DUBAI, U.A.E.—Global trade consultancy DMCC has released a report on ‘The Future of Trade,’ together with Futureagenda.org and economics consultancy Cebr.
“The Future of Trade was a natural progression for us. We are in constant dialogue with our 12,000 or more member companies about how to improve their standing in the world of trade, so we thought it prudent to look ahead to the next decade to see the challenges and opportunities we will face. Together with Futureagenda.org and economics consultancy Cebr we embarked on a journey around the world that began in London, the historic home of global trade, and ended in Dubai, its modern day equivalent. On the way we stopped off in Hong Kong, Cape Town and Mumbai where we engaged at every turn with some of the world’s leading experts on global trade. We listened to them, we discussed the major issues they raised and our journey became a conversation that has led to a remarkable report packed with insight and valuable observation.
The adoption of digital strategy by global importers and exporters presents such a profound shift in the future of trade that as many as 350 million more businesses could begin to export goods and services through digital commerce.-“$40 trillion worth of goods make their way along ever shifting import and export routes around the world every year, and while the perception of ongoing economic malaise persists as we enter 2016, there is a light at the end of the tunnel for global trade,” the report said.
This shift would provide the first significant boost to worldwide trade since the great recession and usher in a ‘digital revolution in trade’.
The adoption of such strategy on a global scale would add as much as $29 trillion to the digital economy over the next decade, the report research shows.
The share of Internet users has risen exponentially over the past two decades. Today, almost half of the world’s population report to be users of the Internet. Establishing the potential for digital development and the impacts of this on trade is crucial, which is why the companies developed an Industry Digitalisation Index (IDI) that tracks businesses’ progress with digitalisation.
The role of the development in digital technologies as the single most important phenomenon of the past two decades cannot be overstated.
The role of money in trade
There are multiple benefits to digital money not least that it is cheaper than cash to handle which by most estimates, costs society as much as 1.5% of GDP; it has low administration costs, reduced security costs and is traceable, thus reducing the risk of loss of funds from corruption.
The role of currencies
Many are looking for new mediums of exchange. As such some believe that, rather than the dependence on the USD, we may see growth in alternative currencies and money networks, and the first state issued fiat digital currencies.
Today, the sum total of money in the world is about $60 trillion of which about a tenth is held as coins or bank notes. The remaining 90% is held as digital money on computer servers. As a result the vast majority of transactions by value are executed by moving electronic data from one computer file to another without any exchange of physical cash.
A good share of new international regulation is increasingly aimed at freeing up trade to make it simpler and less bureaucratic. Whether at global or regional levels, governments around the world are seeking to improve the trading landscape for the goods their country produces, some more successfully than others.
Over the next decade, as trade continues to evolve, many see significant improvements occurring in the overall efficiency of the global trade system. At both global and regional levels, there will be enhancements that reduce waste, improve transparency and smooth the flow of goods.
The mega-trends of globalization, digitization and more efficient systems are all in play around the world. Over the next decade, these will continue to evolve and enhance the overall landscape within which trade operates.
Equally the signals of other sources’ potential change are also becoming more visible. For example, as the report highlights:
Block-chain as a platform is enabling us to rethink not only currencies but also other complex systems that can benefit from a distributed ledger;
China’s sustained investment in international infrastructure, and especially the One-Belt-One-Road project, is providing funding for global change.
Standards are being used more proactively as levers for and against trade in an increasingly multinational TPP and TTIP environment.
**International Convention for the Safety of Life at Sea