What is 'the digital economy' and 'digital trade'?

Digital trade is growing exponentially and this creates opportunities for New Zealanders.

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Digital economy

The digital economy is made up of economic activities conducted or facilitated through digital technologies. With digital being part of our everyday life, the New Zealand Productivity Commission(external link) recently stated, “there is little to differentiate the digital economy from the broader economy; in other words, the digital economy is the economy”.

Digital trade

While there is no single accepted definition of digital trade, the Organization for Economic Cooperation and Development (OECD) reports(external link) that there is a growing consensus that it encompasses digitally-enabled transactions of trade in goods and services that can either be digitally or physically delivered, and that involve consumers, firms, and governments.

In other words, digital trade is anything that is enabled by digital technologies whether or not it is digitally or physically delivered. For example, digital trade would include the purchase and physical delivery of a paper book through an on-line marketplace as well as the purchase and digital delivery of an e-book.

’Digital trade’ and ‘e-commerce' are often used interchangeably.

Digital trade benefits New Zealand – businesses and consumers

Digital trade is growing exponentially and this creates opportunities for New Zealanders. Digital trade is especially important for the New Zealand economy, which is largely made up of small and medium sized businesses. Digital technologies help these businesses overcome the challenges of scale and distance to enter global markets that were previously only accessible to larger businesses, accelerating their growth.

The many benefits for consumers from digital technologies include more convenience, lower prices, more choice and better information.

Digital technologies can also potentially support the increased participation in trade by women, Māori and rural communities, helping spread the benefits of trade across our communities and regions – a key aim of our Trade for All policy.

Barriers to digital trade are arising

The changing nature of trade in the digital era is leading to new barriers to trade arising.

Barriers to digital trade might arise ... Examples are ...
… simply because the nature of trade is changing … the growth of online platforms has led to more small packages being sold across international borders. Border procedures not created for this high volume/low value trade may slow it down or stop it altogether.
… because countries can create new barriers to digital trade - directly or indirectly - through legitimate responses to domestic regulatory issues such as privacy and cyber security.

… domestic laws on these issues heavily restricting the cross-border movement and storage of many types of data, both of which are necessary for digital trade and for the digital economy to function.

Countries are grappling with how to protect privacy and safeguard cybersecurity in a way that does not unnecessarily prevent data movement.

… indirectly because businesses and consumers do not consider the internet a safe and secure place to trade. 

… consumers concerned about consumer protection laws being applied; or

… businesses concerned about how to verify the legitimacy of an overseas party.

Digital economy and COVID-19

New Zealand’s Trade Recovery Strategy for COVID-19 can be found here.

The DEPA comes at a time of considerable disruption to international trade and supply chains due to COVID-19. New Zealand’s immediate goal has been to bring the pandemic under control and to mitigate as far as possible its negative impacts on our people, health systems and the economy. Work is also under way on New Zealand’s trade recovery, which seeks to ensure that New Zealand is in the best possible position to emerge from the COVID-19 pandemic as quickly as possible.

COVID-19 demonstrates the value of our digital economy and digital trade, and the DEPA with Singapore and Chile will encourage further growth of digital aspects of our trading relationships. The digital economy is also an opportunity for New Zealand to continue diversifying exports which will improve our resilience to possible shocks in any one exporting sector.

The DEPA will assist New Zealand’s COVID-19 trade recovery strategy, by contributing to the revitalisation of our trade architecture. New Zealand’s trade networks provide predictable rules and other mechanisms to facilitate New Zealand exports of goods and services to markets around the world.


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