The long-run impact of digitalization on trade patterns

We employ the WTO Global Trade Model (GTM) to generate quantitative projections on the expected long-run impact of digitalization on global trade patterns. Five trends are modelled: (i) adoption of artificial intelligence which raises productivity growth;(ii) digitalization reducing trade costs, (iii) the shift to online sales (e-commerce), (iv) the reduced need for physical face-to-face interaction leading to lower trade costs; and (v) changes in data policies in response to these technologies which also impacts trade costs. We distinguish between a convergence scenario with larger productivity growth and trade cost reductions for low-income economies and a core scenario with uniform changes. The simulations generate three main sets of findings.