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From AI to Blockchain: Technological Frontiers in Global Trade

The impact of artificial intelligence (AI) on global trade extends far beyond the technology itself, reshaping every industry and facet of commerce. AI, projected to add $15 trillion to the global economy by 2030, is revolutionising sectors such as supply chain management, market analysis, and customer engagement. Chapter 3 examines the broader transformative effects of AI, alongside advancements in semiconductors, blockchain, cryptocurrencies, and e-commerce. 

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Strengthening Supply Chain Resilience

AI's ability to provide real-time data and insights is becoming indispensable in supply chain management, where it is used to predict and mitigate disruptions. This enhances the resilience of global trade networks against future shocks, as underscored by the recent pandemic.

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Improve Trust in Trade Finance

Automated services will enhance trust in trade finance as AI improves the detection of fraud, counterfeiting, and illicit activities by analysing financial records, transaction data, and shipping information. 

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Reduce Global Trade Barriers

AI will lower global trade barriers and improve compliance, thereby expanding market access. Large language models powered by AI will facilitate real-time translation, overcoming language obstacles between international buyers and sellers.

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AI Automation

AI will enhance trade services and operations by automating processes, thereby improving accuracy. Automation, including electronic invoicing and customer support through document handling and chatbots, will streamline administrative tasks in trade. This will increase sustainability, greater efficiency, and lower operational costs.

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Improved Market Analysis

AI will boost market analysis and competitive intelligence, notably in e-commerce, by swiftly processing and analysing large datasets from multiple sources, including trade databases, market reports, and social media.

Crypto and Blockchain Technologies:

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Digital currencies and CBDCs are increasingly integrated into trade, promising faster transactions and reduced transaction costs, enhancing efficiency across global markets.

  • Cryptocurrencies and CBDCs can execute cross-border transactions almost instantaneously, a significant improvement over traditional banking systems, which can take several days to process international payments.

Blockchain's Growing Role

Although adoption has been slower than expected, blockchain's potential to streamline transactions, increase transparency, and reduce costs remains significant for global trade.

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Challenges to Digital Currencies and Blockchain

E-Commerce Case Study in South East Asia

  • The value of the e-commerce markets in Indonesia, the Philippines, Thailand, and Vietnam is expected to more than double by 2030.

  • Southeast Asia's working population is projected to grow by 24 million individuals by 2030, contributing to increased consumption and economic activity, including in e-commerce.

  • Southeast Asia attracted a record $222.5 billion in foreign investments in 2022, driving growth and innovation in the e-commerce sector.

  • Southeast Asia is experiencing rapid growth in its e-commerce market, driven by factors such as demographic changes, increased internet and mobile penetration, regional integration efforts, investment inflows, and the migration of manufacturing and supply chains. 
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Learn More About The Ways E-Commerce Has Grown In Southeast Asia in the Case Study

Recommendations for Business and Government

Business Recommendations

  • Embrace comprehensive digital transformation. Businesses should embrace digital transformation, incorporating AI and fostering innovation culture across the organisation.
  • Invest in R&D and pilot programmes. Invest in R&D, pilot programmes to identify optimal tech uses, maximising value from emerging technologies.
  • Engage proactively on technology regulation. Engage regulators, help shape frameworks enabling innovation while addressing societal concerns for emerging tech.
  • Advocate for common standards and harmonisation. Advocate for common standards across regions, benefiting digital SMEs engaged in cross-border trade.
  • Leverage data analytics for business insights. Leverage data analytics for actionable insights into market trends, consumer behaviour, supply chain optimisation. weak points and implementing mitigation strategies.
  • Invest in e-commerce capabilities. E-commerce offers opportunities for businesses to reach new markets, engage with customers more effectively, and streamline transaction processes. Businesses should invest in e-commerce capabilities to expand sales channels and optimise inventory and logistics operations.
  • Monitor and push for blockchain progress. Continue observing blockchain progress, advocate standards advancement to facilitate widespread, secure blockchain adoption.

Government Recommendations

  • Diversify export markets: Despite slow growth, businesses should diversify their export markets, particularly in North America, Asia-Pacific, and Africa, to capitalise on growth opportunities in these regions.
  • Reconfigure supply chains against geopolitical shifts. Geopolitical tensions reshape trade flows, offering challenges and opportunities. To adapt, businesses must build flexible supply chains, explore new markets, diversify suppliers, and invest in alternative sourcing to mitigate disruptions.
  • Mitigate macroeconomic risks. Amid global economic uncertainty, businesses must monitor economic conditions, currency fluctuations, inflation, and taxation. Mitigate associated risks through strategic planning.
  • Invest in digital transformation and innovation. AI's rise in trading systems revolutionises business. Companies benefiting invest in understanding and use case development, while those not risk losing to competition.