31 July 2019
The Possible Economic Impact Of Smart Ledgers On World Trade
Background:The seminar will explore an econometric approach that maps trade frictions that Smart Ledger technology might be able to offset, especially in the realm of non-tariff and bureaucratic barriers to trade. We will discuss the following conclusions:
- Smart Ledger technology could boost world trade in goods by at least $35 billion dollars per annum.
- The cost of importing a single container could, therefore, be reduced by around $46, by simplifying procedures.
- These potential benefits are driven by a 2.5% cost clawback assumption, supported by case studies on previous technological advancements in trade. One such case study is containerisation, where the cost savings have been calculated to be in the range of 20%.
- If reduced uncertainty is, also, taken into account, using option pricing theory, the potential gains become even larger, with a potential monthly net cost saving of $172 million (or, approximately, $2 billion per annum).
- This would boost world GDP by $10 to $20 billion and could, potentially, add between 450,000 and 900,000 to the worldwide demand for labour, boosting wages and living standards worldwide. The World Bank estimates that 10.7% of the world’s population still lives in extreme poverty, with an income below $1.90 a day (2011 prices).