thermal scanning, tracking and face covering, the report says. Further study to explore how protective and preventive measures can be stepped up to allow relaxation of safe distancing requirements would help mitigate capacity challenges. A possible future trend may be consolidation of services and rationalization of routes to better serve the emerging travel demand patterns and practices.

As countries enter the “recovery” phase, further preventive and precautionary operating measures and advanced technology should be implemented to enable contactless processes and facilitate an agile response. Demand management measures can facilitate crowd control in public transport systems and airports. As a complementary measure, non-motorized transport capacity could be expanded to absorb spillover demand from public transport.

Since mass public transport is the lifeblood of most economies, government policies and financial support are essential during this period, to enable public transport operators to stay viable and continue to support the movement of passengers and goods in a sustainable way.

For ADB, which committed last year $7 billion to the transport sector, behavioral trends linked to COVID-19 may require a review of the short-term viability of passenger transport and operational performance to meet changing demand for public transit systems. “Regardless of the COVID-19 pandemic it is clear that developing Asia will continue to have a large need for additional transport infrastructure and services,” the report concludes. “It would take several years before the projects currently in the pipeline would be operational and much can happen during these years.”

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Zero emission economy will lead to 15 million new jobs by 2030 in Latin America and Caribbean

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In a new groundbreaking study , the Inter-American Development Bank (IDB) and the International Labour Organization (ILO) show that the transition to a net-zero emission economy could create 15 million net new jobs in Latin America and the Caribbean by 2030. To support a sustainable recovery from the COVID-19 pandemic , the region urgently needs to create decent jobs and build a more sustainable and inclusive future.

The report finds that the transition to a net-zero carbon economy would end 7.5 million jobs in fossil fuel electricity, fossil fuel extraction, and animal-based food production. However, these lost jobs are more than compensated for new employment opportunities: 22.5 million jobs are created in agriculture and plant-based food production, renewable electricity, forestry, construction, and manufacturing.

The report is also the first of its kind to highlight how shifting to healthier and more sustainable diets, which reduce meat and dairy consumption while increasing plant-based foods, would create jobs and reduce pressure on the region’s unique biodiversity. With this shift, LAC’s agri-food sector could expand the creation of 19 million full-time equivalent jobs despite 4.3 million fewer jobs in livestock, poultry, dairy and fishing.

Moreover, the report offers a blueprint on how countries can create decent jobs and transition to net-zero emissions. This includes policies facilitating the reallocation of workers, advance decent work in rural areas, offer new business models, enhance social protection and support to displaced, enterprises, communities and workers.

Social dialogue between the private sector, trade unions, and governments is essential to design long-term strategies to achieve net-zero emissions, which creates jobs, helps to reduce inequality and delivers on the Sustainable Development Goals .

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Women Gain Key Economic Benefits from Greater Trade

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Trade increases women’s wages and helps close the wage gap between men and women while creating better jobs for women, a new World Bank Group report concludes. Countries that are open to international trade tend to grow faster, innovate, improve productivity, and provide higher income and more opportunities to their people. Countries that are more open to trade, as measured by the trade-to-GDP ratio, have higher levels of gender equality.

The report, produced in collaboration with the World Trade Organization, marks the first major effort to quantify how women are affected by trade using a new gender-disaggregated dataset. The dataset, developed by the World Bank Group, allows researchers to understand how women are employed, in which industries they work, how much they earn, and whether or not they are involved in global trade. This analysis helps governments see how trade policies can affect women and men differently.

“Over the past 30 years trade has been the engine of poverty reduction. This report shows that, provided the right policies are in place, it can also provide an engine to reduce the gender gap,” said World Bank Managing Director Mari Pangestu. “Trade can expand women’s role in the economy and decrease disparities with men by giving women more and better employment opportunities. Seizing these opportunities will be even more important in a post-COVID-19 world.”

The report, Women and Trade: The Role of Trade in Promoting Women’s Equality, offers several key findings. Firms that are part of global value chains (GVCs) employ a greater percentage of women (33 percent) relative to non-GVC firms (24 percent). When countries open themselves to trade, women’s share of wages in the manufacturing sector increase by 5.8 percentage points on average. When women are employed in sectors with high exports, they are more likely to be formally employed. Formal employment means better job benefits, training, and job security.

The report also highlights the importance of addressing discrimination against women in trade policy. Although no country overtly imposes tariffs according to gender, implicit biases can amount to “pink tariffs” that put women at an economic disadvantage. The report shows that products specifically consumed by women face a higher tariff burden than men’s products. In the textile sector, for instance, tariffs on women’s apparel are US$2.77 billion higher than on men’s clothing, a consumption gap that grew about 11 percent in real terms between 2006 and 2016. Disparities like this can hurt women consumers all over the world.

Targeted policies can help women maximize the benefits of trade. These include removing trade barriers that impede women’s access to international markets and improving women’s access to education, financial services, and digital technologies. Governments can design trade facilitation measures that remove gender-specific barriers to trade. These measures could address burdensome customs requirements, limited access to trade finance, and exposure to extortion or physical harassment at borders.

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