Cross-border digitally delivered services are the fastest growing segment of international trade, with new players emerging, registering an almost fourfold increase in value since 2005, a new report has said.

Titled, ‘Digital Trade for Development’, it looks into opportunities and challenges for developing economies arising from digital trade and was jointly published by the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), United Nations Conference on Trade and Development (UNCTAD), the World Bank and the World Trade Organisation (WTO).

Rising 8.1 per cent on average per year over 2005-22, it has outpaced growth in goods exports (5.6 per cent) and other services exports (4.2 per cent) to account for 54 per cent of total services exports.

With new ways of obtaining comparative advantage, opportunities arise for new players to engage in global trade, including farmers and small businesses.

The report also points out the potential benefits of digital trade for developing economies like Nigeria as well as the need to bridge the digital divide and strengthen the country’s readiness to benefit from digital trade. According to the report, more international financial and technical support is needed to build the capacity of Nigeria’s economy to improve connectivity and skills and more international cooperation is needed to regulate in areas relevant to digital trade.

The report also notes that while tariffs and value-added taxes (VAT) are not mutually exclusive, recent evidence shows that, for most economies, given current rate structures and with appropriate investment in the capacity of tax administrations, VAT could generate higher revenue from taxing electronic transmissions compared to hypothetical tariffs. Moreover, tariffs on electronic transmissions would reduce digital trade and its benefits and might also impact the competitiveness and participation of firms in trade, especially micro, small and medium-sized enterprises and women-owned traders.

It further underscored that global solutions are needed on regulatory issues such as cross-border data flows, competition and consumer protection. Global cooperation is also highlighted as necessary for ensuring that small businesses, women and young entrepreneurs and consumers in all economies can reap the benefits of digital trade. “International organisations can support these efforts by strengthening cooperation with governments, stakeholders and each other, and this joint report is a step in this direction,” the report concluded.