Week 8.2 - Digital Development in the Age of Global Production Networks Flashcards
Why do tech firms prefer general terms like ‘digital technology’, ‘digitalisation’, and ‘data’?
To make their strategies seem inevitable and universal, rather than contestable transformations
What happens during ‘moments’ of digitalisation in a sector?
New interests enter and attempt to renegotiate power but must still contend with existing actors
Who are some actors that tech platforms must contend with in digitalisation efforts?
Public policy actors, politicians, civil society, and other businesses
Do tech platforms act alone when entering the development space?
No, they often collaborate with other actors despite having core commercial interests
How do some media and economic accounts misrepresent digitalisation?
By equating technological affordances with actual impacts and ignoring the difficulty of scaling and power dynamics
Is it easy for developers to scale digital technologies to poorer or rural users?
No, scaling requires extensive outreach and an iterative process due to the influence of informal power brokers
What makes disintermediation difficult in rural or low-income settings?
Informal intermediaries are deeply embedded, making it hard to bypass them
How do tech firms integrate themselves into public policy?
By investing in infrastructure, training, and offering cost-saving services
What kinds of alliances do tech firms form to shape digital development?
Alliances with international organisations and non-profits with shared or commercial interests
How do tech firms use research to influence policy?
By funding research in areas like fintech and behavioural economics that align with their capabilities
What role do tech firms play in academic research?
They provide access to big data and collaborate directly with researchers
How do tech firms present themselves in global governance discussions?
As experts in forums like the ITU and WTO e-commerce meetings
What political tactic do tech firms use to shape regulations?
Lobbying
Does technical affordance automatically lead to impact?
No, affordance does not equal impact
What is a common issue in respected publications regarding digital technologies?
They often contain unverified claims about digital applications
What myth exists around disintermediation in digital development?
That it will occur almost magically without confronting real-world complexities
Are claims about digital apps like Digifarm always verified before being celebrated?
No, many apps are labelled successful before proper evaluation
How are low-income countries represented in digital trade talks?
They remain underrepresented
What does underrepresentation of low-income countries risk?
It risks creating one-size-fits-all global rules driven by advanced economies
What is the consequence of excluding low-income country voices in digital discussions?
Legitimate development concerns may be overlooked
How should revolutionary digital development claims be treated?
With skepticism until solid evidence is available
What specific metric should be scrutinised in digital impact assessments?
The difference between users and active users
What was the Seacom cable project?
A 2009 initiative to bring fiber optic internet to East Africa
Is the internet a single unified web?
No, it’s a network of intermediated networks
What characterises wired internet infrastructure?
Higher upfront costs but cheaper and faster in the long run (e.g. copper wires, fiber optics)
What characterises wireless internet infrastructure?
Lower upfront costs but more expensive over time (e.g. radio, GSM, LTE, Starlink)
What is the role of the cross-border network in the data infrastructure supply chain?
It connects service centers to the global internet over distances typically under 1000km
What is the function of the middle-mile network?
It links larger cities and routes data to service centers over 10–1000km
What does the last mile of internet access refer to?
It distributes internet from the middle-mile network to homes and businesses within 1–5km
What is the function of a firewall in IP networks?
It inspects incoming traffic based on administrator-defined rules to protect or censor access
What does an IP address represent?
It identifies a physical internet connection, situating it both virtually and often geographically
How does a firewall assess incoming internet messages?
It uses rules and checks the IP address to determine if the data is trustworthy, malicious, or illegal
What shapes people’s experience of digital connectivity?
It is shaped by both physical geography and social-political context
What are examples of application platforms in digital infrastructure?
E-commerce, industrial platforms, and tools like Digifarm
What services are included in web services infrastructure?
Cloud computing, servers, and data center services
What devices fall under retail digital devices?
Mobile phones, tablets, PCs/laptops, and modems
What comprises national digital infrastructure?
National fiber optic networks and mobile technologies like 3G, 4G, and 5G
What makes up international infrastructure?
Submarine, terrestrial, and satellite communication links
What is digital governance?
It includes standards, laws, policies, and norms governing digital systems
What is an API in digital systems?
A set of communication protocols enabling software components to interact
What is the purpose of an open API?
To allow third-party developers to build within a platform’s backend, increasing interoperability and flexibility
How do platforms facilitate interaction among users and developers?
Through a multi-sided architecture using APIs
How does openness and interoperability benefit platforms?
It allows third-party developers to scale and integrate, reducing redundancy
What market effect does growing participation on a platform cause?
Network effects lead to greater centralisation and increased market share for the platform operator
How do platform operators control the platform economy?
They set market terms and entry conditions aligned with their commercial interests, influencing behaviour
Do all business platforms operate in the same way?
No, they differ in structure, objectives, and revenue models
What do e-commerce or consumer-facing platforms do?
They match supply and demand, centralise market data, and generate revenue through data and advertising
What do industrial or innovation platforms coordinate?
They manage production across firm boundaries with less centralised data and revenue from subscriptions or productivity gains
Why are industrial platforms more fragmented?
Due to sector-specific expertise, local incumbents, and less standardised data flows
How does ideological orientation affect digital infrastructure?
It influences coverage and cost of services for different populations
What do ICTs complement rather than replace?
They complement infrastructures like electricity, roads, finance, literacy, political power, and more
What percentage of non-users in low- and middle-income countries cite digital literacy issues?
Nearly 70% are held back due to digital literacy deficiencies
What cost reductions does digital infrastructure offer?
It lowers the cost of retrieving information, coordination, and transactions
How does transport infrastructure improve trade?
By reducing the costs of physically moving goods across borders
What impact do electricity, water, and waste infrastructure have?
They reduce domestic production costs per worker
How do knowledge infrastructures help production?
They lower the cost of innovation and skilled labor production
What happens when digital and transport infrastructure are combined without others?
Trade efficiency improves but domestic production becomes less competitive
What is the result of combining digital, transport, and utility infrastructure?
It enables production but usually at low value and with disadvantageous terms of trade
What occurs when knowledge infrastructure is added without production policy?
It generates relevant knowledge, but risks brain drain and unemployment if local industry doesn’t absorb it
What is required to achieve higher value production and better trade terms?
All four infrastructures—digital, transport, utilities, and knowledge—must be developed together
Can countries leapfrog development by focusing on digital infrastructure alone?
No, infrastructural complementarity is necessary, and leapfrogging is not possible without it
What challenge do low and middle-income countries face with ICT professionals?
They are educating ICT professionals but not retaining them due to brain drain caused by large wage differentials
What are two ways governments can treat ICT?
As a business or as a public utility used for internal government functions
What are some common areas of digital governance policy?
Internet filtering, privacy, security, and censorship
What does data localisation require?
It mandates foreign firms to store data within the country, necessitating local data centres
What are local content requirements?
Rules requiring foreign firms to use local hardware or media content
What is an example of local content enforcement?
Huawei in Algeria for hardware or Netflix being required to use local film content
What is source code transfer in governance?
A requirement for foreign firms to share or transfer source code to the host government
What is the purpose of digital tariffs or taxes?
To regulate and monetise digital services provided by foreign firms
How do governments support domestic champions?
Through financial aid or preferential tenders
What legal tools can be used to limit platform monopolies?
Tougher competition and anti-trust laws
What stance has the US historically taken on digital protectionism?
It has opposed it, promoting a free internet influenced by libertarian tech values
What role did US tech firms play during the Obama administration?
They became some of the most powerful lobbying groups in Washington and Brussels
Why has the US pushed for digital freedom in trade agreements?
Because such agreements are enforceable and can shape global digital rules
What did the US do when global trade negotiations didn’t go its way?
It pivoted to regional and plurilateral trade agreements
Why do countries like China and India have more leverage in digital trade?
Because US firms are eager to access their large markets
Why do African countries have less leverage in digital trade?
Because their markets are smaller and less valuable to US firms
Which African countries have pushed back against WTO digital rules?
South Africa and Rwanda, as part of the Africa Group
How has the US changed its WTO e-commerce agenda recently?
It has backed away and is moving to end the de minimis exemption to counter China’s digital policy
What is the de minimis exemption in digital trade?
It allows small-value imports to enter without duties, fueling US imports from Chinese platforms
Which companies have benefited most from the de minimis exemption?
Temu and Shein, which are estimated to account for 30% of such US imports
Why is it difficult to separate ‘values’ from ‘value’ in digital governance?
Because political, moral, and economic motives often overlap
How does the US conflate values and value in its digital agenda?
It ties press freedom to competitive advantage
What is the purpose of China’s Great Firewall?
It represents digital protectionism and censorship while promoting China’s global digital ambitions
What dual purpose does the EU’s GDPR serve?
It protects privacy and acts as an economic strategy to build a digital market
What is Ethiopia and Rwanda’s approach to digital governance?
They pursue a ‘Developmental Media State’ model
What defines a ‘rogue’ digital state?
Business-state relations that tolerate or support hackers in exchange for political or economic favours
What does allocative efficiency mean in neo-classical economics?
It is achieved when capital and data flow freely to capital-scarce regions, maximizing social welfare
What do neo-classical economists see as barriers to allocative efficiency?
Any friction or market distortion that diverts resources away from productive investment
What do neo-classical economists say about IP and patents?
They reduce welfare in the short term but are necessary to incentivise long-term innovation
Why are patents seen as beneficial despite being market distortions?
Because they create incentives for risky research and development
When did neoliberalism rise in prominence?
It emerged in the 1940s and rose to dominance in the 1980s
What does neoliberalism say about profit and price signals?
That they will efficiently allocate capital if trade barriers are removed
How do neoliberal policies treat tariffs and exchange rates?
They advocate cutting tariffs and liberalising exchange rates to align domestic prices with global prices
How do neoliberals view state support for inefficient industries?
They argue for removing support and defunding inefficient parastatals or national champions
What is the purpose of locking regulation at a supranational level?
To harmonise rules across economies and prevent capture by national politics or populism
What do neoliberals believe about regulating digital technologies globally?
That global rules are needed to harmonise digital services so firms can maximise efficiency
What is currently being done about digital protectionism?
There is a push to build evidence against it
What does the Digital STRI do?
It identifies, catalogues, and quantifies barriers to trade in digitally enabled services
How does the Digital STRI help policymakers?
It helps them identify regulatory bottlenecks and design policies for more competitive digital trade
What do New Institutional Economists believe about markets and institutions?
That markets are best for growth, but weak institutions in developing countries make them hard to function
What is the problem with informal property rights?
They create risks, dissuade investment, and limit access to credit
What problems arise from information asymmetries?
Poor access to information leads to misallocation of resources and exploitation by middlemen
What issues stem from high transaction costs?
Lack of trust leads to inefficient investment choices based on familiarity, not merit
How do New Institutional Economists believe markets can work better?
By strengthening property rights, improving information flows, and reducing transaction costs
How do New Institutional Economists view digital technologies?
As tools to strengthen markets by documenting rights, credit histories, and lowering transaction costs
What is GhanaPostGPS?
Ghana’s digital property system
What is Bitland in Ghana?
A blockchain-based land registration system
What is MAST and where is it used?
The Mobile Application to Secure Tenure, used by USAID in Tanzania and Zambia
What is the Kadaster initiative in Jordan?
A project to digitise land records
What is Aadhaar in India used for?
A biometric ID system that links identity to land transactions to reduce fraud
Why are market information and agronomic apps important?
They address information asymmetries and compensate for underinvestment in public services
What does M-Cow in Kenya provide?
Information on prices, weather, and livestock/crop health
What is Abacus in Kenya used for?
To inform local and foreign investors about business opportunities
What do digital marketplaces aim to do?
Reduce transaction costs and cut out the middleman
What are examples of G2P digital payments?
Bourse Familiale (Senegal) and SAGE (Uganda)
What is Kopo Kopo in Kenya?
A P2B digital payment service
What is BambaPos in Kenya?
A digital point-of-sale system
What are examples of B2B digital payment services?
Cellulant and ConnectAfrica in Kenya
What is Nomanini in Kenya designed for?
To facilitate informal economy peer-to-peer payments
What is Eastpesa used for?
Cross-border forex and payments in East Africa
What is Bitpesa in Kenya?
A blockchain-based money transfer platform
What are payment aggregators and examples?
Tools for bulk payments like InTouch (Senegal) and Yo Uganda (Uganda)
What sectors are targeted for digital auction reform?
Tea, flower, and coffee sectors, as well as marketing boards
How do digital financial services help users?
By offering small credit to build financial identities and credit histories
What does Jumo in Kenya offer?
A platform where SMEs share behavioural data to create financial identities
What is Tala’s role in Kenya?
It provides credit scores for customers to financial institutions
What is the main idea of behavioural economics?
People are not rational utility-maximisers and are influenced by social, cultural, and psychological factors
How is growth still understood in behavioural economics?
As allocative efficiency, though the assumption of free will achieving it is challenged
What role do digital platforms play in behavioural economics?
They serve as infrastructure to ‘nudge’ people toward “right” decisions
What are developmental platforms designed to do?
Create closed-loop systems that nudge people into making ‘right’ decisions
What is the main focus of heterodox economics?
Structural transformation into higher-value, knowledge-intensive sectors with barriers to entry
What is the traditional and updated understanding of structural transformation?
Traditionally industrialisation, now adapted to include technological changes
How are digital platforms viewed in heterodox economics?
As infrastructure to restructure production and enable rent capture
How does academic economics justify IP law?
Though it reduces short-term welfare, it’s needed to incentivise long-term innovation
How do heterodox economists view industrial policies?
As necessary for long-term learning and development, especially in developing countries
What is embedded liberalism?
A post-war European idea that free markets should be socially embedded via welfare, labour, and environmental protections
What role do trade agreements play in embedded liberalism?
They include ‘inefficient’ but socially desirable protections like labour and environmental rules
What determines which countries can carve out exceptions in global rules?
Their bargaining power and political economy
What are national policymakers typically concerned with?
Maximising national profits and socially embedding liberalism to protect society
What do private businesses typically seek?
Profit maximisation for themselves, not necessarily aligned with public interest
How can private actors gain rents through governance?
By erecting standards and certifications that act as lucrative barriers
Do high-income countries always follow the same economic paradigm domestically and abroad?
No, they may disguise industrial policies at home as national security or environmental concerns
What is Business Process Outsourcing (BPO)?
BPO is when internal business tasks like call centers, accounting, or engineering are outsourced to countries like India, the Philippines, or Kenya
What enables the rise of BPO?
The global penetration of digital technologies and infrastructure enables BPO by stretching global value chains and transforming firm processes
What did Jack Welch argue was necessary to quantify and manage business tasks?
Systems of measurement, surveillance, quantification, and routinisation
How are tasks simplified in Welch’s system?
Tasks are progressively simplified to reduce skill and cognition in non-core tasks while identifying high-value core tasks
Where do high-skill tasks remain and why?
In high-wage economies with existing investments and lower risks, protected by barriers to entry (Schumpeterian rents)
How are simplified tasks relocated?
By seeking the lowest cost-capability ratio through outsourcing or FDI, aiming for cost arbitrage despite risks
What does the smile curve represent?
It shows the skill and complexity levels at different production stages from R&D to sales
What is the positive interpretation of the smile curve?
That simplifying production brings investment and opportunities to new regions
What is the negative interpretation of the smile curve?
That capital enters new regions but strips away knowledge spillovers once associated with FDI (“adverse incorporation”)
What does the World Bank say about data-enabled services in global trade?
They create new trade opportunities for countries that previously lagged in global market access
What role did ISI play in India’s BPO development?
It helped establish domestic conglomerates in the 1970s
What enabled India’s success in upgrading?
Long-term investment in engineering and labour migration to the US built networks and credibility
What are the outcomes of India’s BPO strategy?
It achieved job creation and upgrading but also increased inequality and limited linkages
How has India’s upgrading affected others?
It has restructured production and removed knowledge rents, making its development path harder to replicate
What characterises the Philippines’ BPO sector?
It is almost entirely foreign-owned and focused on slotting into multinational networks
What is the economic impact of the BPO sector in the Philippines?
High employment but low domestic capability development and dependence on foreign firms
Where have BPO-generated rents flowed in the Philippines?
Into real estate, imports, and urban services
What limited Kenya’s BPO success?
Domestic ownership lacked experience and could not manage production or reputation effectively
Why did government support in Kenya fail?
It lacked targeted investment and reciprocal control mechanisms, damaging the sector’s credibility
What is Kenya’s current BPO direction?
It’s shifting toward software, startups, social impact sourcing, and attracting foreign BPOs
Why has Kenya struggled to become a low-cost hub?
Despite having software skills, it faces brain drain and hasn’t established cost competitiveness
What is the aim of China’s Digital Silk Road?
To lead the global digital economy and break barriers against China-based digital firms
What did China promote in 2014 regarding digital trade?
It denounced digital protectionism and called for harmonised laws for online marketplaces
What milestone occurred in 2015 for the Digital Silk Road?
Four cross-border cables were built connecting China and ASEAN, praised for advancing regional integration
What is the basic purpose of the Digital Silk Road?
To enhance China’s influence in the global digital communication order
What policies define China’s digital state capitalism?
State-led R&D, loans, the Belt and Road Initiative, and support for state-linked and private tech firms
How does China use training in its digital strategy?
By building global linkages through migrant networks and treating training as a business strategy
What defines the first wave of China’s digital expansion?
Infrastructure and data centers through firms like Huawei and ZTE
What defines the second wave?
ICT equipment and software provision, including Transsion’s mobile phones in Africa
What defines the third wave?
Digital products, social media, and e-commerce via Tencent, Baidu, Alibaba, JD.com, and regional acquisitions
What additional roles do markets serve for China?
As sources of raw materials, labour, data, and as recipients of digital FDI and political influence
What are the benefits of infrastructure and data centers?
Lower costs, faster speeds, greater productivity, and potential for digital sovereignty
What are the heterodox concerns with infrastructure expansion?
Emphasis on local content policies to encourage learning and spillovers
What are the impacts of Chinese e-commerce access?
Cheaper goods for consumers but increased competition undermines local producers and ‘natural protection’
What role does ‘de minimis’ play in digital trade tensions?
It facilitates Chinese coordination of small trades, increasing imports and competition
What are the trade-offs of access to digital service platforms?
New client opportunities versus downward pressure on wages and risks of data monopolies
How is the global economy changing?
It is becoming increasingly digital, affecting trade in both goods and services
Why is the internet important for trade today?
It, along with cross-border data flows, has become a key channel for international trade
How are countries using internet governance policies?
They use them for economic and trade purposes, creating challenges to existing trade rules and prompting demands for new ones
What role is the US playing in digital trade?
The US is leading efforts to create new digital trade rules that discipline national internet policies and liberalise digital trade
What does digital trade include?
All trade that is digitally enabled, whether goods or services are delivered digitally or physically
What are examples of digital trade?
E-commerce, digital services like software, music, cloud computing, IoT, and autonomous vehicles
How is digitalisation affecting trade classifications?
It blurs the lines between goods and services and challenges traditional product classifications
What is the role of data in trade?
Data is now crucial for trade, yet existing trade agreements don’t fully account for it
How has the trade regime evolved?
It has expanded from focusing on tariffs to include intellectual property, services, and investment
What are “deep” trade rules?
They govern domestic regulatory frameworks, unlike earlier “shallow” rules that focused only on tariffs and quotas
How do powerful states use trade agreements?
They use them to promote their own economic agendas
What is regime shifting in trade governance?
Moving digital governance issues to more favourable regulatory bodies like trade negotiations
What is forum shifting?
Negotiating digital trade deals at bilateral or regional levels when progress is stalled at the WTO
What is competitive regime creation?
Creating new institutions or agreements like the TPP to bypass resistance at existing ones
What are classification issues in digital trade?
Products that were once physical, like books or software, are now digital, raising questions over whether they fall under GATT (goods) or GATS (services)
What are the WTO’s modes of supply, and how does digital trade challenge them?
Digital trade does not fit neatly into the WTO’s four service trade modes, especially between Mode 1 (cross-border) and Mode 2 (consumption abroad)
What is the WTO’s stance on digital tariffs?
It has had a moratorium on e-commerce tariffs since 1998, which countries like India and South Africa want to end due to lost tariff revenue
Why are new digital trade rules being proposed?
Because national internet policies increasingly impact trade and need to be regulated or liberalised
What is internet filtering and who uses it?
Blocking access to foreign digital services, as seen with China’s “Great Firewall”
What is data localisation?
A policy requiring companies to store data within national borders, raising costs for foreign digital firms
What are source code and encryption transfer requirements?
Rules that require foreign firms to give governments access to source code or encryption keys for market access
What is China’s approach to digital trade and governance?
China uses internet filtering, data localisation, and forced technology transfers to promote domestic tech firms and integrate digital trade into industrial policy
How does the EU approach digital governance?
The EU prioritises privacy and data protection via GDPR and mixes liberalisation with strategic digital policies through the Digital Single Market
How do EU member states differ in digital trade policy?
Some like the UK and Nordics favour liberalisation, while France and Germany push for strategic policies
What are other countries like India, Brazil, and Nigeria doing?
They adopt policies like data localisation and content regulation
How does the US promote digital trade rules?
Through lobbying by major tech firms and USTR policies supporting free data flows and protections from liability
What is the WTO’s position on digital trade rules?
The US and EU support them, but developing countries like India and the Africa Group resist moving forward
What role do regional and bilateral agreements play?
They include binding digital trade rules, as seen in the CPTPP, USMCA, and EU’s more privacy-focused approach
What are the main goals of the digital trade agenda?
To prohibit digital tariffs, ensure free data flows, ban localisation, prevent forced code transfers, facilitate paperless trade, and harmonise liability rules
How does the digital trade agenda handle customs duties?
It aims to prohibit duties on digital goods like software, music, and movies
What does the agenda seek for cross-border data?
It promotes free data flows and bans localisation requirements
What protections are included for digital firms?
It includes bans on forced source code/encryption sharing and shields firms from liability for third-party content
How does the agenda facilitate digital trade?
Through support for electronic authentication, digital documents, and harmonised regulatory practices
How are digital technologies impacting industrial manufacturing?
They are transforming manufacturing by enabling optimisation, automation, and data-driven processes
What role do Industrial Internet Platforms (IIPs) play in global value chains (GVCs)?
They enable process optimisation, predictive maintenance, and data-driven decision-making within GVCs
Why is data considered an important intangible asset in GVCs?
Because it holds increasing value and supports efficiency, innovation, and decision-making
What other intangible assets are critical in GVCs?
Patents, brands, and interorganisational relationships are essential knowledge-based production factors
What trend is seen with intangible assets across industries?
They are generating a growing share of revenues across sectors
What does the Internet of Things (IoT) enable in manufacturing?
It allows real-time data collection and analysis
What are the benefits of data analysis in manufacturing?
It enables process optimisation, lifecycle product improvement, and B2B matchmaking
How do IIPs facilitate manufacturing digitalisation?
By providing platforms for data-driven industrial solutions
What are innovation platforms in industry?
Platforms that integrate complementary software into a shared ecosystem
What are transaction platforms used for?
They facilitate B2B trade by connecting manufacturers with suppliers
How do platforms generate revenue?
Through subscriptions, transaction fees, and value-added services
What is the focus of Production-Centred Platforms (PCPs)?
To optimise manufacturing processes using real-time data
What is the focus of Distribution-Centred Platforms (DCPs)?
To enhance sourcing and logistics in supply chains
How do PCPs help manufacturers optimise production?
By using real-time analytics for improved efficiency
What predictive tools do PCPs offer?
Predictive maintenance systems that forecast equipment failures
What are “digital twins” used for in PCPs?
To simulate and improve manufacturing scenarios
What kind of software do PCPs offer?
SaaS solutions for monitoring and managing production flows
Why must PCP architectures be open and interoperable?
Because of the diversity in machine types and software systems in industrial settings
What challenges do PCPs face regarding data sharing?
Companies hesitate due to security and control concerns
Why is dominance hard for PCPs to establish?
Because the industrial ecosystem is highly fragmented
Why do PCPs need third-party developers?
To build a functional and competitive ecosystem around the platform
What is a common PCP revenue model?
Subscription-based access to software and analytics
What is a freemium model in PCPs?
Basic services are free, while premium features require payment
How do consulting services contribute to PCP revenue?
By helping firms integrate data-driven tools into their operations
Why can’t PCPs create “winner-takes-all” markets?
Because firms are reluctant to share data, limiting scalability
Why can’t industrial data be monopolised like consumer data?
Because the value lies in productivity enhancement, not control
What determines PCP platform success?
Their ability to improve productivity, not dominate users
What function do DCPs perform?
They operate as B2B e-commerce marketplaces
How do DCPs reduce transaction costs?
By automating processes like order handling and supplier matching
What sourcing solutions do DCPs offer during disruptions?
Flexible supplier networks that adapt to disruptions like COVID-19
What do DCPs build to manage suppliers?
Networks of evaluated manufacturing partners
How are suppliers evaluated by DCPs?
Based on quality, delivery, and customer feedback
What role does AI play in DCP pricing?
AI tools analyse supply-demand dynamics and historical data for pricing
Do DCPs allow direct supplier interaction?
Some restrict direct contact to enforce transactions through the platform
How do DCPs earn revenue?
Through commission fees on transactions
What are DCP value-added services?
Services like quality control and design verification
Can DCPs monetise data?
Yes, they can analyse industrial data like CAD files or pricing trends
What drives platform dominance in DCPs?
Strong cross-side network effects where more buyers attract more suppliers
How do DCPs influence supplier pricing?
By setting pricing benchmarks
What is the risk of global supplier competition?
A race to the bottom, with intense price and efficiency pressure
What is a long-term risk with DCPs?
They may evolve into monopolies, similar to Amazon in retail
