The Role of

Information Technology
in
Foreign Trade
 1. Introduction
Information technology ('IT), as defined
by the Information Technology Association of
America (ITAA), is

"the study, design, development,

implementation, support or management of
computer-based information systems,
particularly software applications and
computer hardware."

IT deals with the use of electronic computers

and computer software to convert, store,
protect, process, transmit, and securely
retrieve information.
 1. Introduction…cont’d
 IC Technologies facilitate the delivery of basic
social services:
 Health
 Education
 Agricultural extension services
 Good governance
 In general:
 Those who can best receive, process, adopt
and innovate information are winners!
 Conducting old businesses in new ways and
embracing new business opportunities has now
become part of any economic transformation.
 Growing use of ICT as a medium for business
information/knowledge processing and exchange.
 1.1. Motivation and Objective
 Not much is known about the application of ICT in
facilitating domestic and international trade.
 Objectives of the study
 Assessing the ICT and trade policy environment
 Identify gaps in the legal and regulatory frameworks
 Assessing the awareness and usage of ICT in foreign
trade .
 Methodology (several methods):
 Systematic analysis and review of policy documents
 Review ICT and trade statistics from secondary data
 Primary survey data
 Interviews with knowledgeable informants
 Case studies.
General problems of Non-IT based
Foreign trade transactions

The general problems of non IT

based foreign trade transactions are:
 Lengthy and complex Documentation
 Maintenance of transactions and also
monitoring the usage of foreign
exchange
 Slower Communication between
buyer and seller
 Existence of human errors while
filling documents.
 Limited information on target
markets .
 Marketing opportunities are limited.
 Market research information not
available easily.
Need for Information Technology
in Foreign Trade

The need for IT in foreign trade is to

satisfy consumer’s demands for:
 Lower Prices
 Faster transaction
 High quality of products and
services.
Enterprise and Owners profile
 Majority of the firm managers are
male(93%)
 80% have either college diploma or
degree
 48% are sole proprietorship, 43%
partnership
 The majority (65%) are engaged in retail
and whole sale trade
 More than 50% employ less than five
workers
 ICT Penetration and Utilization
 What type of ICTs used?
 Fixed line, mobile, fax, PBX, PCs, LANs,
Website, internet.
Number of Tel. Lines Frequency Percentage
1-3 29 72.5
4–6 3 7.5
7 – 10 4 10.0
16 1 2.5
TOTAL With Fixed lines 37 92.5
W/O Fixed Line 3 7.5
Total 40 100
 ICT Penetration …cont’d
Number of Frequen Percenta Purpose to connect to the Internet
Mobile cy ge
Tel. Lines 80
1 14 35.9 70

2 7 17.5 60
50
3 7 17.5

Firms(%)
40 Series1
4 7 17.5 30
6 2 5.0 20

20 1 2.5 10
0
41 1 2.5

Information
TOT. W. 39 97.5

Topurchase
search

goods and/or
product/service

services
Electronic mail

informationto
customers
Togive
(e-mail)

Mob. lines
Do not use 1 2.5
mobile Purpose
Total 40 100
ICT Penetration …cont’d
E-mail services are the most important use of
internet.
Annual Expenditure for the Internet Connection
No. of
Birr companies Percent
0 - 20,000 14 40
20,001 to 40,000 6 17
40,001 – 60,000 7 20
60,001 – 80,000 3 9
Above 80,000 5 14
 Total 35 100
 Sales via the Internet
 About 45% stated that they have
received orders via the internet.

 However, online payment has not

been possible.
 Purchase via the Internet
 About 45% of the firms have made orders via
the internet to purchase goods and services.
What Motivates?
Main Motivations Number Percent Rank
reduce production/service procurement 16 40.0 25(2)
cost
speed up product/service procurement 16 40.0 49(1)
process
outreach to new suppliers 14 35.0 15(3)
Because of competition from 10 25.0
competitors
prevent theft and crime 12 30.0
avoid corruption 8 20.0
Others 1 2.5
 Advantages of Using ICT in trade
Advantage Number of Percent of Rank
firms firms
Reduces transaction cost 37 92.5 60(1)

Expedite sales and purchases 26 65.0 22(3)

Better security of transaction 26 65.0

Helps to deliver goods and 26 65.0 39(2)

services faster
Improve customers 30 75.0
satisfaction
Avoid corruption 17 42.5

Others 2 5.0
Elements of IT used in Foreign
Trade
 Internet

 Electronic Bulletin Boards And

Closed Systems

 Software and Data Products

INTERNET
Through the Internet, businesses are now
able to find suppliers and buyers, conduct
valuable market research, and post
information on their products and services.
At an even more sophisticated level,
exporters can now use the Internet to do
everything from submitting documentation
to booking a container on a ship.
Internet Allows:
 Faster and cheaper communication
between buyers and sellers of
various countries.
 Publishing of various sites to
promote goods and services.
 Searching of prospective markets.
 Getting acquainted with latest trade
laws applicable in other countries.
 Sending of visual samples of
products and also advertisements of
the product / service to the buyer
by email.
 Getting market survey information
from different countries.
 Exchanging copies of documents.
Electronic Bulletin Boards
The openness and semi-chaotic structure of the
Internet can be overwhelming. Fortunately,
businesses can take advantage of more controlled
closed systems.
For example Economic, the U.S. Department of
Commerce's Bulletin Board (EBB) allows users to
search through Trade Opportunity Leads released
every business day. The EBB is also a source for
statistical releases from a variety of government
agencies such as the Bureau of Census, Bureau of
Economic Analysis, Bureau of Labor Statistics, and
the Federal Reserve Board.
 In addition, the U.S. Chamber of Commerce
is now marketing the International Business
Exchange Network (IBEX), a new system to
help exporters find, qualify, and negotiate
with business partners worldwide via
personal computers. IBEX also gives users
access to a wide range of services and
market research from both the private and
public sectors
Software and Data Products:
Hundreds of export-related software
products and databases are on the
market.
Some categories include tariff
information, export accounting
software, documentation software, duty
drawback software, contact directories,
trade' statistics, market information,
and export control software.
Uses of Software and Data
products:
 For reduction in complexity and
increasing the accuracy in
documentation.
 For proper maintenance of accounts
in domestic as well as foreign
currency.
 For faster transaction.
EXAMPLES OF SOFTWARES IN
FOREIGN TRADE:
 EXPORT-INDIA
 VISUAL IMPEX
 VISUAL AKASH
 VISUAL SAMUDRA
 VISUAL X-PORT
 LOGI-SYS
Conclusion:

Information technology is a part of

all businesses in the current era of
Digital progress. The incorporation
of IT in foreign trade enables it to
operate effectively and efficiently,
thus resulting in the economic
growth of the country
Conclusions…..
 Although the potentials that ICTs can offer for
human and economic development are well
known, some countries has not been able to
fully benefit from developing the ICTs industry
as a sector and using ICTs as an enabler.

 Not much is known about the use of ICTs in

facilitating domestic and international trade.

 The main goal of this project has been to assess

the use of ICTs in facilitating trade and thereby
identify the gaps in policy and regulatory
frameworks to promote e-trade.
 Conclusions…
 On the positive side:
 ICT is considered as a cross-cutting edge in the
SDPRSP and PASDEP documents.
 The industrial development strategy recognizes that
an efficient and reliable telecommunication
infrastructure is crucial to expand the ICT sector
and improve the usage of the technology for
industrial development in the country.
 Practical efforts are observed on the expansion of
ICTs infrastructure
 Although, still more efforts are needed, ECuA’s
reform and modernization are encouraging.
 The draft ICT policy has clear guiding principles for
the implementation process including long, medium
& short term plans.
 Conclusions…
 On the negative side:
 Most sectoral policy documents reviewed did not
clearly articulate the role gov’t can play to facilitate
the use of ICTs.
 The agricultural policy has yet to provide specific
directions on the use of ICTs in the system of production
and in the distribution of agricultural products.
 The trade policy does not explicitly recognize and
appreciate the role of ICTs in facilitating trade.
 Very little attention has been given to the role of the
private sector’s participation in ICTs development
 The current Foreign exchange directives have serious
bottleneck for the development of e-commerce
 The absence of an appropriate legal and regulatory
framework is one of the main constraints for the
expansion of online trade.
Tentative Recommendations
 Mainstreaming of ICTs in all sectors of the economy.

 Ensure ICT friendly legal and regulatory

environment:
 The use of electronic document
 electronic signature
 legal recognition
 enforceability
 Develop ICT oriented education and training
systems, science and technology policies and
strategies
 Liberalization of the telecom infrastructure
 Providing incentives for ICT development :
 tax,
 private sector capacity building programs,
 trade facilitation centers
Tentative … cont’d
 appropriate institutional arrangement that will
facilitate an effective co-ordination, monitoring
and evaluating ICTs application.

 Formulate comprehensive communication &

broadcasting policies.

 Encouraging capacity building programs on ICT

skills development in the public & private sector.

 develop specific ICT private sector development

programs like Technology parks, business ICT
incubators for Business Process Outsourcing
(BPO).
BIBLIOGRAPHY:
www.google.com
www.encyclopedia.com
www.wikipedia.com
www.altavista.com
 Thank you

QUESTIONS ???