The world as
we know it is continually changing, and one of the fundamental drivers is
digital transformation. At its core, digital transformation isn’t about
Internet unicorns. It’s about using the latest technology to do what you
already do but better.
Digital
economy can be seen as an economy that focuses on digital technologies, i.e. it
is based on digital and computing technologies. It essentially covers all business, economic,
social, cultural etc. activities that are supported by the web and
other digital communication technologies.
The global
economy is undergoing a digital transformation as well, and it’s happening at
breakneck speed.
For most people the digital economy refers to the economy conducted on
the Internet, but the digital economy is much broader than this. The digital
economy represents the pervasive use of IT (hardware, software, applications
and telecommunications) in all aspects of the economy, including internal
operations of organizations (business, government and non-profit); transactions
between organizations; and transactions between individuals, acting both as
consumers and citizens, and organizations.
Just as 100 years ago the development of cheap, hardened
steel enabled a host of tools to be made that drove economic growth, today
information technology enables the creation of a host of tools to create,
manipulate, organize, transmit, store and act on information in digital form in
new ways and through new organizational forms.
The technologies underlying the digital economy also go far
beyond the Internet and personal computers. IT is embedded in a vast array of
products, and not just technology products like cell phones, GPS units, PDAs,
MP3 players, and digital cameras.
IT is in everyday consumer products like washing machines,
cars, and credit cards, and industrial products like computer
numerically-controlled machine tools, lasers, and robots. Indeed, in 2006, 70
percent of microprocessors did not go into computers but rather went into cars,
planes, HDTVs, etc., enabling their digital functionality and connectivity.
Connecting these IT tools is a robust and growing wireless and wireline
telecommunications network. Moreover, the technology is anything but static.
The backbone of the digital economy is hyper-connectivity which
means growing inter-connectedness of people, organizations, and machines that
results from the Internet, mobile technology and the internet of things (IoT).
The digital economy is taking shape and undermining conventional
notions about how businesses are structured; how firms interact; and how
consumers
In
the last 15 years, we have seen the tremendous growth of digital platforms and
their influence on our lives. Now consumers are influenced by things they see
on social media (Facebook, Twitter, Instagram) and other such popular
websites (youtube etc).
So
this economy is a way to exploit this opportunity. Now it is
integrated into every aspect of the user’s life – healthcare, education,
banking, entertainment etc.
Advantages of Digital Economy
Digital
economy has given rise to many new trends and start-up ideas. Almost all of the
biggest companies in the world (Google, Apple, Microsoft, and Amazon) are from
the digital world. Let us look at some important merits of the digital economy.
1. Promotes Use of the
Internet
If you think about it, most of your daily
work can today be done on the internet. The massive growth of technology and
the internet that began in the USA is now a worldwide network. So there is a
dramatic rise in the investment on all things related – hardware, technological
research, software, services, digital communication etc. And so this economy
has ensured that the internet is here to stay and so are web-based businesses.
2.
Rise in E-Commerce
The businesses that adapted and adopted the
internet and embraced online business in the last decade have flourished. The
digital economy has pushed the e-commerce sector into overdrive. Not just
direct selling but buying, distribution, marketing, creating, selling has all
become easier due to the digital economy.
3.
Digital Goods and Services
Gone are the days of Movie DVD and Music
CD’s or records. Now, these goods are available to us digitally. There is no
need for any tangible products anymore. Same is true for services like banking, insurance etc.
There is no need to visit your bank if you can do every transaction online. So
certain goods and services have been completely digitized in this digital
economy.
4.
Transparency
Most transactions and their payment in the
digital economy happen online. Cash transactions are becoming rare. This helps
reduce the black money and corruption in the market and make the economy more
transparent. In fact, during the demonetization, the government made a push for
online transactions to promote the web economy.
Disadvantages of
Digital Economy
1]
Loss in Employment
The more we depend on technology, the less
we depend on human resources. The advancement of the digital economy may lead
to the loss of many jobs. As the processes get more automated, the requirement
for human resources reduces. Take the example of online banking itself.
2]
Lack of Experts
Digital economy requires complex processes
and technologies. To build the platforms and their upkeep require experts and
trained professionals. These are not readily available, especially in rural and
semi-rural areas.
3] Heavy Investment
Digital economy requires a strong
infrastructure, high functioning Internet, strong mobile networks and
telecommunication. All of this is a time consuming and investment heavy
process. In a developing country like ours, development of the infrastructure
and network is a very slow, tedious and costly process.
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