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The Edge: Digital Diplomacy

With rising geopolitical tensions and a slowdown in goods trade, observers are concerned about deglobalization. However, one sector defies this trend: the digital services trade, which continues to grow thanks to technological innovations. While technology has introduced a new phase of “digital globalization,” it also has sparked political backlash due to growing concerns over privacy, inequality, market concentration, and risks posed by AI. In response, governments have adopted a range of regulatory strategies.

To address these issues, Stephen Weymouth, the Provost’s Distinguished Associate Professor of International Political Economy, shares insights from his book, Digital Globalization: Politics, Policy, and a Governance Paradox

Your book analyzes digital markets as a key consideration for the future of globalization. What are the main takeaways? 

There is a new wave of globalization that has taken hold through advances in AI and other digital technologies. While governments responded to the globalization of goods by eliminating restrictions and increasing the flow of trade, there is more hesitation as they grapple with data privacy laws and the rise of technology “superstars” that dominate the digital landscape (think: Google, Baidu, and Alibaba, among others). My book presents a framework to explain the rise of digital trade barriers and to identify the potential for international cooperation on digital governance issues. 

How can countries work to globalize their digital economies? 

To successfully integrate digital economies, governments will need to liberalize restrictions on digital markets and converge around issues on which countries have historically been misaligned—privacy laws, competition policy, and multinational taxation. 

There is a general backlash against globalization right now. While the impulse may be to restrict trade, history tells us that globalization increases welfare, lowers the risk of global conflict, and creates more opportunities for innovation and economic growth, so it is in the interest of all of us to come to the table and find common ground. 

How will the private sector react to global policy coordination on data issues? 

The big tech companies have been the big winners of digital globalization thus far, so there may be some resistance to major reforms of privacy or competition on a multilateral level. On the other hand, businesses do not appreciate policy ambiguity because it increases compliance risk. Even if some reforms have the potential to harm the bottom line of the big tech companies, more stability in the international system is in the best interest of corporations and their consumers as we strive to integrate our digital markets and enhance economic cooperation.

This story was originally featured in the Georgetown Business Spring 2024 Magazine. Download the Georgetown Business Audio app to listen to the stories and other bonus content.

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