Trade digitalisation is the improvement or enabling of processes through leveraging digital technologies and digitised data. In the context of international trade, this involves the digitalisation of trade-related information flows. Digitalisation will enable the exchange of trade-related data, documents, and electronic authorisations between parties in the supply chain.
Trade digitalisation is attracting greater policy attention as a means to reduce transaction costs, boost trade, lower prices and yield economic growth. The UK government has recognised this potential with important policy initiatives under the umbrella of its 2025 Border Strategy. These include the Electronic Trade Documents Bill and the development of a Single Trade Window, along with commitments negotiated in FTAs and Digital Trade Agreements supporting the development of digital trading systems with trade partners.
In this context, the Department for Business and Trade (DBT) has commissioned LSE’s Trade Policy Hub (TPH) to further develop the evidence base on three types of relevant technologies:
- Digital trading systems including; a) paperless, digitalised trade administration documents required by governmental authorities
- Existing enablers of e-transactions, with potential for greater roll-out, including e-contracts, e-authentication, and other solutions for paperless services trade
- Blockchain and AI, as technologies with the potential to further develop and improve digital trading systems in future Rather than a general study of the impact of these technologies on the economy, this report is focused on the extent to which they can further enhance and complement digital trading systems.
Specifically, this project aims to quantify the benefits associated with each of these technologies and identify possible barriers to implementation. After thoroughly reviewing the existing literature and conducting various econometric analyses, trade cost reductions associated with each technology are derived as inputs for CGE modelling. Simulations are then run to estimate their potential effects on the wider economy.