Digital Australia: An Economic and Trade Agenda

The capacity of the Australian economy to grow and deliver sustained increases in living standards will require a boost to productivity. The use of digital technologies is a key driver of productivity gains and it will shape the global economy over the next decades. In fact, Australia’s Commonwealth Scientific and Industrial Research Organization (CSIRO) has identified increased immersion in a digital world—characterized by data-driven new business models, platforms, and e-commerce, enabled by global supply chains—as one of the global megatrends for the next 20 years. For Australia, this will require using the global internet and data flows as drivers of innovation and productivity to underpin further decades of economic growth, jobs, and rising living standards. For instance, in the US, it is estimated that the internet has improved productivity in the digitally-intensive sectors of the economy by 7.8- 10.9 percent. According to one estimate, taking full advantage of the opportunities presented by the ‘internet of things’, big data analytics, automation and online talent platforms could increase Australia’s gross domestic product (GDP) by an additional A$140 billion-A$250 billion by 2025. Building a digital economy is not merely about transforming physical goods and services into digital products. In a digital economy, data can be the product; it can be used to create digital goods and services and can be a source of information that leads to further action. The digitization of economic growth and trade will be increasingly driven by the use and extraction of value from data. The expansive use of data will be needed across the economy and within sectors that traditionally have been outside information technology (IT), such as manufacturing, mining, and agriculture. These digital developments have the following economic implications:

• Access to data and the capacity to turn it into actionable insights will be a growing source of economic value. In turn, the growing value of data-based insights will support new business models and services.
• The global internet and access to information is reducing barriers to commerce and international trade. As these barriers erode, opportunities for participation from small and medium sized enterprises (SMEs) and developing countries will increase.
• Competition pressures should grow as global internet access and digital platforms create opportunities for businesses to compete across industries and across countries.

Global data flows are also transforming the nature of international trade, creating new opportunities for all businesses—including SMEs—to participate in the global economy and to plug into global value chains (GVCs), while also increasing the opportunity and value of exports of digital services. This should also increase competition and raise productivity. The key developments in digital trade will be in the following areas:

• Businesses can use the internet (i.e., digital platforms) to export goods
• Services can be purchased and consumed online.
• Data collection and analysis can add value to goods exports.
• Global data flows underpin global value chains, creating new opportunities for participation.

  Digital Australia