E-Commerce for Inclusive Development: Time for an Open Debate

This blog is published in collaboration with the United Nations Economic and Social Commission for Asia and the Pacific.

The potential of e-commerce to drive inclusive development has been debated for decades. As far back as 2002, then-United Nations Secretary-General Kofi A. Annan, in the publication titled E-Commerce and Development Report 2002, called for leveraging information and communication technology (ICT) for poverty reduction. Two decades have passed since that call to action, prompting us to reflect on how e-commerce has contributed to inclusive development, the lessons learned, and the policy implications that should guide us.

The potential of e-commerce to drive inclusive development has been debated for decades. As far back as 2002, then United Nations Secretary-General Kofi A. Annan, in the publication titled E-Commerce and Development Report 2002, called for leveraging information and communication technology (ICT) for poverty reduction. Two decades have passed since that call to action, prompting us to reflect on how e-commerce has contributed to inclusive development, the lessons learned, and the policy implications that should guide us.

A recent paper by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) examines how e-commerce has influenced two crucial dimensions of inclusive development: poverty reduction and women's empowerment. Both aspects are essential for achieving the Millennium Development Goals and the Sustainable Development Goals. The ensuing inquiries, based on the discussion in the paper, are designed to encourage more open and robust debates.

1. Are we ignoring the 'unreturned planes?'

The paper draws an analogy from history, harking back to mathematician Abraham Wald's assessment of the vulnerability of airplanes to enemy fire during World War II. Wald's insight was to consider the planes that did not return, not just the ones that did. Similarly, the paper questions the conventional approach of using case studies of successful e-commerce ventures to gauge their impact on inclusive development. These success stories can lead to a survivorship bias, as they only showcase those who passed a selection process, disregarding the experiences of those who attempted and failed. A comprehensive assessment of e-commerce's impact must include the stories of entrepreneurs, farmers, and traditional brick-and-mortar store owners who faced difficulties, as their experiences are integral for policymaking.

2. Do we truly comprehend 'empowerment?'

The term "empowerment" is frequently used in discussions about the impact of e-commerce, yet its precise significance in the e-commerce context often goes unnoticed. Empowerment essentially signifies the capacity to make choices. For these choices to be authentic and meaningful, they must fulfil two critical criteria: the presence of feasible alternatives that provide the potential for diverse choices and the acknowledgement of these alternatives. The literature review in the paper underscores that some women entrepreneurs could not secure employment beyond Facebook commerce, prompting us to question the extent of their choices. Furthermore, the paper stresses the significance of a growth mindset as an aspect of empowerment. The paper posits that there is a shortage of comprehensive studies on women's empowerment in the realm of e-commerce, calling for further exploration.

3. Why are poverty reduction and e-commerce inherently incompatible?

Contrary to the commonly held belief that e-commerce is a tool for poverty reduction, this paper argues that the two are inherently incompatible. Selling through e-commerce demands resources, knowledge, and capabilities that individuals in poverty often lack. Therefore, support from governments and e-commerce platforms is essential for those in poverty to be able to sell through e-commerce. However, the success of government support cannot be guaranteed, especially if an e-commerce ecosystem is not available in a country. This paper particularly argues that government’s advantages lie in policymaking rather than setting up and operationalizing an e-commerce platform.

4. Why is training not a panacea?

General training in e-commerce may raise awareness and provide basic knowledge. Still, there is limited evidence on how such activity has transformed the prospects of women and people in poverty. The paper argues that learning by doing and the real-world application of knowledge acquired are the only essential paths to meaningful and effective training. Engaging e-commerce platforms to provide action-oriented training tailored to specific groups is vital to enhance, though not guarantee, the training's effectiveness.

5. Are we hitting the nail on the head?

The paper argues that women's empowerment through e-commerce often depends on effective policies that foster women's entrepreneurship. Focusing solely on e-commerce may miss the point. The paper proposes an analytical framework on an entrepreneurial ecosystem in the context of e-commerce that considers government policies, regulatory frameworks, infrastructure, funding, cultural factors, mentorship, support systems, education and training, and market access. These components can impact women entrepreneurs differently and should be examined further.

6. What are the social value and social costs of e-commerce?

E-commerce inevitably creates losers, such as traditional brick-and-mortar stores, which are adversely affected by its growth. It is also undeniable that e-commerce also creates more jobs. However, there is very little understanding how the values created by e-commerce has been redistributed within a society, and there is little evidence to test whether a rising tide has lifted all boats. This paper emphasizes the need to estimate the social benefits and costs of e-commerce at a national level. Unfortunately, such studies are rare. Future research should focus on understanding how e-commerce creates and redistributes value in the economy.

In conclusion: love it or loathe it, e-commerce is here to stay

The recent example of Indonesia's ban on e-commerce sales via social media platforms to protect small businesses serves as a stark reminder of the complexity of e-commerce. While e-commerce opens up vast business prospects, it also raises critical questions about the disproportionate power wielded by platforms, leaving small players like sellers and buyers with a mere whisper. This paper reveals that that there is no overwhelming proof that e-commerce has fully realized its potential for inclusive development, which prompts a soul-searching question: will e-commerce ever realize its potential for inclusive development? Nevertheless, e-commerce is here to stay, and there is no going back. More in-depth research and candid discussions and debates are needed for sound and balanced policymaking.

This blog was first published by UNESCAP on 20 November 2023.