Pare, Daniel

Deconstructing the E-commerce Myth in Developing Countries

Abstract

The received wisdom about B2B e-commerce is that its implementation has the capacity to enable producer firms in developing countries to sell their products and services more easily in external markets by potentially reducing the transaction costs they must incur to participate in international trade. It is expected that developing country producer firms will be able to achieve a previously unattainable international profile and that market barriers inhibiting the growth of developing country exports will be eliminated. B2B e-commerce also is seen as a means of reducing other trade-related transaction costs by providing opportunities to develop direct one-to-one trading relationships between buyers and sellers. In this optimistic view, B2B e-commerce promises a radical shift in the way in which enterprises trade with one another.

Drawing on findings about the use of B2B e-commerce applications by firms in the garment and horticulture sectors in South Africa, Kenya, and Bangladesh, this paper argues that e-commerce has only marginally altered the way in which enterprises trade with one another in these sectors. The evidence suggests that despite making efficiency gains in terms of processing orders for international trade, relatively few gains have been made at the actual transaction level. The paper concludes that policies aimed at promoting B2B e-commerce in developing country firms need to give greater consideration to the multitude of ways in which e-commerce applications are being used to deal with the operational challenges presented by different types of value chains.