Digital Economy: The New Ferrari in a racing world
Whenever asked about the major I’m studying at the university, I get the same question what is digital economy? The world is moving fast. We are already at the dawn of the Fourth Industrial Revolution, which brings a slew of technologies together in new and powerful combinations. We have all heard of Virtual reality, Web3, IOT,NFTs, ETFs, AI, CBDCs, BEPS, NGEU…Whether these new trends will succeed or not depends on whether we move forward firmly, with a focus on asking the right questions at each new road.
It’s about using the latest trends to do what you usually do, but faster and better.
Let’s begin with the definition of digital economy by one of the big4 companies:
Deloitte refers to digital economy on its website as “an economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. The backbone of the digital economy is hyperconnectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology, and the internet of things (IoT).”
To simplify it, digital economy is a term that captures the dawn of the digital computer technology, it has a great impact on how businesses are run, trade is being done, and goods and services are being marketed and paid for. Digital economy is also known for Web economy, new economy, and internet economy.
When did it all start?
It all started with the big bang of the internet on the economy, the term evolved in the latest nineties. This was extended to include the emergence of new types of digitally oriented firms and the production of new technologies.
What are some examples of digital economy?
Today the Term “digital economy” encompasses a dizzying collection of technologies and their application. This includes artificial intelligence, the internet of things, augmented and virtual reality, cloud computing, blockchain, robotics and autonomous vehicles, NFTs, crypto, MetaVERse, Web3. We are overwhelmed lately with new innovations so all of those are part of the digital planet. You are certainly using one of the following forms of digital economy in your daily life Such as Airbnb ,Amazon market place, Ebay, Netflix, E-commerce.
Does digital economy have a measured value?
When in economy, follow the money. So, let’s do it…Apparently it has a value and a specific one actually. Today the Digital Economy is worth almost three trillion dollars. And this number is increasing every second. To put it in context, A stack of three trillion one-dollar bills would go almost three quarters of the way to the moon and weigh approximately thirty tons. Assuming you live fifty more years you could spend over $162 million every day for the rest of our life and still leave a few grand in the bank for the kids. What’s more astonishing is that this entire value is a 20 year old information since the launch of the Internet.
What is the core of digital economy?
At the heart of the digital economy is a ‘digital core’. This includes the providers of physical technologies like semiconductors and processors, the devices they enable like computers and smartphones, the software and algorithms which run on them, and the enabling infrastructure that these devices use like the internet and telecoms networks.
This is followed by ‘digital providers’. That use these technologies to provide digital products and services like mobile payments, e-commerce platforms or machine learning solutions.
Lastly, there are the ‘digital applications’. This covers organisations that use the products and services of digital providers to transform the way they Run their business. Examples include virtual banks, digital media, and e-government services.
Why should we care about it?
Digital economy is affecting our daily lives by disrupting old industries and creating completely new ones. It has transformed the economies of celebrity, it is the essence of the new generation, the Millennials. It has become the most discussed topic in meeting rooms across the biggest firms around the world and even the smallest, I would say the smartest firms. It has even affected scientific research and breakthroughs and the list goes on and on. So how can you not care about it? As simple as it gets, if you want to be integrated into the world of today and not be left behind the unstoppable train you need to care about it. Its not a choice anymore, it’s the new normal! Understanding its concept has become non-negotiable.
Real examples to boost my statement: In Kenya, mobile data is being used to identify malaria infection patterns and identify hotspots that guide government eradication efforts. Vehicle sensor data from delivery trucks, combined from mapping data analytics, has enabled companies to save millions of gallons of fuel and reduce emissions by the equivalent of taking thousands of cars off the road for a year. Farmers from Iowa to India are using data from seeds, satellites, and sensors to make better decisions about what to grow and how to adapt to changing climates.
What makes it more advanced from traditional economy?
The digital economy is now recognized to include all parts of the economy that exploit technological change that leads to markets, business models and day-to-day operations being transformed. So it covers everything from traditional technology, media, and telecoms sectors to new digital sectors. These include e-commerce, digital banking, and even “traditional” sectors like agriculture or mining or manufacturing. All of which are being affected by the application of emerging technology.
Firstly, digital technologies allow firms to do their business differently as well as more efficiently and cost-effectively. They also open up a host of new possibilities. Take navigation apps. No team of people would ever be able to provide real time, traffic-aware navigation in the way that smartphone apps do.
This means that products and services can cover a wider range of consumers, particularly those who couldn’t be served before.
Secondly, this advanced technology has led to new market structures by reducing transaction costs in traditional markets. The best example of this is the spread of digital platforms such as Amazon, Uber and Airbnb. These companies connect market participants together in a virtual world. They reveal ideal prices and generate trust between strangers in new ways.
Lastly, the digital economy is powered by enormous amounts of data and plays a major role in embracing it. Traditionally, when we made purchases in a traditional market using cash, no-one was keeping track of our personal consumption and financial transactions. Now, ordering online and paying electronically means that many of our consumption and financial transactions generate electronic data which is recorded and held by someone.
What are its pro and cons?
What can we do next?
The global economy is enduring a digital renovation, and it’s happening at breakneck speed. We are perhaps just at the beginnings of an evolutionary twist whose final destiny remains unknown. In my opinion, we should put our seat belts on and praise the lord it doesn’t outrun humanity, and its core. And don’t forget to enjoy the ride while it lasts!
