When it’s time to update your image, no need to go out to buy a new wardrobe or die your hair. For a fraction of the price, you can join Second Life, create a digital avatar, and buy your avatar some new clothes, a fancy hat, and some funky shoes and glasses. You probably won’t know (or care) whether you’re buying digital clothing and accessories created in Canada, the U.S., Hong Kong, or elsewhere.
Trading in virtual worlds is no longer a marginal economic activity. Market intelligence company In-stat estimates that over US$7billion was spent globally on “virtual goods” in 2010, and the group expects that number to double by 2014.
In fact, trading virtual goods is only one of the many examples of the new and enhanced global trade opportunities made available by the ability to digitize information. Digitizing information means converting it into strings of zeros and ones, enabling us to send information globally in an instant. This ability has not only created opportunities to trade in new kinds of products and services but changed the way we trade in the same parts, products, and services that we have been already trading for decades.
For example, digitization allows companies to more easily break down activities into specific tasks and source or provide each task or input from wherever in the world it can be done most efficiently. Research in Motion’s BlackBerry, to take a Canadian example, is made up of hundreds of components sourced from around the world. In turn, that BlackBerry and other digital technologies have made it possible and attractive to sell services globally. Several Canadian banks, for example, provide banking services globally both online and via mobile phone. Other examples are translation and x-ray services that can be provided remotely. And we can now immediately download software, music, or books from anywhere in the world—instead of purchasing them on CDs or in printed form.
In short, digital technologies are now fundamental to international trade—and not just trade in virtual worlds or digital products, but to every kind of trade. This means such technologies are fundamental to Canadian companies’ global success. But most of our research, media, and policy attention has been focused on other “trade facilitators.” For example: ensuring the smooth flow of trade across the Canada-US border, improving the state of port infrastructure, and eliminating tariffs with our trading partners have all dominated traditional Canadian trade research, policies, and media attention.
While such trade issues remain important, it is time to pay more attention to the ways in which digital technologies are changing Canada’s global opportunities, and to how we can best position Canada for future trade success in a global digital economy.
In particular
- Where does Canada stand in the global digital economy?
- Does digitization change the nature of Canada’s global trade?
- What relative strengths does Canada bring to the table?
- What are the barriers or threats to Canada’s global trade in a digitized world?
- How can Canada best position itself to be a leader in going global in a digitized world?
The Conference Board’s International Trade and Investment Centre plans to explore these and related issues in this series. The comment period on this series is now closed. The series will be revised based on comments received and published by the Conference Board in spring 2011.
Blogs in this Series