Harnessing the Power of the Digital Economy to Achieve Global Development Goals

03.06.2017 | Kate Moran

This piece originally appeared in the WIIT Communique

The invention of the telegraph was seen as“completely revolutionizing existing modes of doing business; for when telegraphic lines become extended, and its transmitting powers vastly improve, as they doubtless will be, Western, Southern, Northern—all business men, instead of leaving their business and going to distant cities, will order by telegraph what, and as, they want.”1

With the advent of the telephone, mass-communication technology had an instant, transformative effect on the modes of doing business across industries and sectors, particularly the speed at which transactions took place. Fast forward to the present; burgeoning Internet connectivity in the digital age has led to the rise of e-commerce businesses—Alibaba, Amazon and EBay—and completely revolutionized the relationship between producers, suppliers and consumers.

Increased access, diffusion, and intensity of Internet use has, for the most part, directly contributed to the growth of e-commerce businesses, which in turn, has resulted in positive externalities for women entrepreneurs, traders, and small and medium enterprises (SMEs), amongst others. Though e-commerce was initially developed as a mechanism to facilitate business transactions, the “digital economy” has since evolved into a powerful tool by which to create jobs and expand livelihoods. It has enabled aspiring women entrepreneurs to overcome barriers to market entry and to diversify their income streams; similarly, traders from tribal communities have been able to generate demand for handcrafts through websites, connect to funders to drum up capital, and carve out a niche in new and expanded markets. Combined with an enhanced ability to acquire resources, SMEs in developing economies can now readily plug into local, national, and even international supply chains. Doing so not only expands SMEs’ delivery of goods, but also employs more people to generate sustainable livelihoods that raise countries’ standard of living.

Indeed, the growth and strengthening of e-commerce holds great potential—not just for business, but for global development. In an era of both increasing Internet connectivity and political instability, new and innovative digital marketplaces will become critical alternatives for isolated markets and entrepreneurs displaced by war and conflict. In a context where traditional trade routes have been interrupted or destroyed, e-commerce fills the gap by lowering barriers to market entry and enabling historically marginalized groups—most notably, women entrepreneurs—to bring their voices to bear in the economy.

E-commerce—and those who leverage it—are breaking barriers. Yet, barriers persist, and remain greater for some than for others. While individuals in every country and region have succeeded in circumventing red tape to achieve digital enterprise development and trade, on a broader scale the e-commerce revolution precludes the participation of many small businesses and firms; the United National Conference on Trade and Development (UNCTAD) reports that existing platforms and rules for global trade are skewed towards the interests of large corporations, leaving few opportunities for small and medium-sized enterprises. New research from Facebook, the World Bank, and the Organization for Economic Cooperation and Development (OECD)’s “Future of Business Survey” shows that increased trade, “especially in emerging markets and with the appropriate policies, corresponds to decreased poverty, more jobs, economic growth, and increased productivity.”2 Small businesses are responsible for the majority of jobs globally. Thus, in order for e-commerce to truly thrive, opportunities for micro- and small enterprise owners must be at the fore of economic growth strategies.

So what does successful e-commerce look like for vendors in emerging markets? How can economically marginalized groups in the developing world—particularly existing and potential women entrepreneurs—harness the potential of the digital revolution to grow their businesses and amplify their voices in trade? In fact, they already are: in Palestine, women are leveraging the power of the Internet to market their homemade products internationally—everything from wool carpets to hand-embroidered jewelry. In Nigeria, businesswomen are using mobile technologies to increase their companies’ sales. In Pakistan, a USAID-funded “Women Leadership in Trade Policy” program is engaging women micro- and small business owners in roundtables to discuss the role of trade organizations and women in trade policy formulation and advocacy, with the intention to influence the conversation.

Women are a global, largely untapped source of entrepreneurial potential. Especially in the developing world, where women increasingly occupy integral income-generating roles in their families, the potential of e-commerce and digital business should not be overlooked. Successful experiments such as those in Nigeria, Pakistan, and Palestine must be replicated on a broader scale. In light of the Sustainable Development Goals (SDGs)—among them, gender parity and decent work/economic growth—providing pathways for women-owned micro and small enterprises (MSEs) to take part in the global economy through international “e-trade” is critical.

Practically, this means increased Internet penetration and access in areas of the world where connectivity is limited; it means arming women entrepreneurs and MSE owners with the tools and requisite training to successfully take part—and compete—in the global marketplace. It means a re-shifting of priorities, to make genuine room for these enterprises at the global policy table.

4.3 billion people are still not online; of those who are online and also are small business owners, often the infrastructure does not exist for them to pursue e-commerce opportunities. E-commerce can be a global force for good, and can contribute to the achievement of the SDGs, but only if the playing field is leveled and opportunities for economic participation are expanded to all. Women in emerging markets will have a particular role to play; with the world at their fingertips, they will be the drivers of positive economic growth, job creation, and expanded livelihoods in countries across the globe. In doing so, they will assume a more prominent role in international trade, transforming “business as usual” and bringing vital voices to bear in the “digital economy.”

1 American Phrenological Journal and Miscellany, 1848.
2 https://www.futureofbusinesssurvey.org/

Kate Moran is Program Assistant for the Middle East and North Africa at CIPE.