– Bala Krishnamoorthy
– Gayathri Sampath
‘Digital economy’ refers to an economy that is based on digital computing technologies¹. It encompasses a global network of economic and social activities that are enabled by information and communications technologies, such as the internet, mobile and sensor networks². However, the term ‘digital’ itself is not a new one. The Oxford English Dictionary’s entry for digital contains evidence for the word as far back as the 15 century with the sense, ‘designating a whole number less than ten’. Originally, the word digital was used to describe types of signals that could be interpreted as either 1 or 0. But despite this long history, was for many centuries an unimportant word. It wasn’t until the early 20 century that it became significant and digital widespread when digital signals, combined with mathematical formal logic came together to produce the first modern computer³. Since then, the term digital economy has come to include not just the convergence of computing and
communication technologies through the Internet but also the resultant impact of this information and technology on business and commerce.
Klaus Schwab, founder and orchestrator of the World Economic Forum, calls digital the “fourth” Industrial Revolution—after steam power, electricity and computers defined the first three, the next will be shaped by sensors and artificial intelligence.Broadband connectivity, wireless mobility, cloud computing, e-commerce, social media, sensors — will all together transform the world as we know it: how we work, play, consume, interact and stay in touch. The real-time and virtual connectedness between people and things that digital enables today is creating new ways for people and assets to create value and reach customers never accessed before, and this is turning the basic tenets of scale economics on its head⁴.
The digital economy is characterised by an all-pervasive adoption of a wide variety of digital, real-time, and networked technologies, products and services that enable people, companies, governments and even machines to stay connected and communicate with one another, gathering, analysing and exchanging massive amounts of information on all kinds of activities. Digital economy is the share of total economic output derived from a number of broad “digital” inputs. These digital inputs include digital skills, digital equipment (hardware, software and communications equipment) and the intermediate digital goods and services used in production. ‘Digital Skills’ are the digital nature of occupations and the skills and knowledge required of people to perform their jobs. ‘Digital Technologies’ include the various productive assets related to digital technologies (hardware, software and communications equipment). Lastly, the term ‘Digital Accelerators’ refers to the
environmental, cultural and behavioural aspects of digital components of the economy that support digital entrepreneurship or activities.