UNCTAD’s Report on Trade and development 2018
About UNCTAD Report
- The UNCTAD’s Trade and Development Report 2018 outlines what developing nations must to do ensure that they don’t get swayed by the narratives being perpetuated by the digital giants and their cheerleaders.
- Further, in respect of the digital economy, the report has eight key messages. These are extremely relevant for India’s quest to formulate a national e-commerce policy.
Eight Key Messages Of The Report
- First, TDR 2018 argues that in the digital economy first-movers advantages benefit from controlling and scaling large volumes of data.
- Recommends tighter regulation of digital platforms.
- Second, UNCTAD has zeroed on the phenomenon, which is commonly referred to as “cash burning” in the Indian context. TDR 2018 drives home the point that players in the digital economy seek to enhance their market shares by resorting to various strategies, including slashing prices, even to the extent of sustaining losses. Policymakers in India and other developing countries need to take note of these unfair practices and devise solutions to address them.
- Third, the report states that “localisation of servers can be required for regulatory purposes, and such regulation can also operate to assist in the promotion of domestic providers of a range of goods and services”. Given the in-depth research that seems to be underpinning the report and the credibility of this flagship publication of UNCTAD, this should strengthen the hands of those who want India to adopt a nuanced approach to localisation for giving a fillip to local innovation and domestic entrepreneurs.
- Fourth, TDR 2018 makes important suggestions for nurturing local innovators in developing countries—an issue of considerable significance for India. The report suggests that firms and innovators in developing countries should have access to data that are typically collected by multinational platform companies. It further advocates for governments to acquire stakes in commercialization of successful new technologies by establishing professionally managed public funds.
- Fifth, the reports emphasises that linking domestic producers to national e-commerce platforms should be a part of national promotion scheme. It buttresses this point by giving the example of a Chinese e-platform called KiKUU, which sells only Chinese goods. This example is extremely relevant, as the need to create a national platform for selling Indian goods appears to have been considered in the course of formulating India’s draft e-commerce policy.
- Sixth, TDR 2018 makes a persuasive case for developing countries to implement digital industrial policies for catching up with the leaders. However, it makes the point that such policies would need to be preceded by regulating the digital platforms. This would provide developing countries’ firms with an opportunity to compete with the existing platforms and avail themselves of new opportunities in the digital world. Thus, UNCTAD’s view is that regulation is essential for developing countries to gain from ecommerce.
- Seventh, UNCTAD has recognised the problem of digital giants escaping the tax net in many countries. The report recommends taxing these firms where their activities are based rather than where they declare their headquarters. This will help in redistributing their rents and increase government revenues.
- Eighth, given the strong push by some countries at the WTO to negotiate binding rules on ecommerce, TDR 2018 strikes a cautionary note. It has observed that “the potential for development provided by digital technologies can be easily eclipsed if developing countries are not given the flexibility and policy space to design their economic and industrial policies and national regulatory frame-works to promote digital infrastructure and digital capacities.”
- Overall, unlike many other international organizations, UNCTAD’s TDR 2018 has resisted the temptation of getting swayed by the narratives being perpetuated by the digital giants and their cheerleaders about the global digital economy and its links with development. The report’s diagnosis of many of the problems emerging in the digital arena is objective and spot on.
- The recommendations to address the underlying problems are well thought-out and far reaching. It also resonates well with India’s attempts at formulating a domestic ecommerce policy.
- Are India’s policymakers listening?