UN: E-Commerce Key to Global Economic Growth

E-commerce will continue to be a driving force behind future economic growth worldwide, and may be especially important for developing countries, according to a report released Tuesday by the United Nations.

"By reducing costs, increasing efficiency, reducing time and distances, e-commerce could become an important tool for development," the UN Conference on Trade and Development (UNCTAD) said in the E-Commerce and Development Report 2001.

However, the group, made up of representatives of private and government agencies, also warns that the divide between technologically advanced countries and others could continue to widen.

B2B Rules

At the head of the worldwide e-commerce class will be business-to-business (B2B) services, the report said, with benefits for the agriculture, petrochemical and manufacturing industries.

Within B2B, financial transactions will lead the way, with double-digit growth for online finance transactions worldwide for the next several years.

That growth area, too, poses risks, as developing countries may lack the "e-finance preparedess" needed to be able to move large volumes of financial transactions onto the Web, the group said.

Alive and Well

The UN report also found that the Web was providing important economic stimulus in less developed countries. The UN cited the example of EthioGift.com, which sells items such as slaughtered sheep for traditional meals, and a company in Bangladesh that uses the Internet to perform records-transcription work for doctors in the United States.

However, e-commerce is not only important to developing countries because of the promise of pure-play e-tail and B2B uses, the report said, but because the efficiencies it promises spill over into all aspects of economic activity.

"Developing countries stand a better chance of sharing in [e-commerce's] benefits earlier than in previous technological revolutions," the report said. "If these countries manage to keep pace with developed countries, the benefits will be even greater, extending beyond economic output and exports to such areas as health care delivery, distance learning, public sector administration (such as electronic voting) and employment generation."

Call for Cooperation

At the same time, one potential pitfall for e-commerce is the lack of a cohesive set of regulations and a recognized governing body for the Internet. Issues of dispute resolution, jurisdiction and taxation all have the potential to slow growth, the UN group said.

For example, governments around the world could stand to lose US$8 billion annually that would have been culled from e-commerce transactions except for uncertainty over tariffs and taxes.

"E-commerce currently operates in a tax- and duty-free environment, in an unclear legal and regulatory framework -- a situation calling for urgent intergovernmental cooperation to clarify the situation," the report stated.

Tough to Gauge

The study acknowledged that finding solid measurements of worldwide e-commerce is difficult.

"No economic sector has been subject to more far-fetched growth forecasts," UNCTAD said in the report. "The numbers differ considerably."

For instance, estimates for business-to-business e-commerce during 2000 alone ranged from a low of $200 billion as reported by Morgan Stanley to $604 billion from Forrester Research.