Abstract

Digitalisation is two facets implying as much it has so many advantages, it also has some disadvantages as it renders employees redundant. The main aim of this study was To investigate the impact of digitisation in improving international trade.

Specifically, the study seeks to study the role of internet of things in affecting international trade, to assess the role of robotic technology in affecting international trade, to examine the role of big data affecting international trade and to assess the influence of cloud computing in promoting international trade.

This study is limited to the e-commerce sector, most epically jumia Cameroon. 132 questionnaires were administered to staffs of Jumia Cameroon. Using SPSS version 20, the researcher conducted a regression analysis and results showed that that IoT, Robotics and big data significantly affect international trade (ecommerce). Meanwhile cloud computing didn’t have any significant effect on ecommerce.

CHAPTER ONE

INTRODUCTION

Introduction

This study aims to investigate the impact of digitalisation on the improvement of international trade. In the course of this study, the researcher will bring out facts to show the relationship between industry 4.0 and international trade using E-commerce sector.

1.1 Background and introduction

In nearly every element of our present lives, technological advancements over the last few decades have brought substantial changes. In the modern day, knowledge and learning have become the fundamental building blocks and activities (Lundvall & Johnson, 1994).

Knowledge economies have begun to emerge, focused on the production, dissemination, and application of knowledge and information for the purpose of enhancing performance and the general welfare of society (OECD, 1996). The growth of information technology or the third industrial revolution in general, has played a crucial part in establishing the groundwork for knowledge economies, ushering in a new technological paradigm (Smith, 2002).

New scientific disciplines emerge in this new paradigm, previously boundary fields become crucial to on-going development, and previously separate scientific domains become increasingly intertwined. Knowledge-intensive industries are becoming increasingly important for economic growth and competitiveness.

Not only do high-tech businesses account for an ever-increasing share of GDP in industrialized nations, but the function of collected and applied knowledge is also becoming increasingly important in ‘low-tech’ industries.

In today’s world, innovation has become a critical component of success. Innovations are not only demonstrations of what technology can do, but they are also the most essential component in determining economic competitiveness, as well as redrawing the economic framework itself. It appears that a new industrial revolution is beginning to take shape, based on the many digital technologies developed during the last five decades.

The fourth industrial revolution, as defined by the World Economic Forum (2016), is already here, characterized by a fusion of technologies that blurs the barriers between the physical, digital, and biological domains (Dengler & Matthes, 2015). This new industrial revolution is primarily based on the preceding one, while it has certain specific characteristics, such as the pace and scope of changes, as well as the wide range of systems affected.

The scope and complexity of the changes result in the transformation of entire production, management, and governance systems. This implies that businesses must not only innovate their products and services, but also rethink their manufacturing processes. Following the German high-tech policy effort in 2013, this trend was dubbed Industry 4.0.

Industry 4.0 refers to a collection of vertically and horizontally integrated technology trends, such as 3D printing, big data, robotization, simulation, cloud computing, and so on. Industry 4.0 takes a more holistic, interconnected, and comprehensive approach to manufacturing. It provides for greater cooperation and access across departments, partners, vendors, products, and people by connecting the real and digital worlds.

The goal of industrial revolutions is to boost production and international trade productivity (Schuh et al., 2014) While the first industrial revolution manifested itself in the shape of mechanical production based on water and steam power at the end of the 18th century, the Second Industrial Revolution began with Henry Ford and Frederick Taylor’s invention of conveyor belts at the turn of the twentieth century (Bahrin et al., 2016).

Unlike the previous industrial revolution, which was based on information technology to automate production (Wahl, 2015), the fourth industrial revolution, dubbed Industry 4.0, is centred on digitalization.

Industry 4.0 enables business leaders to have a deeper understanding of and control over every element of their operations, as well as to use real-time data to improve productivity, streamline procedures, and accelerate growth (Epicor, 2019). If these technologies are used, we can talk about a smart business that is based on cyber physical systems, with numerous technologies that are tightly linked to human workers. Companies have a significant hurdle when such changes are implemented. The availability of personnel who can meet the demands of Industry 4.0 or the fourth industrial revolution in general, is one of the most significant criteria for implementing these changes.

The global economy and digitization in international trade are increasing at a quick rate, according to Ahmedov (2020), and the digital domain is becoming a significant area for global trade. The impact of digitalization on international trade, the impact of changes in the structure and form of international trade, the intensification of global competition and its transition to the intangible sector; the emergence of new formats and opportunities for international business through digitization, the expansion of cross-border commerce and invisible employment, and the reduction of cross-border and internal operations in a globalized digital environment;

Factors such as the rapid growth of digital commerce with companies, businesses and households, the emergence of new generation science related to the regulation of commercial relations in the trans-boundary virtual space, the emergence of new changes in international trade regulation have been explored.

However, a few years ago, the trade theory literature was primarily focused with analysing the impact of technical development on the equilibrium position in a two-commodity, two-country trade model. Although the research into the function of technical change in affecting trade patterns is still in its early stages, the research into the impact of exogenous changes in techniques is nearly complete (Drandakis & Phelps, 1966).

Furthermore, digital transformation has a significant impact on organizations’ international competitiveness. In addition to lower production costs, which boosts firm productivity, trade costs fall as well: logistics coordination becomes more efficient; relevant documents are available globally; search costs for suitable suppliers and customers fall; and constantly improving software is translating digitalised transport documents in an increasingly reliable manner. This decrease in trade costs will result in increased competition (Morasch & Bartholomae, 2017).

Furthermore, international trade theory emphasizes the significance of technological innovation in explaining a country’s international competitiveness (Fagerberg & Melchoir, 1997). Economic development, according to Schumpeter (1883-1950), is a dynamic process derived from industry and trade.

This author lists various factors of economic development related to commerce, such as the introduction of a new quality of a good or a new use for an existing good, a new manufacturing method, the opening of a new market, and a change in economic organization.

Then, technical innovation can be described as a country’s ability to put new ideas into action through the development of new goods and processes that play an important part in international trade and economic development. As a result, in a knowledge-based economy with a high and increasing reliance on information technology and human capital, the development of meaningful indicators to quantify the amount of technological innovation among countries is of significant interest.

Kuznets, (1962) identified the difficulties that a lack of proper innovation measurements can cause in economic studies relating to innovative activity. In recent years, significant efforts have been undertaken to quantify technological innovation and spread, as well as human talents across countries.

Ramos et al., (2007) have established a set of indices and variables to quantify technological innovation achievement. Nonetheless, a country’s technical achievements are extremely complicated. As a result, capturing them in an index that reflects the whole spectrum of technologies and measures some aspects of technology invention, dissemination, and human capabilities is difficult.

The Technological Achievement Index (TAI) has been utilized in empirical assessments to address these drawbacks (Martínez-Zarzoso & Márquez-Ramos, 2005). This index was created by combining measures of a country’s successes in four dimensions: technological creation, diffusion of recent innovations, diffusion of old technologies, and human skills.

Furthermore, empirical applications suggest that heterogeneity is important in technological innovation. When determining whether greater information can replace geographical distance, Loungani, Mody, and Razin (2002) discriminate between developed and developing countries. Their findings show that technological innovation can “substitute” for distance in developing countries (better information reduces the effect of distance), whereas in developed countries, technological innovation and distance are “complementary” (better information magnifies the effect of distance).

This can happen when commerce in differentiated items is dominant and physical proximity and advanced information technology work together to promote trade. By investing in technical innovation, developing countries can overcome the disadvantage of distance. Fink & Neagu, (2005) investigate the impact of communication costs on bilateral trade flows while taking sector heterogeneity into consideration. Their findings reveal that communication expenses have a major impact on international trade and are more important when dealing varied products than when trading homogeneous products.

Then, because knowledge asymmetries exist and, as a result, there is a reduced demand for differentiated goods in foreign markets, technical innovation is viewed to have a stronger impact on trade of differentiated commodities. The primary goal of this research is to examine the impact of technological innovation on commerce while taking sector and country heterogeneity into consideration.

Furthermore, the presence of a probable non-linear relationship is studied, because the impact of better technological innovation on trade may vary depending on a country’s technological success. The findings show that there is a non-linear relationship between exports and technology creation and between exports and the diffusion of old innovations, which is “U-shaped” in both cases, whereas there is an inverted-“U-shaped” relationship between exports and recent innovation diffusion and between exports and human skills.

1.2 Statement of the problem

Countries are quite happy about the advancement of technology in the world, but there are still some major difficulties that have been debated by numerous authors. Although digitisation provides many benefits for the e-commerce sector, enhancing the efficiency of many businesses throughout the world, a number of projections have revealed that, despite its benefits, digitisation is disrupting the labour market by taking jobs and putting many people out of work.

Businesses believe that autonomous robots, the Internet of Things, and big data analytics software have increased productivity by lowering production time and cost. As a result, industries are using more of these technologies to streamline their business processes, and these technologies have also resulted in a high amount of labour redundancy.

1.3 Objectives

1.3.1 Main Research Question

What is the impact of digitisation in improving international trade?

1.3.2 Specific research questions are

This question was addressed through three specific research questions:

1. How has internet of things affected international trade?
2. How has robotic technology affected international trade?
3. How has big data affected international trade?
4. How has cloud computing affected international trade?

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