Socio-economic effects of digital trade and artificial intelligence on EU industries including their value chains and EU imports and exports with major trade partners

Abstract:

Artificial intelligence and new digital technologies are transforming digital trade. They facilitate the development of new business models of trade and reduce the geographical barriers of economic transactions. Such transformations are quite useful for the small and medium enterprises. Artificial intelligence is being adopted by both digital and non-digital sectors, but its adoption varies a great deal across countries, including within the EU. Data and information flow play a crucial role in digital trade by allowing personalization.

Digital trade is not new, but it is taking new forms that are ushering a new phase of globalisation. So far digital trade mainly affected trade in goods, including through global value chains, though some service activities have already become more tradeable thanks to digital technologies. The new phase of globalisation driven by artificial intelligence and new digital technologies is likely to do for services what the previous phase did for manufacturing: to vastly increase trade between advanced and emerging economies. This prospect raises important issues for domestic policies and trade policy.

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