globalization and e-commerce

By Bienvenido B. Abad, Jr.

What is globalization?• Globalization is a process of

interaction and integration among the people, companies, and governments of different nation.

• A process driven by international trade and investment and aided by information technology.

• Source: globalization101.org

Business of the Past• For thousands of years, people—

and, later, corporations—have been buying from and selling to each other in lands at great distances.

• E.g. Famed Silk Road across Central Asia that connected China and Europe during the Middle Ages.

Business today

• Thomas Friedman has said that today globalization is “farther, faster, cheaper, and deeper.”

• Time-space compression

Time-space compression

• Information technologies have given all sorts of individual economic actors—consumers, investors, businesses—valuable new tools for identifying and pursuing economic opportunities

easy transfers of assets

Online trading

faster and more informed analyses of economic trends around the world

collaboration with far-flung partners

economic actor

What is e-commerce?

• E-commerce is the sale of products and services over the internet, and the fastest growing segment of our economy.

What is e-commerce?

• It allows even the smallest business to reach a global audience with its product or message with minimal cost.

What is e-commerce?

Buying and selling of goods

and services, the transfer of

funds, and even the exchange of

ideas

E-commerce Functions

selling

finance

manufacturing negotiations

Effects of Globalization and

e-commerce • Digital Divide

• Intellectual Property Rights• Tariffs and Taxes

Digital Divideeffects of globalization and e-commerce

In the US..• 180 million people in the US use the internet

at least once per month.• In 2005 there were approximately 1.08

billion people worldwide who used the internet at least once a month. This grew to 1.6 billion in 2010.

• The online population has hit 73% of all U.S. adults.

• The average income of Internet households is over $72,744, making the Internet user a very attractive customer for you to target.

Broadband Adoption Growth Trend - Home Users (US)

Source: Extrapolated from Nielsen Online data.

in developing countries…

• There is risk of left behind in the internet economy.

Internet users in 2012 as a percentage of a country's population

Source: International Telecommunications Union.

in developing countries…

• Many people do not have access to the internet.

• E.g. excluding South Africa, there is one internet host for every 80,000 people in sub-Saharan Africa while in India 55,000 people.

Worldwide Internet users

  2005 2010 2014a

World populati

on6.5 billion 6.9 billion 7.2 billion

Not using

the Internet

84% 70% 60%

Using the

Internet16% 30% 40%

Users in the

developing world

8% 21% 32%

Users in the

developed world

51% 67% 78%

a Estimate.Source:

International Telecommunications Union.

Intellectual Property RightsEffects of Globalization and e-commerce

What is copyright?

• By granting authors exclusive rights, the public receives the benefit of literature and music and other creative works that might not otherwise be created or disseminated.

• Copyright is a legal term describing rights given to creator for their literary and artistic works.

The internet and copyright issues

• The internet posses a threat to copyright law, especially in the area of illegal music copying and distribution.

Music consumption statistics. (AM,2008, Jun 17)

Copyright issues

• What is scope of protection in digital environment involving how rights are defined and what exceptions and limitations are permitted?

• How rights are enforced and administered?

• What is Jurisdiction and applicable laws?

Tariffs and TaxesEffects of Globalization and e-commerce

Rest of worldWestern EuropeAsia-PacificNorth America

2002

Total: $2,293.5(US$ billions)

$1,677.3

$341.6$246.3

$28.2

2006

$7,469.0$2,458.6

$2,645.6$264.1

Total: $12,837.3(US$ billions)

Forecast: Worldwide Online Trade Growth, 2002 To 2006

Source: Forrester Research Inc.www.forrester.com

Hence, there is legitimate concern by Governments, especially developing countries, over potential erosion of their tax base resulting from e-commerce.

How to collect tariffs and taxes on cross border e-commerce?

?So far, no national or international legislation.

Implications? • One concern is the potential loss in tax and

tariff revenues resulting from e-commerce, which account for significant shares of government budgets in most countries.

• This is of particular concern to developing countries, where import duties comprise higher shares of government revenue and a shift to other revenue sources is economically less feasible.

Are you purchasing good or service?

• Goods imported traditionally regardless of order method falls under GATT which subject to import duties.

• Goods purchased and downloaded online is under GATS which banned for import duties but might crossed border many times

Synthesis

• Globalization with the help of information technology is evidently growing and inevitable.

• Though effects is great on positive side, threats and implications are more likely to appear and it obviously affects developing countries. Digital divide, copyright and collection of tariffs and taxes are among them.

Digital Divide to Fill

• Currently, there is huge gap that has to be filled in digital divide.

• The number of internet users is constantly rising but not enough to catch up with the new economy imposed by globalization.

• To address the issue Access to computers and the other hardware at world prices – remove excessive import duties, efficient, low-cost telecommunications and training are necessary.

Copyright Infringement Prevention

• Copyright law is no longer an industrial regulation rather it is a austere measure to restrict to the general public. Yet piracy is still uncontrollable.

• To mitigate the situation, enforcements of rules are necessary such as;

• Harsh punishments are inflicted on copyright violators.• Publisher are trying to extend duration of copyright

Tariffs and taxes

• The on-line trade is becoming clearly growing bigger and the huge majority obviously involves trade in services.

• The absence of policy on collection of tariffs and taxes on e-commerce transactions could hurt the Government revenues especially developing countries.

• Another issue is classification of electronic products which have physical counterpart wherein the latter is dutiable .

Sources• E-Commerce (n.d.), http://www.myownbusiness.org/s9/• Essays, UK. (November 2013). Globalization And The Impacts Of E Commerce Information Technology

Essay. Retrieved from http://www.ukessays.com/essays/information-technology/globalization-and-the-impacts-of-e-commerce-information-technology-essay.php?cref=1

• Harvey, Melissa J. (2002) E-commerce, http://www.encyclopedia.com/topic/e-commerce.aspx• Lalith Edirisinghe: Managing Trade in Services - GATS, Vs GATT. (n.d.). Retrieved November 3, 2015. • Meringer, Julie, (2001). eCommerce Next Wave: Productivity and Innovation, Forrester Research Inc.

Retrieved at http://www.wto.org/english/tratop_e/devel_e/sem05_e/presentation_meringer.ppt#31• Moore, Mike. (2000, October 31) Opening Remarks , E-Commerce conference, ITC,

https://www.wto.org/english/news_e/spmm_e/spmm40_e.htm• Negative and positive effects of globalization for developing country business - Boundless Open Textbook.

(n.d.). Retrieved November 3, 2015. • Susanne Teltscher, 2000, Tariffs, Taxes and Electronic Commerce: Revenue Implications for Developing

Countries; United Nations Conference on Trade and Development Policy Issues in International Trade and Commodity. http://www.differencebetween.com/difference-between-gatt-and-vs-gats/Difference Between GATT and GATS

• Tuthill L., (n.d). WTO Implications of Classification Issues, Retrieved from http://www.wto.org/english/tratop_e/devel_e/sem05_e/presentation_tuthill.ppt#25

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