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Why Isn't E-Commerce Benefiting the Arab World?

Although headline measures of digitalization and e-commerce are growing steadily in the Middle East and North Africa, the outlook is anything but rosy. Not only is internet access largely limited to those with higher incomes, but the bulk of the goods and services being traded comes from foreign suppliers.

DUBAI – For centuries, the streets of Cairo have been festooned with traditional lanterns to celebrate the holy month of Ramadan. In recent decades, the domestically produced lanterns were replaced by cheaper ones made in China. Yet owing to the pandemic’s disruption of global supply chains, Egyptian-made lanterns made a comeback last year. But whether their revival will last remains to be seen.

The Egyptian lantern story is just one pixel in a much larger picture. Across the Middle East and North Africa (MENA), new technologies are increasingly facilitating trade within the region and between local markets and the rest of the world. Digital platforms like Alibaba, eBay, and Amazon have expanded the range of goods and services that can be exchanged across borders. Digitalization has not only increased the scale, scope, and speed of commerce; it has also changed the way businesses trade across borders and allocate resources.

Successful local e-commerce platforms are usually a source of pride. But, though digital platforms provide consumers with a greater variety of goods and services and allow businesses to trade internationally with greater efficiency, they also subject local businesses to tough, and sometimes unfair, competition.

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