Digital Globalization: Politics, Policy, and a Governance Paradox

Digital technologies are reshaping the global economy and complicating cooperation over its governance. Digital value chains (DVCs) complicate international economic relations, eroding individual privacy, shifting tax burdens, and cementing monopoly positions. Governments are responding with increasing restrictions on cross-border data flows. This monograph explains the new sources of political division, documents policy barriers to digital trade, presents a framework to explain digital trade barriers, and assesses the prospects for international cooperation on digital governance.

Format: Paperback / softback
Length: 75 pages
Publication date: 01 June 2023
Publisher: Cambridge University Press

Digital technologies are fundamentally transforming the global economy, leading to complex challenges in governing cooperation. The rapid advancements in technology and business have ushered in a new phase of globalization characterized by the unprecedented expansion of cross-border information flows. This phenomenon is generating political conflicts and policy disagreements, as it disrupts traditional economic structures and power dynamics.

One of the central actors driving this digital globalization is the digital value chain (DVC). DVCs are networks of businesses and organizations that operate across international borders, leveraging digital technologies to streamline production, distribution, and consumption processes. While the DVC has brought about numerous economic benefits, it also complicates international economic relations.

One of the primary concerns associated with DVC activities is the erosion of individual privacy. As data is increasingly shared and processed across borders, concerns arise about the potential misuse of personal information, including surveillance, data breaches, and identity theft. This erosion of privacy can have significant consequences for individuals and society as a whole, including reduced trust in institutions, reduced economic activity, and even political instability.

Another issue related to DVC activities is the shifting of tax burdens. Digital businesses often operate in jurisdictions with lower tax rates, leading to a redistribution of tax revenue away from traditional economic actors. This can create unfair competition and undermine the ability of governments to fund public services and infrastructure. Moreover, the complex nature of DVC operations can make it difficult for governments to effectively collect taxes, leading to tax evasion and revenue loss.

Furthermore, DVC activities can contribute to the consolidation of monopoly positions in the global economy. As digital platforms and technologies become more dominant, they can exclude competitors and limit the entry of new entrants. This can lead to reduced competition, higher prices, and reduced innovation. It can also have negative consequences for consumers, as they have fewer choices and less control over their products and services.

In response to these challenges, governments are increasingly implementing restrictions on cross-border data flows. These restrictions aim to protect individual privacy, prevent tax evasion, and maintain competition in the digital economy. However, these measures can also create barriers to digital trade and hinder the growth of the global economy.

To address these challenges, it is important for countries to move beyond coordinated liberalization and toward coordinated regulation of digital technologies. This requires a collaborative effort between governments, businesses, and civil society to establish clear rules and standards for digital trade, privacy, and competition. It also requires investment in infrastructure and education to ensure that all individuals and businesses have access to the necessary tools and resources to participate in the digital economy.

In conclusion, digital technologies are reshaping the global economy and complicating cooperation over its governance. The activities of digital value chains, the central economic actors in digital globalization, have significant implications for international economic relations. While the DVC has brought about economic benefits, it also poses risks to individual privacy, tax burdens, and competition. Governments must respond to these challenges by implementing regulations that balance the interests of all stakeholders, while also promoting digital trade and innovation. Only through coordinated regulation can we ensure that the benefits of digital globalization are shared equitably and that the negative consequences are minimized.

Weight: 123g
Dimension: 229 x 152 x 4 (mm)
ISBN-13: 9781108978361