Digital Trade in Europe and Central Asia

The Internet greatly increases firms’ potential to produce new goods and services for new markets. The Internet is also having a dramatic impact on services, especially in the retail, trade, and finance sectors, by enabling firms to digitize their products and deliver them over long distances. We consider how the Internet can increase exports by reducing trade costs, discuss how e-commerce is transforming sales to both domestic and foreign consumers, and consider how the Internet is making firms more mobile. Despite the enormous potential benefits, the use of the Internet to conduct digital trade is relatively limited in Europe and Central Asia (ECA). We focus on the broad range of developing and developed countries in the ECA region, whose experience will have relevance for many countries. We then review the policy priorities for governments and the new challenges for policy.

WORKING PAPER NO: 751