The Asia-Pacific Trade and Investment Report (APTIR) is a biennial publication prepared by the Trade, Investment and Innovation Division of the United Nations Economic and Social Commission for Asia and the Pacific to provide insights into the impact of recent emerging developments in trade and foreign direct investment on countries’ abilities to meet the challenges of achieving sustainable development.
The theme of APTIR 2023/24 is “Unleashing digital trade and investment for sustainable development.” Prepared in collaboration with the United Nations Conference on Trade and Development and the United Nations Industrial Development Organization, the report explores the roles of digital trade and investment in guiding the Asia-Pacific region towards sustainable development. It examines digital trade and investment patterns in the region and provides an overview of the digital trade and investment policy environment, viewed through a sustainable development lens. The report also assesses the potential of unilateral policies on trade and investment, as well as the impact of multilateral and regional cooperation, in maximizing the benefits of digital trade and investment while focusing on the Sustainable Development Goals (SDGs). Incorporating a quantitative assessment, this study evaluates the role of digital trade in archiving the SDGs and examines the impact of various policy scenarios. Building on this understanding, the report concludes by offering a series of action-oriented policy recommendations, specifically targeting the trade and investment domains, to ensure that digital and investment policies effectively unlock the potential of digital trade and investment for sustainable development.
EXECUTIVE SUMMARY
To harness the potential of digital trade and investment for sustainable development, it is essential to carefully craft trade and investment policies. These policies should take into account the related societal and environmental opportunities and challenges. This report presents an integrated approach to policy-making, aimed at enhancing the understanding of trade and investment policymakers regarding their roles in realizing the potential of digital trade and investment as effective means for the achievement of the Sustainable Development Goals (SDGs).
The role of digital trade and investment in sustainable development
‘Digital trade’ encompasses all international trade transactions that are digitally ordered or delivered. In the developing regions of the Asia-Pacific, the growth of digital trade is largely dependent on foreign direct investment (FDI) for the development of digital infrastructure, digital technology adoption and digital businesses. This ‘digital FDI’ provides essential capital, expertise, and cutting-edge technologies, which are vital for establishing a competitive stance in digital trade. Moreover, digital trade necessitates Information and Communication Technology (ICT) networks, equipment, and services. These ‘digital-trade enablers’ facilitate the process of ordering and delivering all digital trade transactions.
Digital trade and investment present a promising means for economies in the Asia-Pacific region to achieve the SDGs. Central to this dynamic are digitally deliverable services, notably those associated with data, online platforms and services facilitating online transactions. Empirical studies conducted by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the United Nations Industrial Development Organization (UNIDO) found a positive relationship between increased digital trade and overall progress towards the SDGs. This association was especially pronounced for SDG targets connected to social development.
The benefits derived from digital trade are closely tied to Internet penetration. Thus, unlocking the full potential of digital trade urgently calls for bridging the digital divide. ESCAP research suggests that a 1% increase in digital trade value is associated with a 0.8 percentage point rise in the growth rate of an economy’s real Gross Domestic Product (GDP) per capita. Additionally, the study finds that the positive outcomes of digital trade are often reliant on widespread internet access. The results underscore the importance of addressing the digital divide. This is especially urgent for Least Developed Countries (LDCs), the economies of South- and South-West Asia (SSWA), Pacific Islands Developing Economies (PIDEs) and Land-Locked Developing Countries (LLDCs).
Trends and development in digital trade and investment policies in Asia and the Pacific
The digital trade policy environment in the Asia-Pacific region exhibits a dual-pronged approach. On one side, there is a shift towards regulatory simplification, prominently in areas like tariffs, trade facilitation and intellectual property rights (IPRs). Such policy development is expected to boost digital trade, mitigate costs, and amplify competition. However, when one delves into the policies pertaining to digital service trade, investment and the overarching framework for digital governance, there is a growing trend towards stringent policy enforcement. This rigorous approach is more prevalent, on average, in the NCA and SSWA economies.
CONCLUSION
In wrapping up, a consistent theme throughout the report is that unleashing digital trade and investment for sustainable development requires giving particular attention to the regulatory impacts on consumers, small firms, workers, and the environment. Fundamental to achieving this are the coherence of both traditional and digital trade and investment policies with sustainable development aspirations, and regulatory cooperation with key trade and investment partners.
Central to these strategies is the need for a streamlined, open regulatory framework. This requires avoiding regulations that unduly increase compliance costs for businesses. Such a regulatory environment is particularly advantageous for small enterprises, which are pivotal for achieving inclusive growth outcomes. Simplifying processes associated with business establishment, licensing, permits and their associated costs and durations becomes crucial. Moreover, the importance of creating mechanisms that encourage regulatory cooperation and interoperability cannot be overstated. Aligning technical requirements within regulations with international standards and mutual recognition arrangements guarantee a level of international consistency and interoperability.
For a conducive setting for digital trade and investment, a holistic policy approach is important. This entails co-ordination among various agencies, unwavering commitment to transparency, and engaging public consultations.
Lastly, as the regulatory environment evolves, preparing enforcement agencies for upcoming changes is crucial. Specialized training programmes can empower these institutions, enabling them to efficiently enact and promote the newly established or revised regulations. ESCAP, UNCTAD and UNIDO are poised to assist in this endeavour.
To read the abstract published by United Nations Economic and Social Commission for Asia and the Pacific, click here.
To read the full report, click here.