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Digital economy
The document discusses key aspects of the digital economy. It defines digital economy as the worldwide network of economic activities enabled by information and communication technologies. It notes that the digital economy is worth $3 trillion generated over the past 20 years since the launch of the Internet. The digital economy transforms business interactions and transactions through online platforms and has given rise to new digital currencies and payment processes.
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Digital economy
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- 2. Introduction to Economics •Adam Smith is considered as the Father of Modern Economics. • The branch of knowledge concerned with the production, consumption, and transfer of wealth. • It is the study of how individuals and societies make decision about ways to use scarce resources to fulfill their wants and needs.
- 3. Introduction to DigitalEconomics • Digital economy refers to an economy that is based on digital computing technologies. • Digital economy is worldwide network of economic activities enabled by information & communication technology ( ICT ). • The digital economy is also sometimes called the Internet Economy, the New Economy, or Web Economy. • The Digital Economy is worth three trillion dollars today. • The entire value has been generated in the past 20 years since the launch of the Internet.
- 4. Continued… • The digitaleconomy is not simply about moving business transactions from face to face to online. • The digital economy is about transforming the many facets of business interactions and transactions and also enabling economic innovations. • For example, the digital economy both is enabled by and has given rise to the advent of new digital currencies and payment processes (i.e., and the digital wallet).
- 5. History of DigitalEconomics • The term 'Digital Economy' was first mentioned in Japan by a Japanese professor and research economist in the Japanese recession of the 1990s. • In the west the term followed and was coined in Don Tapscott's 1995 book The Digital Economy : Promise and Peril in the Age of Networked Intelligence. • The Digital Economy was among the first book to consider how the Internet would change the way of business.
- 6. Continued… According to ThomasMesenbourg (2001), three main components of the 'Digital Economy' can be identified as: • E-Business Infrastructure • E-Business • E-Commerce
- 7. Digital Economy Data •The world is changing fast. • We are at the dawn of the Fourth Industrial Revolution, which will bring together digital, biological and physical technologies in new and powerful combinations. • The World Economic Forum’s Networked Readiness Index is a key indicator of how countries are doing in the digital world. • It measures how well an economy is using information and communications technologies to boost competitiveness and well being.
- 8. Data from 2016… •Singapore is at number one. The ranking is, to a large extent, the result of strong government commitment to the digital agenda. • Gains from information technology are widely shared in Singapore, and it makes excellent use of digital technologies to provide access to basic and government services, and ensure that schools are connected. • Finland ranks at number two. The country has extremely good access to the latest technologies as well as venture capital, and its businesses are highly connected. • Norway moves up to fourth place ahead of the United States, which has also risen this year. • The US stands out in terms of its extremely favourable business and innovation environment, which has led to one of the most agile and digitized business sectors in the world.
- 9. • The UnitedKingdom stays at number eight. Perceived venture capital availability and UK government procurement of advanced technologies have improved in the last 12 months. • Government support is important when it comes to an economy becoming networked ready. When governments were ranked according to their tech savviness, Singapore again came out top. • There are two other Asian countries in the top 10: South Korea and Malaysia. • Three Arab nations feature: the United Arab Emirates, Bahrain and Qatar. • The European Union is represented by Estonia, Luxembourg and the UK, while the United States government does not appear anywhere in the top 10.
- 10. 10 Major IT Characteristicsin the Digital Economy • Globalization • Speed (need for real-time transactions) • Information overload • Markets moving on-line • Innovation • New business models • High rate of obsolescence • New opportunities • New types of fraud and crimes • Wars are going cyber • Digitized organizations
- 11. Continued… • Based ondigital technologies (networking, communication etc.) that provide the platform (infrastructure) over which people and organizations interact and collaborate. • Digitized products • Digitized financial transactions • Everyday objects and appliances equipped with computing capabilities
- 12. Components of DigitalEconomy • E-Business Infrastructure (hardware, software, telecoms, networks, human capital, etc.), • E-Business (how business is conducted, any process that an organization conducts over computer-mediated networks), • E-Commerce (transfer of goods, for example when a book is sold online).
- 13. S.M.A.R.T Economy • Social •Mobile • Apps • Real-Time • Trusted
- 14. Advantages • As theeconomy is cashless, a lot of paper will be saved. • Many crimes like corruption, kidnapping and extortion require cash, In a cashless economy, no such crimes would have their existence. • As the entire money is digital, no term like Black money and green money would exist. • Just by charging a small percent of transaction as tax, government would be earning a lot of revenue. • As a computer would be looking at transactions and charging the tax, A lot of government revenue will be saved as there would be no need of departments like Income Tax, Excise Duty etc.
- 15. Disadvantages • There wouldbe registered bank accounts of every person. • A digital system means a lot of power (electricity) is required for this system. • It is required that every shopkeeper, vendor, taxi driver should have machines and gadgets to accepted the transaction. • The greatest harm to this economy is hackers. • Every citizen should be literate.
- 16. Solution always exists… •Even if people are not literate, they can learn to operate the electronic purse. • Hacking problem can be solved by ideas like one time passwords(OTPs) and security can be made more difficult to cross. • All the locales would install the required machines to accept transaction as the necessary change generates itself. • If solar power plants are installed, a lot of clean and cheap energy will be generated which means in effect that the problem of power would be solved. • Once the economic system comes into existence, more and more people would join this system, given its advantages. Awareness would compel them to open up with bank accounts.
- 17. Twelve Theme ofthe New Economy
- 18. Theme 1: Knowledge •The knowledge economy is the use of knowledge to generate tangible and intangible values. • Technology in particular, knowledge technology, helps to incorporate part of human knowledge into machines. • Based on human capital and Networks. • People who worked with their minds rather than their hands.
- 19. Continued… • Activities inKnowledge economy • Academic institutions : -Research and development • Programmers developing new software and search engine • Health workers use digital data to improve treatments • Farmers use apps and digital solution to manage crops
- 20. Theme 2: Digitization •New economy is digital economy. • Information is increasingly digital in form-bits. • Information can be squeezed or compressed and transmitted at the speed of light. • Quality of information can be far better than with analog transmission. • Information can be stored and retrieved from around the world.
- 21. Theme 3: Virtualization •Virtual Alien • People working on participating in one country’s economy who are physically located somewhere else. • Virtual Business Park • Business resources on the net to help companies rapidly create virtual corporation. • Virtual Government Agency • Government agencies which have similar purpose linked by networks to deliver service through single window to the public.
- 22. Theme 4: Molecularization •When molecular activity is extended to the economy as a whole, we can see very different kinds of relationships. • For example, the mass media will become the molecular media, where readers, listeners, and viewers access and interact with millions of "channels." • E.g. Computer chip manufacturing company • Mobile temper glass manufacturing company • Tire manufacturing company.
- 23. Theme 5: Integration/Internetworking •The new economy is a networked economy, integrating molecules into clusters which network with others for the creation of wealth. • E.g. Collaboration between the intel and Microsoft. • Tire company and automobile manufacturing company.
- 24. Theme 6: Disintermediation •Disintermediation of the middle functions between consumers and producers are being eliminated through digital networks. • Disintermediation is changing the signal pattern. • Government is also a candidate for disintermediation.
- 25. Theme 7: Convergence •Convergence is becoming the basis of all sectors. • In the new economy, the dominant economic sector is being created by three converging industries which, in turn, provide the infrastructure for wealth creation by all sectors.
- 26. Theme 8: Innovation •The new economy is an innovation-based economy. • Innovation drives every aspect of economic and social life. • In the innovation economy, human imagination is the main source of value. • Customer intimacy may be one way to win in the innovation economy. • You need to innovate beyond what your markets can imagine.
- 27. Theme 9: Prosumption •Producers must create products that reflect the requirements and tastes • Every consumer on the information highway becomes a producer by creating and sending a message to a colleague of individual consumers.
- 28. Theme 10: Immediacy •Immediacy becomes a key driver and variable in economic activity and business success. • Customer orders arrive electronically and are instantly processed. • Enterprises seek to "compete in time" effectively. • EDI (Electronic Data Interchange) is a powerful, if badly misunderstood, example of how the information highway is creating information immediacy."
- 29. Theme 11: Globalization •The new economy is a global economy. • Global customers demand global products. • Computer networks allow companies to provide 24-hour service as customer requests are transferred from one time zone to another. • Global businesses need to be able to link with customers, suppliers, employees, and partners throughout the world.
- 30. Theme 12: Discordance •The nature of work and the requirements of the workforce in the digital economy are fundamentally different. • The new economy is bringing highly paid, high-value jobs, but there is little job mobility between old and new. • Knowledge workers require motivation and trusting team relationships to be effective. • If not managed properly this situation will severely increase social stratification, creating a new underclass.
- 31. Conclusion • Knowledge iseverything — from smart clothes to smart roads. • Digital not analog — email, not post office. • Virtual means physical things can become virtual — from virtual ballot boxes to the virtual job. • Molecularization of old organizations are replaced by dynamic clusters of individuals. • Internetworking through clusters networks rather than hierarchies. • Disintermediation of the middle functions between consumers and producers are being eliminated through digital networks.
- 32. • Convergence Computing,Communications, and Content Industries — converging to become the leading economic sector. • Innovation Obsolete your own products — If you don't do it first, your competitors will... If it isn’t broke, break it before your competitors do. • Prosumption — a consumer active in a product's development and production through customization combining production and consumption. • Immediacy becomes a key driver — just in time is everything, EDI. • Globalization with transnational systems — global organizations. • Discordance issues are rising due to as unprecedented social conflicts — high value jobs, high paid and so on.
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