Restrictions on international trade inevitably make both sides poorer, Adam Smith declared in The Wealth of Nations in 1776. His observation holds true today, even though Smith could not have imagined the industrial, communications, and digital revolutions that have shaped the intervening two and a half centuries.

The digital revolution has substantially redefined trade in less than two decades, and it continues to be a huge driver of economic activity today, as the developed world slowly emerges from recession and red-hot growth cools in developing markets. By 2016, the Internet economy will have expanded to $4.2 trillion in the G-20 economies. If it were a national economy, it would rank as one of the world’s top five, behind only the U.S., Chi-na, Japan, and India, and ahead of Germany.

It contributes 5 to 9 percent to total GDP in developed markets; and in developing markets, the Internet economy is growing at 15 to 25 percent per year.

Inevitably, however, as the digital economy has matured, sources of friction—new and old—have taken hold, constraining free ex-change and slowing growth. Companies find, for example, that they don’t have the necessary information- and communications-technology (ICT) skills to take full advantage of their e-commerce potential. Small businesses looking to expand online are confronted with data security issues that were not problems in the offline world. The lack of bank ac-counts and credit cards or the inadequate availability of capital takes on heightened significance as the euphoria of early adoption develops into the steadier business of building the Internet’s range and impact into harder-to-reach locations and demographic and economic sectors. Incumbent players, under threat from new technologies, sometimes look for policy or regulatory assistance to protect their turf. Developing markets face particular challenges and opportunities, given that the Internet can drive both online and offline growth.