WTO and e-commerce diffusion in developing countries : the case of China's coastal urban area

Abstract

The increasing use of Internet and the potential of e-commerce give rise to important policy issues relating to both national economic policy and multilateral rules of international trade. Motivated by the argument that the liberalization commitments made at the World Trade Organization (WTO) may have a major impact on the e-commerce development, this research aims to investigate the relationship between WTO commitments and e-commerce diffusion in developing countries by using China’s coastal urban area as a case study. Taking critical realism as the underlying philosophy, the research develops two process models to answer the research questions. The model at the lower level focuses on the single process of how the WTO commitments can affect an individual infrastructural sector related to e-commerce. It was developed by analyzing the four most important e-commerce input sectors: telecommunications, banking, logistics and express delivery, and information technology (IT). The model at the higher level is a network combining the processes at the lower level, examining the overall effects of WTO commitments on e-commerce diffusion. Nine propositions were made from the higher-level model. Conclusions are drawn from outcomes in verifying these propositions. The WTO commitments are found to have indirect effects on liberalization in telecommunications, banking, and logistics and express delivery services. Improvements in these sectors have made information infrastructure and commercial services less important barriers to e-commerce than other issues. In addition, the WTO commitments have directly boosted Chinese enterprises’ interest in e-commerce adoption and positively affected the taxation policy on e-commerce. All these have positively influenced e-commerce diffusion in China, while the effects of the WTO commitments on IT product imports, computer and related services, intellectual property rights (IPRs) protection, and educational services have not been evident. This research is the first study to use a specific case to examine the WTO rules in the context of e-commerce diffusion. It has implications for both research and practice. First, by examining the interactions between the external pressure from multilateral agreements and internal forces of domestic institutions, the research investigates the actual process of how the impacts of the WTO rules can be materialized. Second, the thesis confirms the argument that while the socio-economic challenges to e-commerce are difficult to surmount, the path to reducing regulatory barriers is clearer and the benefits quicker to observe. Government action is critical to removing these impediments to electronic commerce. Show more