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What is the digital economy?
The digital economy is made up of economic activities conducted or facilitated through digital technologies. According to the Asia Pacific Economic Cooperation (APEC)(external link), “all activities that utilize digitized data” can be characterised as being part of the digital economy.
The digital economy is large and growing. APEC states that current estimates of the size of the global digital economy range from 4.5% to 15.5% of global GDP and that over the next decade, it is estimated that approximately 70% of new value created in the global economy will be based on digitally enabled platforms.
What is digital trade?
While there is no single accepted definition of digital trade, the Organization for Economic Cooperation and Development (OECD) reports(external link) a growing consensus that digital trade encompasses all digitally-enabled transactions of trade in goods and services that can delivered digitally or physically, and that involve consumers, firms, and/or governments.
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 online marketplace as well as the purchase and digital delivery of an e-book. Further examples of digital trade can be found here in MFAT’s digital trade review.
The terms ’digital trade’ and ‘e-commerce' are often used interchangeably.
Benefits of digital trade
Digital trade is growing exponentially. It is especially important for the New Zealand economy, which is largely made up of small and medium sized businesses. Digital technologies and trade create opportunities for New Zealanders by helping businesses overcome the challenges of scale and distance to enter global markets that were previously only accessible to larger businesses, thereby accelerating their growth.
Digital trade also enables New Zealand businesses to become more resilient. The digital economy is also an opportunity for New Zealand to continue diversifying exports which will improve our economic resilience to possible shocks in any one exporting sector.