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BRICS Economies as a Basis for Creating or Developing National Digitalization

来源:InfoBrics;发表于:2022-11-29;人气指数:123

Tuesday, November 29, 2022

 

BRICS Economies as a Basis for Creating or Developing National Digitalization

Daria Saperova, participant of the VI BRICS International School – special for InfoBRICS

The term “digital economy” since its inception in the mid-1990s has been characterized by rapidly changing technologies and how businesses and consumers use them. In the late 1990s, the first studies in the field focused mainly on the spread of the Internet and contained initial reflections on its economic consequences. An example is Understanding the Digital Economy: Data, Tools, and Research. As the Internet has spread since the mid-2000s, more and more attention has been paid to the conditions under which the digital economy emerges and, most importantly, can develop. In recent years, the trends of the digital economy have shifted to the search for optimal ways to distribute goods, services and technologies. Global brands and companies are going through the process of digital transformation as a standard, using the technologies and innovations of the digital economy for this. The digital economy continues to gain momentum thanks to the ability to collect, use and analyze huge amounts of electronic data on all topics. Such data is collected based on the analysis of the digital footprint left on various online platforms as a result of the activities of individuals, social groups or enterprises. The volume of global Internet Protocol (IP)-based traffic, which provides a rough indication of the magnitude of data flows, has grown from about 100 GB per day in 1992 to over 45,000 GB per second in 2017. Global IP traffic is predicted to reach 150,700 Gb/s by 2022 as a result of more new Internet users and increased penetration of the Internet of Things into everyday life (UNCTAD, 2019)

The emergence and rapid spread of the digital economy is one of the most important trends in world development in recent decades. The digital economy and related phenomena, among which digitalization stands out (the use of digital data and technologies, leading to the emergence of new or transformation of existing activities, have an increasing impact on the world economy, individual national economies and people's lives. The digital economy is developing very its progress in recent years is especially noticeable: the volume of world trade in goods, one way or another related to information and communication technologies (ICT), in 2015 exceeded 2 trillion US dollars, the production of ICT products provides about 6.5% of th of GDP, exports of ICTrelated services grew by 40% in five years (2010-2015), and more than 100 million people are employed by ICTs.

As the digital economy develops, new economic and political forces appear on the world stage that have to compete with the US and the EU. These economic systems are counterbalanced by the BRICS countries (Brazil, Russia, India, China and South Africa), the strongest of the emerging economies. The BRICS 2019 summit held in Brazil identified the key issues around which the members of the Commonwealth need to increase synergy: the digital economy, cybersecurity, as well as cooperation in the field of science, technology and innovation.

The most common challenges faced by the BRICS countries in the development of e-commerce include a lack of accurate data, logistics infrastructure, consumer confidence, regulatory requirements, facilitated crossborder customs clearance and talent. In addition to these general issues, each BRICS country has its own unique problems and challenges. For example, the development of e-commerce in Brazil faces customs and taxation issues. There are serious barriers in cross-border e-commerce in Russia. In South Africa, there are problems with payment and logistics. In China, the loss of confidence in e-commerce is coupled with the need to improve its regulation, especially in the area of consumer protection. The growth of the digital economy is becoming a determining factor in global development. The digital economy creates new incentives and opportunities for economic growth, which accompanied by deepening global inequality. At the moment, the BRICS countries are at different levels of development of the digital economy. In my opinion, this problem is serious and urgent. As Chen Chao said, "the need to focus on bridging the digital divide and narrowing the gap in digital infrastructure, digital technology and digital services." I fully agree with this statement.

I believe that in order to solve this problem and overcome the difference in the levels of development of the digital economy, it is necessary to deepen the dialogue and exchange of best practices in promoting digital development; Develop common standards for the production of digital goods and services, as well as promote the common interests of the BRICS countries in ensuring global information security.

Due to the fact that not all BRICS countries have comprehensive programs for the digitalization of the national economy, it can be proposed to develop within the framework of the BRICS a model strategy for introducing digital technologies into the economy, which would take into account the main modern trends in digitalization and could be used by individual BRICS economies as a basis for creating or developing national digitalization plans.

Digital technologies are entering modern life and production very quickly. The BRICS countries, in order to maintain their competitiveness in the future, are also forced to quickly introduce digital solutions into their economies. In order to contribute to the unification of the capabilities of the BRICS economies in the creation and implementation of digital technologies, it is proposed to create a Technological platform for sectoral ecosystems of the Digital Economy of the BRICS countries. On the basis of this platform, the formation of the National Information Infrastructure could be carried out to provide high-speed communication and a cloud platform for various government departments: from the government to the level of rural settlements.

The rapid development of e-commerce in international practice has already raised the issue of developing international agreements governing e- commerce. There are different approaches to the definition and classification of “digital products” and the types of agreements that should govern the online sale of goods and services (GATS or GATT). In this regard, it would be advisable for the BRICS countries, within the framework of the BRICS working group on e-commerce, with the involvement of representatives of interested departments, to develop synchronized approaches to these issues, which will create conditions and contribute to the development of national laws on the regulation of Internet commerce, the conclusion in the future multilateral trade agreement on e-commerce issues, including the procedure for taxing telecommunications services and e-commerce using automatic exchange of tax information, strengthening the positions of both individual BRICS countries and the forum as a whole in negotiations on e-commerce issues with countries outside the BRICS.

To create conditions for the development of all types of electronic commerce (B2B, B2G, B2C), equal recognition of foreign and national electronic signatures is required. In this regard, it seems important to develop rules and documentation requirements that regulate the procedure for cross-border electronic document management within the BRICS countries. At the initial stage, it is necessary to sign an Agreement on the use of information technologies in the exchange of electronic documents in cross-border trade. E-commerce will develop steadily (especially in the B2B and B2G sectors) only if financial transactions are reliably protected from access by unauthorized persons. The development of cryptographic information protection tools is a common problem facing all BRICS economies. Based on this, it seems appropriate to develop a project of the BRICS countries for the joint development of specialized means of cryptographic information protection. In particular, a scientific and innovative platform for digital security can be created based on the Kaspersky Lab, which provides for the study and exchange of experience of the BRICS countries.

The development of software and data transmission protocols for cross-border e-commerce is going on in parallel in many countries, which leads to a variety of technical solutions that are not always compatible with each other. In this regard, the BRICS countries could launch a project through the relevant departments (Ministries of Communications and ICT) to develop common approaches to the applied technical solutions and standardize all software protocols. The use of unified solutions will create additional conditions for the development of electronic commerce between countries.

The development of e-commerce will be actively influenced by emerging digital technologies. Russia is already actively engaged in the standardization of mechanisms for distributed ledger technology and blockchain technology and the introduction of blockchain in financial transactions. Considering the high degree of reliability and transparency of transactions carried out using blockchain technology, it would make sense for the BRICS countries to launch a joint project to develop and implement this technology. In the case of the introduction of this technology in cross-border trade, both the seller and the buyer get the opportunity to track the movement of goods in real time, which increases the transparency, predictability and attractiveness of foreign trade operations.

The development of cooperation between the BRICS countries in the implementation of digital technologies will be facilitated by the harmonization of national laws governing the use of technologies of the Internet of things, distributed information storage (blockchain) and big data, as well as the deployment of fifth generation networks.

One of the central problems in cross-border trade is the problem of VAT payments. The lack of a uniform approach to resolving this issue leads to the erosion of the tax base of a number of countries and the withdrawal of profits from taxation. The BRICS countries at this stage are actively developing ecommerce, in this regard, it is important to agree in principle on the positions and reach agreements on this issue. It would be advisable to consider the possibility of creating a unified mechanism for the collection of VAT when foreign organizations provide services via the Internet to individuals. It is important to define a unified list of such services, the places of their provision, the procedure for paying VAT, etc.

As a basis for expanding cooperation between the BRICS countries in the tax sphere at the first stage, the OECD Agreements on the automatic exchange of information, the Common Transmission System of the transport infrastructure for the automatic exchange of information for tax purposes and the Network on joint information exchange in the field of international taxation (JITSIC). Based on already existing international agreements and opportunities, the BRICS countries can intensify their cooperation in their national segments.

Online purchases are delivered via international mail and are often regarded as goods for personal use, in this regard, foreign online stores do not bear the burden of import customs duties and can offer lower prices, which creates unequal conditions for the functioning of online and offline trade. In order to intensify mutual electronic commerce, maintain healthy competition and equalize the conditions for conducting trading activities on the Internet for domestic and cross-border transactions, it is advisable for the BRICS countries to develop common approaches to regulating electronic commerce, up to the adoption of an interstate agreement in the future. Considering that the positions of the BRICS countries on this issue may differ, in order to mitigate the contradictions, it would be possible to propose not a one-time, but a gradual reduction in the threshold for duty-free Internet commerce.

Almost all BRICS countries face poor (in terms of delivery time) quality of cross-border B2C e-commerce. In this regard, the BRICS countries could implement a project to exchange best practices in organizing logistics for the delivery of goods within the framework of electronic commerce. Quite often, goods supplied as part of electronic cross-border trade do not meet the declared quality. In this regard, it would be advisable for the departments of the BRICS countries responsible for the development of cross-border trade (ministries of trade, economy, etc.) to create on a temporary basis a special group of experts authorized to discuss possible measures and practices to improve the quality of the supplied goods. The result of the work of this group could be a set of agreed recommendations to the governments of member countries aimed at mutual protection of consumer rights in the segment of Internet commerce and improving the quality of goods in foreign trade.

An interesting direction in the development of modern economies is the formation of new financial technologies. One of the areas of fintech is the use of cryptocurrencies. Currently, the Central Bank of the Russian Federation has a negative attitude towards the introduction of cryptocurrencies into widespread practice. Despite this, given that the BRICS countries (PRC, South Africa) have experience working with cryptocurrencies, it seems appropriate to intensify cooperation within the BRICS on the use of cryptocurrencies. In particular, it would be possible to consider the issues of harmonization of approaches to the use of cryptocurrencies in international settlements within the BRICS; creation of a single exchange of cryptocurrencies of the BRICS countries; the use of cryptocurrencies in international settlements, etc. Russia's participation in such projects will provide Russia with access to the experience of the BRICS countries in regulating the cryptocurrency market and will allow it to keep up with global trends in the development of the use of cryptocurrencies.

The role and significance of the joint activities of the BRICS countries in the formation of the digital environment, as well as in the formation of instruments for supranational regulation of electronic commerce, will be due to the fact that the BRICS countries will undoubtedly be able to take advantage of the results of the synergistic effect from cooperation. The BRICS countries can form such norms of supranational regulation that will allow them to be active participants in the digitalization of the world economy, determining trends and prospects for the development of the global economy.

At the same time, the level and degree of regulation of the digital environment in the BRICS countries varies significantly and is determined by national priorities. Thus, the problem of ensuring national cyber security is essential for the PRC, for which the Law on Cyber Security was adopted in November 20163. As required by the Law, companies are required to store their data locally in offices and provide the authorities with encryption keys upon request. Providers are required to store user passwords and ensure that they are freely transferred to the authorities to ensure access to any data.

A direct consequence of the implementation of the law will be support for national IT companies and indirect restrictions on the activities of Western companies in this sector of the economy. The implementation of the law will allow law enforcement agencies to freeze the accounts of foreign citizens and organizations that are suspected of causing damage to China's state information infrastructure. The state also intends to tighten power control over the Internet space: special police units will be created to ensure cybersecurity. Control over software vendors for critical infrastructure facilities will be strengthened.

China demonstrates consistency in upholding its sovereignty and national security in cyberspace. The main direction of regulation of cyberspace is the tightening of regulations for working in it, which is quite understandable, if we keep in mind the scale of the Chinese Internet market. Tighter regulation of cyberspace will create inconvenience, but is unlikely to entail the voluntary exit of foreign providers from the Chinese market, unless they are forced to leave the Chinese market under pressure from the authorities, as was the case, say, with Google, which abandoned Chinese censorship and exited the Chinese market in 2010.

Source: InfoBrics

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