Effects of globalization to e-commerce and vice versa

1. globalization and e-
commerce
By Bienvenido B. Abad, Jr.

2. 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

3. 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.

4. Business today
• Thomas Friedman has said that today globalization is “farther, faster,
cheaper, and deeper.”
• Time-space compression

5. 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

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

7. What is e-commerce?
• It allows even the smallest business to reach a global audience with its product or message with
minimal cost.

8. What is e-commerce?
Buying and selling
of goods and
services, the transfer
of funds, and even
the exchange of
ideas

9. E-commerce Functions
selling
finance
manufacturing
negotiations

10. Effects of Globalization and
e-commerce
• Digital Divide
• Intellectual Property Rights
• Tariffs and Taxes

11. Digital Divide
effects of globalization and e-commerce

12. 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.

13. 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.

14. 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
population
6.5 billion 6.9 billion 7.2 billion
Not using
the Internet
84% 70% 60%
Using the
Internet
16% 30% 40%
Users in the
developing
world
8% 21% 32%
Users in the
developed
world
51% 67% 78%
a Estimate.
Source: International Telecommunications Union.

15. Intellectual Property
Rights
Effects of Globalization and e-commerce

16. 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.

17. 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)

18. 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?

19. Tariffs and Taxes
Effects of Globalization and e-commerce

20. Rest of world
Western Europe
Asia-Pacific
North 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.

21. How to collect tariffs and taxes on cross border
e-commerce?
So far, no national or international legislation.

22. 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.

23. 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

24. 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.

25. 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.

26. 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

27. 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 .

28. Sources
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