McKinsey has published a report on digital globalisation in which it examined digital flow and its impact worldwide. We briefly highlight some key findings and discuss them from a Caribbean perspective.
Over the past decade, the flow of data and information has increased exponentially, from being virtually non-existent 15 to 20 years ago. According to global management advisory firm, McKinsey, in its latest report, Digital Globalization: The New Era of Global Flows, “the amount of cross-border bandwidth that is used has grown 45 times larger since 2005” (Source: McKinsey). Further, it indicated that the impact of digital flow – of data and information – now exert a larger impact on GDP growth than the traditional forms of trade in goods and services.
Thanks to the Internet, and highly connected and interconnected world in which we now live, the ways in which we work and live have changed considerably. Examples highlighted by McKinsey included that fact that firms, even those considered micro and small businesses, can compete with the largest multinationals and can reach international markets with less capital-intensive business models than what would have obtained historically. Among individuals, global digital platforms are being used “to learn, find work, showcase their talent, and build personal networks” (Source: McKinsey).
Based on its own research, McKinsey found that “approximately 12 percent of the global goods trade is conducted via international e-commerce”, and “virtually every type of cross-border transaction now has a digital component”. Additionally, “some 900 million people have international connections on social media, and 360 million take part in cross-border e-commerce”.
Where is the Caribbean in all of this?
In this latest research, which included an assessment of digital connectedness in 139 countries worldwide, six Caribbean countries were included: Barbados; the Dominican Republic; Grenada; Guyana; Jamaica; and Suriname. The results and ranking of those countries in the McKinsey Global Institute Connectedness Index will be examined in a separate and future article. However, across the region generally, and from our own observation and experience of connectedness:
- There is ad hoc and uneven digital participation among the commercial sector. Though many businesses may advertise and promote their offerings online, e-commerce, especially end-to-end sale of goods or services online, is still exceedingly low. Hence efficiencies that have become the norm worldwide are still not yet enjoyed in the region.
- Increasingly, Caribbean residents are securing work opportunities beyond their national borders. Those opportunities can be quite lucrative, especially if they can be fulfilled remotely via the Internet.
Currently, the Caribbean has very few systems in place to truly measure the impact of digital flows on our countries and economies. However, the impact globally cannot be denied, along with the recognition by the Caribbean governments of the importance of ICT as a critical driver of continued economic and social development.
What more should the Caribbean be doing?
Having said this, one of the crucial stumbling blocks for the region, which is not only affecting digital flows, but also local and cross-border commercial activity, is the current state of our e-commerce and e-transaction ecosystem. Currently, merchant e-commerce accounts are still a novelty in the Caribbean, and are expensive and time-consuming, especially by MSMEs (micro, small and medium enterprises), to secure locally.
Hence frequently, firms that wish to develop those opportunities must consider options available outside the region. Though, to varying degrees, the resulting benefits will trickle back to the region and to their home countries, they are directly contributing and adding value to the countries (overseas) that have established more comprehensive and open systems that can be readily accessed.
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