United Nations Conference on Trade and Development (UNCTAD) Policy Briefs

Artificial intelligence can be deployed virtually anywhere, extending its influence across borders. Yet its development is largely driven by a few technology leaders. Governments therefore need to establish policies ensuring that its development serves the public interest and benefits all. International artificial intelligence governance initiatives are directed by developed countries, while many developing countries, despite having significant stakes in the future of artificial intelligence, have limited influence over its trajectory. There is a risk that such an imbalance may undermine the legitimacy and effectiveness of global governance and hinder efforts to promote artificial intelligence as a global public good. An inclusive and multi-stakeholder approach is essential in order to ensure that artificial intelligence is accessible and beneficial for everyone, while fostering innovation to advance sustainable development. Ensuring benefits for all while fostering innovation requires incorporating accountability mechanisms into global artificial intelligence governance, to align its development with shared goals and values. In addition, international cooperation is critical, particularly with regard to the three key drivers of artificial intelligence transformation, namely, digital infrastructure, data and skills.

Electronic commerce (e-commerce) is reshaping the global economy, transforming consumption patterns while driving economic growth. The value of the sector rivals that of global trade in goods and services, and keeps expanding. E-commerce platforms help millions of businesses, many of which are small and medium-sized enterprises, sell online, overcoming barriers such as physical market access, infrastructure gaps and social constraints. However, the benefits of e-commerce remain uneven, with most developing countries lagging in the adoption of online shopping. It is also critical to ensure that this global transformation does not compromise environmental sustainability. The environmental impact of e-commerce depends on the type; business-to-consumer e-commerce implies a growing number of smaller packages, deliveries and returns, while business-to-business e-commerce may be more efficient, with bulk orders requiring less packaging and allowing for streamlined delivery. The different stages of the business-to-consumer e-commerce logistics chain for goods (warehousing, packaging, transport, returns) are examined in this policy brief, along with changing consumer behaviour. In addition, the need to rethink these elements is highlighted, to reduce the environmental footprint of e-commerce, while creating a regulatory framework that balances environmental sustainability with economic growth.

Banks often use intermediary banks through CBRs to enable cross-border payments. These relationships are, therefore, critical for international trade transactions that rely on those payments. In recent years, CBRs have declined in many developing economies, and the de-risking strategy of some banks contributes to this trend. This decline in CBRs creates a challenge for LDCs, LLDCs, and SIDS to conduct trade. This brief examines the cause of declining CBRs, and presents a preliminary assessment of how it can affect trade, and proposes possible pathways of action.

Climate change can have physical and economic impacts that affect core areas of central banking, including inflation and financial sector stability. Central banks, including those of LDCs, need to reevaluate their options in the light of the climate crisis and the global low-carbon transition. This policy brief outlines the ways central banks can identify policy tradeoffs and determine how to best incorporate climate-responsive policy and analytical tools in their operational frameworks. There is increased awareness of how climate change risks can have profound effects on financial sectors and other economic sectors. Two broad classes of climate risks can create financial stress: physical risks – arising from the direct and indirect consequences of climate-related events – and transition risks, associated with the shift towards a low-carbon economy. Examples of physical risks include increased frequency and intensity of extreme weather events, such as hurricanes and floods that damage assets and disrupt supply chains. Transition risks relate to regulatory changes, technological progress, and market shifts that impact the value of investments to which carbon-intensive industries are especially exposed.

Israel has occupied Gaza and the West Bank, including East Jerusalem, since June 1967. Despite the “withdrawal” of Israel from Gaza in 2005, it has retained control over its airspace and all land and sea borders, except for the 12 km border with Egypt. Since the early 1990s, and greatly amplified after 2007, the Palestinian people in Gaza have been subjected to prolonged and severe restrictions on their movement that, in combination with tight restrictions on trade in goods, in effect amount to a blockade on the densely populated 365 km2 Gaza Strip. Furthermore, Israel does not allow the construction and operation of air or seaports and bans or restricts the importation of critical production inputs and technology.

The green and digital transitions have developed in parallel to date, especially in latecomer countries, but green and digital technologies are increasingly becoming intertwined. In this policy brief, greening and digitalizing options for latecomer countries are examined, along with opportunities for benefiting from this twin transition in global value chains. The focus is on environmental and technological upgrading and on how global value chains can become greener by switching to the use of digital frontier technologies associated with smart manufacturing, often referred to as industry 4.0 technologies.

In the last two decades, the use of frontier technologies such as artificial intelligence, the Internet of things and energy from renewable sources has undergone significant growth, and this trend is expected to continue. However, there is still considerable concentration in these markets. The leading frontier technology providers are mostly firms from China, the United States of America and a few other developed countries, with little participation from developing countries. The same pattern is observed with regard to knowledge generation and trade. Governments of developing countries should take proactive action to increase preparedness to use, adopt and adapt such technologies and to take up the economic opportunities linked to them. Some of the challenges associated with the adoption of new technologies in developing countries are addressed in this policy brief, and some policy recommendations are proposed.

Increasing the share of manufactured goods in total exports would be beneficial to least developed countries (LDCs), but achieving industrial growth remains elusive. This goal can be jeopardized by the increasing use of trade policy measures to achieve climate or environmental goals. While these goals are legitimate, uncoordinated measures by systemically important traders can have adverse consequences for LDCs. To attenuate them, these traders should adopt special measures to help LDCs adapt to the evolving international regulatory scene. LDCs should invest more on upgrading their productive capacities and intensify trade with regional markets.

The African Continental Free Trade Area is set to promote structural transformation in States parties, in addition to strengthening sustainable and inclusive socioeconomic development and improving gender equality. However, to achieve the desired outcomes and maximize benefits, it is imperative for implementation to be undertaken carefully, with strong and appropriate institutions underpinning the process. A key aspect of any trade agreement involving different parties is the dispute settlement mechanism, aimed at fostering trust, accountability and the rule of law in operationalizing the agreement. UNCTAD, in this policy brief, analyses the framework of the dispute settlement mechanism under the African Continental Free Trade Area Agreement by comparing it with other dispute settlement mechanisms under regional economic communities and the World Trade Organization, with a focus on challenges. In addition, recommendations are made for enhancing the dispute settlement mechanism, to ensure that it is more accessible and aligned with the preferences of member States of the African Continental Free Trade Area.

Climate change impacts on seaports can result in significant and costly damage, operational disruption and delay across global supply chains, with important implications for international trade and the sustainable development prospects of the most vulnerable countries. Timely and effective action on adaptation is a matter of growing urgency. Major scaling up of capacity-building and finance will be critical for developing countries, and time is of the essence.