Digital Trade in a Post-Pandemic Data-Driven Economy

Abstract

The pandemic is impacting at a time of major transformational change in the global economy driven by the digital transformation, a decoupling between the United States and China, and the rise of populism. The massive economic shock of the pandemic is not only accelerating changes that were “in the works” but is also deflecting the evolution of the economy in new and unexpected directions by changing market evaluation of supply chain risks and raising national concerns about the robustness of domestic capacities for emergency response. Whether V-shaped, W-shaped, or Nike swoosh-shaped, the important issue is not so much when (and if) the global economy regains the heights of the pre-pandemic era, but where the recovery takes the global economy in terms of how and where work is done. A substantial part of the fixed capital stock will have to be written down or written off, including the backbone economic infrastructure; comparative advantage of nations will be reshaped by national investment strategies (which may include an accelerated adoption of green economy strategies to address climate change); and business strategies will evolve to take advantage of accelerated technological development and to respond to changing patterns of demand. These developments will naturally have major implications for the direction and structure of trade, both as regards traditional goods and services and the rapidly growing forms of digital and digitally enabled trade. The accelerated expansion of the latter forms also heighten the needs for trade governance reforms.