The future of global trade is being affected by two contrasting factors. One is increasing protectionism thanks to acts such as the US withdrawal from the TPP and UK’s from the EU. The other factor is the increasing digitization that is blurring national boundaries. As a result of the latter, it is the platform-based economy that is replacing the pipeline model. This model saw manufacturing get outsourced away from developed countries to developing ones. Now the scale of this model is reducing thanks to reduced expenditure in the home developed countries using robotics and automation. Developing countries have also seen an upsurge in commodity consumption leading to a slower pace of delivery of final goods to the developed ones. Another impact is that while goods traffic is plateauing, services is actually growing. GE and Siemens as a result are leveraging their enormous data warehousing capabilities to venture increasingly into providing services instead of equipment. This platform economy is also enabling many smaller players to participate in the global marketplace taking advantage of platforms such as Alibaba’s, with We Chat and Amazon soon set to join in. All this will make platforms even more power. Salesforce’s Einstein and IBM’s Watson for example are already providing cutting edge business intelligence to organizations. A lot of traditional big companies that are supply-chain leaders too will need to rethink their strategy to occupy some space on the platform side. Such platforms will even affect low-income countries such as Philippines and Bangladesh who may lose jobs in the future to the army of freelancers working now in the gig economy.

Source:https://knowledge.insead.edu/blog/insead-blog/how-the-platform-economy-is-reshaping-global-trade-9991

Uploaded Date:11 September 2018