Blockchain used in world trade

I have not had a chance until now to blog about the Long Finance report on the impact of distributed ledgers on trade, published in April. It was launched at the House of Lords, and looks at Smart Ledgers (blockchain) as potential facilitators of global trade flows. It is particularly relevant given recent developments in Brexit discussions.

The impact of Smart Ledgers will be to reduce cost frictions associated with processes such as paperwork and identity checking. This could facilitate the creation of new business opportunities, and reduce the volatility associated with international trade.   For this reason, the report was sponsored by, among others, the Worshipful Company pf World Traders.

The key findings of this report into the potential economic impact of Smart Ledgers on world trade are the following:

• Smart Ledger technology could boost world trade in goods by at least $35 billion dollars per annum. The cost of importing a single container could, therefore, be reduced by around $46, by simplifying procedures. These potential benefits are driven by a 2.5% cost clawback assumption, supported by case studies on previous technological advancements in trade.
• If reduced uncertainty is also taken into account, the potential gains become even larger, with a potential monthly net cost saving of $172 million (or, approximately, $2 billion per annum). This would boost world GDP by $10 to $20 billion and could, potentially, add between 450,000 and 900,000 to the worldwide demand for labour, boosting wages and living standards worldwide.

Boosting world trade would be of particular benefit to the United Kingdom (UK), for two reasons. First, as a small island economy, it is relatively more dependent on world trade than most countries, and second, because Smart Ledgers offer particular advantages in solving some of the problems that might emerge from Brexit. The likely gains to UK GDP might be given an estimated boost of £0.4 to £0.8 billion, without taking into account the effects of Brexit.

Written by Gill Ringland, SAMI Fellow Emeritus.

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

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