There was a time when globalization was mostly measured by trade in goods, but today it is converging with digitalization. So, to quantify this shift we have to measure the economic impact of digital globalization.
By measuring inflows and outflows of goods, services, finances, people and data for 97 countries, it was found that data flow directly and indirectly accounted for almost two-thirds of the whole current world GDP in 2014.
If you think that cross-border data flows were negligible 15 years ago, you can realize the huge impact it is causing to the world economy.
Over the past decade, the used bandwidth that undergirds this swelling economic activity has grown 45-fold, and it is projected to increase by a factor of nine over the next five years. Beyond the value digital flows create, they are also quickly transforming traditional flows, with more than half the world's traded services and over one-tenth of global trade in goods conducted digitally. The same is true for the flow of people, facilitated by traveling companies online.
In spite of this advance, the growth of trade in goods has dropped. A lot of factors contribute to the feeling that global trade in goods may not resume its previous growth.
In a tough scenario like this, companies are looking for digital platforms that help them to deliver digital goods and services, so they become international suppliers without a physical presence abroad.
Although there are many internal platforms inside large corporations, open platforms can connect millions of global users and give businesses enormous built-in customer bases and ways to interact with customers directly.
Competition is intensifying as digital platforms allow companies of any size, anywhere, to roll out products quickly and deliver them to new markets.
Businesses in all industries need to take a fresh look at their assets, including customer relationships and market data, and consider whether there are new ways to make money from them. Digitalization can simplify the tailoring of products, brands, and pricing for companies that sell into multiple global markets.
Digital tools for remote collaboration and instant communication make it possible to centralize some global functions, to create virtual global teams that span borders.
In addition, the Internet and international competition have cut into the window of exclusivity that companies once enjoyed for new products and services; copycat versions can be launched in new markets even before the originators have time to scale up.
As digital tools create new possibilities for building and managing a global presence, business leaders must challenge long-held assumptions about the international competitiveness of their companies.
For participants of all types (countries, cities, businesses, governments, and individual) participating in global flows offers major economic opportunities. But smart strategies and policies will be needed to take full advantage and to avoid being left behind.
Nobiletec is a multi-national consultancy firm specializes in B2B, B2C and P2P FinTech solutions.