Cyprus has achieved a significant milestone in 2024: it reduced its trade deficit to €8.13 billion from €8.47 billion the previous year which is a 3.97% reduction from the previous year. Since global trade and the economy are becoming more digitized, countries such as Cyprus are using technology to boost their exports, streamline imports, and bring down deficits in the end.

But the main question is whether these reductions can be sustained to grow the economy in the long run. In this blog, we are going to look at whether digital trade innovations can sustain trade deficit reductions by looking at the case of Cyprus and other countries.

Using proxy servers to enhance digital trade efficiency

Cyprus and other countries with small economies need access to international platforms and services to compete in the global market. They need a strong connection that helps them to bypass restrictions, be compliant with regulations, and not get flagged. This is where the usage of proxy servers can be helpful not only at an individual but at an organizational level. A proxy server reroutes the traffic between the user and the internet through a channel that brings in benefits such as anonymity, low latency, unrestricted browsing, and more.

Many businesses from Cyprus deal with exports, finance, or eCommerce with multiple jurisdictions. A US proxy can help with better connectivity, faster access to international services, and compliance with global security standards. The US is home to over 20,000 large and multinational corporations, and globally, many use a US proxy for trade operations, lower latency, stable connections to global financial hubs, and access to analytics that are otherwise restricted. They can also bypass geo-restrictions that limit Cypriot businesses from competing effectively.

Moreover, American proxy services are compliant with many regulations needed for financial services and exporters. This gives Cypriot businesses a way to be legally regulated while at the same time having a secure digital trade environment that aligns with their ambitions for global export growth.

Key digital innovations driving Cyprus’s export growth

The country has invested in non-profit organizations like the Cyprus Seeds to encourage startups to make digital innovations which could lead to a better potential for export growth.

There is a private initiative from the Bank of Cyprus known as the IDEA Innovation Centre. It can positively impact the country’s export growth as it offers support for entrepreneurship and overall innovation.

The country is even looking to invest in technology and science parks, such as the one proposed in Pentakomo, in the Limassol district. Places like this are where innovation can be developed, which may potentially give Cyprus digital solutions for future expansions in export.

Lessons from digital-first economies: Estonia, Singapore, and the Netherlands

Cyprus can take lessons from countries such as Estonia, Singapore, and the Netherlands to improve its trade positions. For instance:

  • DEPA (Digital Economy Partnership Agreement) was initiated by Singapore, Chile, and New Zealand in the form of a digital trade agreement. The movement proposes that advancement be made in the digital economy by focusing on improving paperless trade and e-invoicing. Other countries have expressed interest in joining with Canada and China putting in applications.
  • The Netherlands has integrated AI into its Port in Rotterdam, which is helping with nautical safety, asset life cycle, operations optimization, and virtual energy systems.

Cyprus can use this as an inspiration and integrate AI into their ports, enter into digital trade agreements with countries in the Mediterranean, or provide e-residencies to attract remote businesses.

Challenges and risks in sustaining digital trade growth

While digital trade innovations come with the potential for growth, they also come with challenges that businesses operating in Cyprus need to look into. When operations become more digitized, they also encounter frequent cyber attacks by malicious actors. Even though companies can use proxies, VPNs or similar privacy tools, they must invest in advanced cybersecurity measures such as end-to-end encryption or multi-factor authentication to protect sensitive trade data.

Can Cyprus stay ahead?

Even though Cyprus has shown improvement in the balance of trade with digital trade innovations, there is still room for innovation. They can invest in AI and blockchain technologies as seen with the Netherlands to streamline operations while considering policy recommendations that can ensure sustained economic growth through global digital integration.

It is also worth mentioning that some changes may take time as the integration of technology comes with the need of financial and human resources. The latter one, by the way, is not less important as modern technology solutions, especially when we talk about AI, require not only technical skills but also readiness for responsible and ethical working processes.

DISCLAIMER – “Views Expressed Disclaimer: Views and opinions expressed are those of the authors and do not reflect the official position of any other author, agency, organization, employer or company, including NEO CYMED PUBLISHING LIMITED, which is the publishing company performing under the name Cyprus-Mail…more