The information and communication technology (ICT) that enables global networks of economic activity, business transactions, and business participation is called the “Digital Economy.”
The backbone of the Digital Economy is hypoconnectivity, which means the increasing interconnectedness of people, organizations, and machines as a result of the Internet, mobile technology, and the Internet of Things (IoT).
The Digital Economy is taking shape and undermining traditional notions of business structure. how companies communicate; and how consumers obtain services, information, and goods.
In the Digital Economy, all consumers, both business-to-business and business-to-consumer, want to interact with businesses when and where they want and in the way that is most convenient for them. Additionally, consumers want to engage with brands through seamless, omnichannel, direct, contextual, and personalized experiences.
Importance of the Digital Economy
The Digital transformation of the Economy has created new business models, products and services, and ways of doing business. It has created a global marketplace for goods and services and has made it possible for companies to reach new markets and customers.
The Digital Economy is driven by electronic media such as computers, smartphones, and other Digital devices like smart TVs, wearables, etc. The Digital Economy is the result of billions of connections between people, companies, devices, and data every day. It is a global and interconnected Economy that is not limited by geographical borders.
In the future, The Digital Economy will consider the main engine of economic growth in both developed and underdeveloped countries.
Examples of the Digital Economy
Digital innovations include Digital banking, e-commerce stores, virtual learning, smartphone apps, and collaboration platforms.
This Economy consists of three main components.
It is the performance of business activities through the use of electronic systems. It includes the process of buying and selling and the commercialization, production, and delivery of goods and services Digitally.
Ecommerce Support System
It refers to the electronic systems that companies use to execute their operations. It includes hardware, software, networks, and data storage systems.
It is the buying and selling of goods and services through electronic systems. It involves the exchange of money, interests, and services between businesses and consumers.
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Benefits of the Digital Economy
A Digital Economy has the following characteristics:
Powered by the Internet: The Internet is the backbone of the Digital Economy. This is what makes it possible for companies to reach new markets and customers.
Global: The Digital Economy is not limited by geographic borders. It is a global and interconnected Economy that allows companies to reach new markets and customers.
Always connected: The Digital Economy is available 24/7. This means that companies can operate 24 hours a day and reach customers at any time.
Fast pace: The Digital Economy is moving at a fast pace. This is due to continuous innovation and the introduction of new technologies.
Reduce costs: Technology has made it possible for companies to reduce their marketing, production, and distribution costs by replacing traditional methods with more efficient Digital methods.
Creates New Jobs: The Digital Economy has created new employment opportunities as new businesses and start-ups emerge. It has also created new job roles like Digital marketing, big data analytics, data mining, etc.
Leads to innovation: Digitization of business and business processes leads to innovation. This is because it allows companies to experiment with new ideas and technologies to develop, market, and sell their products and services.
Greater transparency: The Digital Economy has increased the transparency of companies, as they can now use technology to share information with their customers.
Better Communication: Increased connectivity in the Digital Economy has made it possible for businesses to communicate more effectively with their customers. They now have many channels through which they can reach their customers, including social media, email, and SMS.
Improves efficiency: The Digital Economy has helped businesses become more efficient as they now have access to better tools and technologies and can use data to achieve better results.
Faster Transactions – The Digital Economy has made it possible for businesses to transact faster as they can now use online payment methods. This is not limited to businesses, but also extends to individuals, who can now transfer money online with just a few clicks.
Proximity. Direct customer support channels allow customers to resolve questions and issues faster with a manufacturer or service provider.
The Digital Economy’s Drawbacks
Although the Digital Economy has many advantages, it also has some disadvantages which are listed below.
Digital divide: One of the biggest pitfalls of the Digital Economy is the Digital divide. This is the difference between those who have access to technology and those who do not. This division exists not only between countries but also within countries. This has created a new form of inequality in the world.
Cybercrime: With the increased use of technology, cybercrime has also increased. This is because criminals can now use technology to commit crimes like identity theft, fraud, and money laundering.
Data security: As companies collect more and more data about their customers, there is a risk that that data will be leaked or stolen. This can lead to a loss of trust between companies and their customers.
Unemployment: The digitization of the Economy has led to job losses in some sectors as companies replace human workers with technology. This has increased unemployment in these sectors.
Privacy Concerns – As companies collect more data about their customers, there are concerns about misuse of this data.
Big investment: Digitizing business requires a big investment in technology. This is a challenge for small businesses that do not have the resources to invest in technology.
Potential environmental impact: The increasing use of technology in the Digital Economy has increased the amount of e-waste and its large carbon footprint. This is a concern because it can harm the environment.
The future of the Digital Economy
As mentioned above, the Digital Economy is based on information technologies. An increase in new business results in greater business connectivity around the world. What is called a ‘new type of Economy’ emerges? The rapid spread of ICT around the world has led to the development of new types of products and services, changing the way of doing business. The Digital Economy today represents 15% of the global GDP. In the future, The Digital Economy will take more weight as the “Internet of Things”, artificial intelligence (AI), virtual reality, blockchain, driverless cars, and other technological advances.
Impacts of the Digital Economy around the world
The Digital Economy can also contribute to GDP per capita growth in countries along the Belt and Road by reducing unemployment rates and improving employment structures. The main reason for this is that the use of the Internet is becoming a major source of job creation along the Belt and Road as well as in most developing countries. The integration of ICT industries with traditional industries can lead to expanding economies of scale, especially the increase in online consumption and thus the impact of the gradual expansion of IT-based jobs. consumption. In addition, changes in Digital technology can also lead to job restructuring. In particular, the growth of the Digital Economy can lead to the creation of more non-farm jobs, providing more employment opportunities and even increasing the profitability of labor. This leads to an estimated direct Digital transformation investment of more than $6.8 trillion from 2020 to 2023.