BRIDGING THE DIGITAL DIVIDE AND SUPPORTING INCREASED DIGITAL TRADE: SCOPING STUDY

The document examines how digitalization is restructuring global value chains and the risks it poses to developing nations, such as increased technological divides and value capture by advanced economies. It contrasts the digital industrial policies of the EU (market-friendly) and China (interventionist) to propose a dual-track policy framework for developing countries: 'enabling markets' (focusing on infrastructure, ecosystems, and mitigating disbenefits) and 'digital catch-up' (focusing on technology linkage, learning, and economic leverage). The authors highlight specific instruments like payment interoperability, data localization, and fiscal incentives, while warning of implementation hurdles such as ministerial silos and international trade agreement constraints.

• Digitalization is altering the organization, geography, and value distribution of global value chains, potentially leading to the 're-shoring of production' as robotics and 3D printing reduce the need for offshoring to low-cost labor markets.
• The 'digital divide' has evolved from a matter of simple Internet connectivity to a structural gap where advanced economies shape technological change and dominate the digital economy through 'network effects' and first-mover advantages.
• The EU and China employ contrasting digital industrial strategies: the EU focuses on a 'market-friendly' approach via the 'Digital Agenda for Europe' and 'Digital Single Market' to integrate its fragmented market, while China uses a 'classic infant industry model' involving the 'Great Firewall of China' to protect local firms and encourage technology transfer.
• Developing countries can pursue 'enabling markets' strategies by investing in backbone fibre, promoting payment interoperability (e.g., India's Unified Payment Interface), and simplifying government interfaces for MSMEs through 'single window' initiatives.
• A 'digital catch-up' strategy involves more interventionist measures, such as limiting international competition in specific sectors to support local firms, as seen in China's cloud computing sector, or using fiscal incentives like Brazil's 'TI Maior' legislation.
• To mitigate the 'disbenefits' of digital trade, governments are implementing data protection rules (inspired by the EU's GDPR), data localization requirements in countries like Vietnam and Turkey, and regulations on platform monopolies.
• Effective implementation of digital policy is often hindered by a lack of 'ownership' across government ministries, lobbying from incumbent low-technology firms, and potential conflicts with international trade agreements (e.g., WTO rules).

APA

Azmeh, S., & Foster, C. (2018). BRIDGING THE DIGITAL DIVIDE AND SUPPORTING INCREASED DIGITAL TRADE: SCOPING STUDY. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2018/08/GA_Th3_DP-Azmeh-Foster_20180906.pdf

Chicago

Azmeh, Shamel, and Christopher Foster. BRIDGING THE DIGITAL DIVIDE AND SUPPORTING INCREASED DIGITAL TRADE: SCOPING STUDY. South African Institute of International Affairs, 2018. https://saiia.org.za/wp-content/uploads/2018/08/GA_Th3_DP-Azmeh-Foster_20180906.pdf.

Wikipedia

{{cite report |last1=Azmeh |first1=Shamel |last2=Foster |first2=Christopher |title=BRIDGING THE DIGITAL DIVIDE AND SUPPORTING INCREASED DIGITAL TRADE: SCOPING STUDY |publisher=South African Institute of International Affairs |date=August 2018 |url=https://saiia.org.za/wp-content/uploads/2018/08/GA_Th3_DP-Azmeh-Foster_20180906.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{azmeh2018bridging, author = {Azmeh, Shamel and Foster, Christopher}, title = {{BRIDGING THE DIGITAL DIVIDE AND SUPPORTING INCREASED DIGITAL TRADE: SCOPING STUDY}}, institution = {South African Institute of International Affairs}, year = {2018}, month = aug, url = {https://saiia.org.za/wp-content/uploads/2018/08/GA_Th3_DP-Azmeh-Foster_20180906.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }