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The digital economy – Pros and Cons

What is the digital economy.

The digital economy refers to economic activity that uses electronic communication and digital technologies to provide goods and services. The main building blocks of the digital economy are

• The internet. This enables firms to offer goods for sale and enables consumers to browse for goods that they need.
• E-mail. Electronic communication enables very cheap, instantaneous communication across the world. It can be used to send information and requests very quickly.
• Digital automation. Firms can use the processing power of computers to make decisions on output, prices and how to reach consumers.
• Digital payments – credit cards, Apple Pay, Google pay, bitcoin, bank transfer. A digital economy is moving us towards a cashless society.
• Automation. Increasingly the digital economy relies on AI, mass use of electronic data and automated technology
• Social media. To a lesser extent, social media is an aspect of the digital economy. With individuals using it share recommendations about business.

The traditional economy is based on physical shops, goods and cash payments. Over time, the traditional economy has adopted aspects of the digital economy, e.g. traditional firms taking debit cards, then selling online. As the digital economy evolved, some firms missed out on having a physical shop altogether, and selling straight from an e-commerce site, delivered to consumers homes. Some digital services now have no physical goods. For example, Netflix and Spotify do not need to use any physical goods but has everything streamed through the internet.

Examples of the digital economy

• Airbnb – This enables tourists to book online. It has also made it possible for individual households to let our their house/room to tourists. Before the digital economy it was not practical.
• Amazon market place/Ebay.
• Netflix – This enables consumers to purchase tv-series and films over the internet, without need for any physical good.
• E-commerce site – E.g. Economics help, selling e-books for economics revision.

Advantages of the digital economy

• Greater information . The internet has enabled consumers to have greater information and choice. For example, it makes it easier to compare prices between firms. It also brings information to a person’s fingertips. This is particularly important for tourists going on holiday. Before the digital economy, it might not be possible to find the prices of hotels and bus timetables.
• Saves time . Before if you needed office supplies, you would have to make a journey into town and purchase. Now, you can make an order over the internet and it will arrive the next day. This saves business labour costs.
• Reduced costs . Firms can save on renting expensive buildings by running most of business through the internet. A digital economy enables firms to cut out an aspect of the retail chain and send personalised goods direct from factory or warehouse to people’s goods, rather than through shops. This enables lower costs and lower prices.
• Personalisation . A digital economy allows greater personalisation than would be possible under traditional economy. For example, a traditional shop would only have room to stock a certain number of colours and sizes, but with the digital economy, a consumer can choose any preference and then the product can be custom-built e.g. 3D printer. For example, custom clothes that have particular sizes and colours to match individual preferences.
• Lower barriers to entry . In some markets, aspects of the digital economy make it easier for new firms to enter. If an entrepreneur has an innovative idea that catches on, they can create a new product which challenges traditional firms. The digital economy has brought many new services which were inconceivable before, such as online home deliveries for grocery to dating apps.
• Creates significant data which can give new insights . The mass production of data can help inform governments and charities about what is happening in the economy. For example, in tracking of COVID-19 spread, the use of an app on mobile phones may indicate where local hotspots emerge.
• Benefits for developing world . The digital economy is opening up opportunities for the developing world. For example, computer programmers in India can easily underbid western counterparts, leading to new job opportunities and higher income in India.
• Enables people to work from home . The digital economy has been a huge asset during the COVID lockdown. Without digital technologies, the decline in economic activity would have been even greater. The digital economy gives greater scope for people working from home and having greater flexibility in their hours (which may suit parents with children). Working from home can reduce contact and spread of a virus. It can also help reduce traffic congestion and pollution.

Problems of digital economy

• Monopoly power . Despite the potential for new start-ups, many aspects of the digital economy have become dominated by firms with monopoly power. For example, Amazon has cornered the market for online sales, meaning many firms have to go through the Amazon market place to reach consumers who go to Amazon out of habit. Similarly, Google and Facebook have all developed very strong brand loyalty and market share in their respective markets. This has made a few tech giants very profitable. WIth monopoly power, Google are able to charge high prices for online advertising and Amazon have the market power to undercut traditional booksellers.
• Less community. A traditional bookshop can act as a focal point for local community. It may hold events, book signings and individuals may enjoy the experience of browsing physical books. With the digital alternative undercutting traditional firms, old fashioned bookshops are forced out of business. Although books may be cheaper, we have lost physical interaction between sellers and buyers which was an important aspect of the buying experience.
• Addictive nature of technology . Whilst, in theory, the internet can save time, e.g. finding bus times is much easier with internet than paper copies, this time saved may be outweighed by the time we waste checking Facebook, twitter, internet searches. Also, the sheer volume of information can cause us to drown in information and lose sight of what we actually need. More choices do not necessarily lead to better outcomes. When faced with a bewildering range of outcomes, we can take time to decide and it becomes easier to procrastinate.
• Privacy issues. Harvesting and using data has become big business. Facebook collects a large range of data on its users and this has been bought by political interests who can give very targetted political ads to its users.
• Bypassing of labour laws. The digital economy has created a trend towards using self-employed freelancers, who are not protected by the same labour laws. For example, delivery drivers for Deliveroo and Uber drivers have often been employed on zero-hour contracts . This enables firms to cut labour costs, be more flexible, but it can leave workers without sick pay or employment protections.
• Social media has led to more graphic content. The anonymous and distant nature of social media has exacerbated trends to personal attacks and the posting of conspiracy theories or posting of violent/sexual images. The digital economy has enabled the proliferation of content that is damaging to human well-being.
• Disruption patterns. The economy has always faced disruption from new technology – from the period of the Luddites to the assembly line. However, the digital economy is increasing the pace of change, causing many traditional firms (high street retailers) to go out of business. The rise of AI may threaten jobs in a whole new range of service sector industries. In theory, new technology will lead to changing patterns of activity, but no increase in overall unemployment. However, the pace of digitalisation can lead to structural unemployment , with some unskilled workers increasingly losing out to skilled workers. Combined with the monopoly power of big tech firms, it is causing an increased inequality in society, which may lead to feelings of alienation and unfairness.
• Environmental costs. It is a mistake to think that the digital economy implies a ‘green solution.’ Data centres use electricity and cause CO2 emissions. In the US, data centres account for around two per cent of U.S. electricity use in 2014. ( link ) A bigger potential cost is how the digital economy encourages a ‘throw-away’ culture. E.g. the planned obsolescence of mobile phones and computers, encouraging consumers to buy new models, leading to greater use of raw materials.
• Automation – benefits and costs
• Sectors of the economy
• Costs and benefits of globalisation

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Essay on Digital Economy

Introduction.

With the rapid growth of digital transformation in recent years, many organizations have flourished across various industries, often against powerful incumbents by leveraging compelling and complex connections with consumers. The organizations have gained a competitive advantage by running multiple paths to engage with their consumers. Amazon is among the most successful organizations emerging in the transformed business landscape. Amazon has experienced a continuous transformation digitally since its launch in 1994 to an international company (Althafairi  et al.,  2019). The organization has gained a tremendous competitive advantage by using the technology effectively. First, the company is customer-centric, whereby the organization has been ranked the number one for various consumer satisfaction indexes.

Besides, the entire business structure of the organization is driven by digital technology in expanding its business offerings and enhancing the main business functions. In addition, the company provides a workplace culture that drives innovation and change. The company has grown from a book store to being the leading online store currently. The company continues to break into and create new markets successfully, which is only possible by being responsive and having its workers willing to move with the transformation. As novel technologies have continued to be developed, the organization has always stayed at the front end of the wave (Lisdorf, 2021). For instance, the organization uses drones for delivery and data analytics to make decisions on cutting costs through economies of scale and other efficiencies. This paper discusses the implications of the digital economy on Amazon.

The digital economy is a hyper-connected economy that comprises growing inter-connected individuals, companies, and machines through the web and using digital means such as robotics and big data analytics (Barefoot  et al.,  2018). It involves a transformation in the economy due to the general use of developing digital technologies. The change results in a digital business based on e-business and e-commerce aimed at e-goods. The main building blocks of the digital economy include the internets, which enables organizations to offer goods for sale and allow consumers to browse the products they need. E-mail which allows cheap and instantaneous communications across the globe; digital automation, which is the processing power of computers that helps organizations make decisions based on the output, digital payments, which include credit cards, bitcoin, and bank transfer; and social media where people use it to share recommendation about business. Organizations embracing the digital economy use internet websites, social media reviews, e-sales, e-payments, and automation in their operations (Abdrakhmanova  et al.,  2021). However, the traditional economy is based on physical shops and cash payments. Some of the digital economy examples include Airbnb, which allows tourists to make reservations online, and Netflix, which will enable consumers to buy television series and films through the internet without any physical good.

Developments in the digital economy have led to positive and negative effects on organizations operating in the e-sector. The positive implications of digital economy development include more meaningful information enabled by the internet to help consumers have detailed information to make better choices. For instance, a consumer can use the internet to assess a specific product offered by different organizations and compare the prices. Besides, digital technology has helped save costs since the business does not require many employees hence saving on labor costs (Cassar  et al.,  2010). The organization also benefits by cutting out the aspect of the retail chain since it can send the purchased goods directly to the consumer rather than through shops. In addition, the digital economy helps create important data that gives significant insights to the company. For instance, an organization may use data analytics to analyze the trends in the economy and plan appropriately for the future. Also, the digital economy helps organizations reach a wide range of target consumers since it is not limited by location. With the use of the internet, a consumer can purchase products in different world locations. The goods are then shipped to the customers. Thus, the digital economy has helped organizations gain a wide customer base, which makes the company make more profits, hence more growth. The negative implications of the digital economy on organizations in the e-sector involve cyber-attacks (Hojeghan & Esfangareh, 2011). Since the organizations use information technology systems, they are prone to attacks such as disrupting the organizations’ approach, which may lead to loss of consumers or lack of trust from the consumers when they get manipulative messages from the attackers. Also, it breaches an organization’s privacy since it is challenging to have privacy in the digital world, and the organization’s data can be stolen or sold.

Business Model of Amazon

Amazon is an American international e-commerce organization launched by Jeffrey Bezos in 1994. When it faces competition, its brand remains unparalleled and hence remains in the lead (Investopedia, 2019). The business model of Amazon identifies the following critical success factor. The first factor is maintaining a solid brand name and location, then offering its consumers value and strong shopping knowledge, which then followed by considerable sales capacity and finally realizing economies of scope and scale. Amazon’s business model is set if business models rather than a single agency (Sadq  et al.,  2018). The business model of e-commerce organizations, in general, comprises eight key components, which include value proposition, market opportunity, revenue model, competitive environment, competitive advantage, market strategy, organizational development, and management team (Wadhwa  et al.,  2020). . The business model of amazon comprises the value proposition, revenue model, customer segments, essential resources, competitors, partners, cost structure, and customer relationship.

Value proposition

Value proposition involves specifying how the products and services of the organization are combined and extended to meet the needs of consumers. The company targets middle-class and upper-class individuals who have experience in technology and those that do not have time to buy products from physical outlets (Wadhwa  et al.,  2020). Thus, the company has positioned itself as a local and global e-commerce giant where consumers can purchase anything and get it delivered at any remote location. The company has obtained many information technologies and e-commerce start-ups intending to offer high value to their consumers using the digital technology of the acquired companies at a low cost (Wadhwa  et al.,  2020). . The company used big data analytics to record consumer data and analyze consumer behavior which helps the organization provide consumers products, related products or bundle the items together as an offer depending on consumer preferences demonstrated through purchases.

Revenue Model

The revenue model involves ways the organization uses to generate a higher return on investment and profits. The revenue model of e-commerce includes promotion, subscription, sales, fees, and affiliate revenue models. The organization sells goods directly that consumers visit since they assume they will obtain affordable products readily available for purchase and shipping. This helps the company to get direct sales. The company also receives revenue by offering other retailers a platform to sell products to their consumers. The company gets a commission from the sale prices of the retailer’s products. Besides, Amazon retains a subscription-based business model via its Amazon Prime serves, where consumers pay an annual fee to secure free two-day or same-day shipping on eligible items and access streaming media such as digital music and movies (Wadhwa  et al.,  2020). Also, the organization makes revenue from Amazon Kindle, an e-reading package whereby the consumers can purchase, surf, and copy files, publications, and broadsheets (Wadhwa  et al.,  2020). Amazon’s advertising platform is another source of revenue for the company since it offers a marketing platform for sponsored ads and videos. The company owns more than 1000 patents, which is another source of revenue for the company.

Customer segments

Amazon consumer segments can be separated into three categories: suppliers, consumers, and inventors. The suppliers are the organizations that utilize the e-commerce stage of Amazon to sell their products to Amazon’s broad consumers. Inventors involve every public involved with Amazon web services which are Amazon cloud computing platforms (Pereira, 2020). They include customers and partners of all sizes in each industry. The buyers are the people across the globe seeking to purchase products and services via Amazon’s channels. Amazon keeps data of its consumers to track consumer behavior through characteristics such as consumer interests, engagements, and personal information.

Amazon Competitors

The competitive environment in the business model entails the competing firms working in the same market space, possible competitors in the market, manufactured goods alternatives available, and the bargaining power of the consumers and sellers. The organization has many competitors who challenge it to continue providing better services to its consumers to remain at the top. Some of the competitors include online stores, approximately more than 24 million currently (Ritala  et al.,  2014). Another competitor is Walmart which has a significant presence online and is ranked as the second most popular store in the United States. Besides, china-based online retailer Alibaba is another competitor of Amazon, specializing in whole selling. Other competitors include Otto, Jingdong, eBay, Flipkart, Rakuten, and Newegg (Pereira, 2020).

Amazon Key Resources

The organization’s primary resource is the technological infrastructure, which is essential for ensuring the whole chain of the business is operating without disruptions and losses. Others include physical spaces such as warehouses and automation (Pereira, 2020). Human resource is another significant resource that ensures efficient communication with the partners.

Amazon Key Partners

Amazon has always assimilated, financed, and amalgamated with industries that align with their current and future growth while re-investing incomes from their sales into long-standing growth in novel marketplaces and ground-breaking exploration (University of Toronto, 2013). The significant partners of the online store include sellers who are the essential associates of the trademark because they are the producers of Amazon’s leading basis of returns. The company has more than 7.9 million sellers globally who generate approximately half of the firm’s returns (Pereira, 2020). Other partners are affiliates who are bloggers that promote traffic for the platform and earn commission through referrals that lead to a sale and therefore help in boosting sales, developers who are system integrators and software vendors, content creators who independently use Amazon Kindle to publish their works, and subsidiaries which involve organizations that offer storing places, and structures to products and goods established by Amazon.

Amazon Cost structure

The costs incurred by the company involve the maintenance of the information technology systems, a good customer service center, promotion of its products, ensuring the security of its websites, and payment of rents and lease on their physical stores and delivery stations (Pereira, 2020).

Amazon Channels

The company’s leading and the most significant channel is the Amazon website and other channels, including Amazon App, Amazon Prime, and affiliate program. Since the company is internet-based, it utilizes digital marketing, which involves e-marketing and advertisements (Pereira, 2020).

Amazon Customer Relationship

Amazon has, over time, maintaining a strong and enduring connection with the consumers (Pereira, 2020). This is because the company’s main objective is to be consumer-centric, and it does this by maintaining different communication approaches that are easy to use by their consumers, such as telephone calls and online chats. The company’s greatest strength is ensuring complete customer satisfaction and excellent customer service (University of Toronto, 2013).

Amazon Key Activities

The key activities of the institution revolve around the establishment, preservation, and growth of its extensive network. Thus, the company capitalizes on website and application creation and administration and the whole logistics and supply department and information security (Pereira, 2020).

Challenges and Opportunities

Amazon has been facing various challenges in its operations, including regulations in some countries. For instance, the Indian government restricted all overseas corporations from using e-commerce to vend their goods openly to Indian customers. This made it difficult for Amazon to reach consumers in India without involving intermediaries. This, in return, increases the labor costs, which reduces the company’s profits. Another challenge Amazon faces include limited infrastructure to allow easy reach of goods to consumers. Some countries have poor infrastructure, making Amazon take more time before delivering products to its consumers. This wastes many resources which are essential to the company. Besides, the consumers who lack patience give bad reviews about the company, which affects the brand’s image. To deal with this, the company ensures constant communication with consumers in case of a challenge in delivering the consumer goods to let the consumers know that the goods may be delivered late. A good customer relationship through constant communication helps the consumers develop trust and loyalty to the organization. Another challenge the company faces is competition from its rivals through the pricing of products or substitute products (Chhabra, 2021). The company faces this challenge by offering its products at low and competitive prices to keep up with the competition. The company uses dynamic pricing, which involves changing the prices of different products more than 2million times each day. It also uses psychological pricing to keep its costs competitive and attract more customers by providing huge discounts on best-selling and popular products. This makes customers find Amazon prices to be the lowest all-time and purchase from the company. Besides, the company ensures competitive and low prices through competition monitoring and repricing, which involves placing a tab on the prices of every product offered by its competitors and considers repricing its products to attract more consumers to its platform. Despite the challenges, the companies have diverse opportunities in the digital economy. The company has the chance of expanding its operations in other countries, such as the developing states. Also, the company can establish more physical stores to compete with the brick-and-mortar operations, which may be more robust because they engage customers more (Akram, 2015).

Amazon is an international e-commerce company based in America and was started in 1994. Amazon has successfully remained competitive in the digital economy due to its continued investment in new technologies. The digital economy involves using digital technology to connect organizations and people. Some of the digital economy organizations include Netflix, Amazon, and Airbnb. Developments in the digital economy have impacted the e-commerce sector significantly. It has provided consumers with the availability of more information to make informed decisions before purchasing products online. For instance, consumers can visit different online companies offering the product they need and compare prices before buying. Besides, it has provided the businesses with the ability to reach a vast population of their target customers. However, the companies in the digital economy face various challenges such as privacy concerns whereby their information and consumer information is can be accessed by cyber attackers. Amazon has a business model which includes multiple components such as value proposition, revenue model, cost structure, key partners, customer segments, customer relationship, competitors, and critical resources. The revenue model entails the different sources of revenue for the company, including direct sales to its consumers, commissions from retailers using their platform, and Amazon Prime. The company faces challenges which include government restrictions from selling directly to citizens, which the company has faced successfully by developing physical stores in those countries. Other challenges include stiff competition from other companies in the e-space and poor infrastructure, which easily hinders the delivery of products to consumers. The opportunities include the company can open stores in other countries such as the developing nations.

Abdrakhmanova, G. I., Vishnevsky, K. O., Gokhberg, L. M., Demidkina, O. V., Demyanova, A. V., Kovaleva, G. G., … & Shugal, N. B. (2021). Digital economy.

Akram, S. (2015).  Amazon’s Business Model and its Evolutions . Academia.edu. https://www.academia.edu/37917507/Amazon_s_Business_Model_and_its_Evolutions

Althafairi, B., Alhoumaida, N., Saxena, M., & Almsri, Z. (2019). Case study-AMAZON.  Journal of the Community Development in Asia (JCDA) ,  2 (2).

Barefoot, K., Curtis, D., Jolliff, W., Nicholson, J. R., & Omohundro, R. (2018). Defining and measuring the digital economy.  US Department of Commerce Bureau of Economic Analysis, Washington, DC ,  15 .

Cassar, C., Heath, D., & Micallef, L. (2010). What is digital economy? Unicorns, transformation and the internet of things.  Deloitte Article .

Chhabra, T. (2021, July 28).  Amazon business model: How does amazon make money?  Feedough. Retrieved March 26, 2022, from https://www.feedough.com/amazon-business-model/

Hojeghan, S. B., & Esfangareh, A. N. (2011). Digital economy and tourism impacts, influences and challenges.  Procedia-Social and Behavioral Sciences ,  19 , 308-316.

Investopedia. (2019).  Amazon’s vs. Alibaba’s Business Models: What’s the Difference?  Investopedia. https://www.investopedia.com/articles/investing/061215/difference-between-amazon-and-alibabas-business-models.asp

Lisdorf, A. (2021). Amazon. In  Cloud Computing Basics  (pp. 75-84). Apress, Berkeley, CA.

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The digital economy is no leveller, it’s a source of inequality

Associate Professor of Creative Industries & Digital Media, University of Nottingham

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Andrew White does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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When we think about income and wealth inequalities we are tempted to lay blame on the old way of doing things. In Capital in the Twenty-First Century , Thomas Piketty picks out inherited money as a driver of unsustainable disparities between the global rich and poor. Oxfam recently pinpointed the high-profit finance and pharmaceutical industries as engines of inequality that distribute wealth to the wealthy.

This view is consistent with those who place their faith in the digital economy as some kind of solution. It is held up as an alternative to traditional forms of economic activity, and one which can generate sustainable growth and narrow inequality. Lower barriers of entry into its markets (“anyone can start a business on the internet!”) is said to widen opportunities and lead to a more equitable distribution of wealth.

It is for this reason that many politicians and academics continue to advocate the aggressive expansion of the digital economy, especially into areas which have not witnessed much of this type of economic activity. Sadly, it’s not quite as simple as that.

Creative licence

The expansion of the digital economy has gone hand-in-hand with the growth of the creative industries. The UK’s pioneering development of policy on the creative industries in the late 1990s was predicated partly on the desire to exploit the intellectual property generated by burgeoning digital technology. That applied particularly to those single operators and small businesses that proliferated in the cultural and creative sectors.

Similar policies have been used in countries at varying levels of development in the early years of the 21st century. Look at the UN’s enthusiastic promotion of the creative economy, and its suggestion that these kind of structural reforms could work in both the developed world and in emerging markets . This explains why much research on developmental economics focuses on narrowing the so-called digital divide in order to give more equal access to a global economic system which promises prosperity for all.

But what if the problem is the digital economy itself rather than our incapacity to fully exploit the opportunities it seemingly presents? The first chapter of Michael Lewis’s book Flash Boys opens with a story about construction workers on a project to lay a tunnel for fibre-optic cables as straight as they possibly could, even if this involved digging through mountains or river beds. The reason: to connect financial exchanges in New York and Chicago by the shortest possible route and give the operators a crucial few milliseconds advantage when processing transactions.

A huge amount of money is required to carry out such projects, and to buy the supercomputers that can manipulate the data and run the trading programs. It starts to look like a rigged game and it is difficult to see how a digital economy in which financial speculation is so prominent can reduce inequality.

Stuck in the middle with you

There are undoubtedly other sectors of the digital economy where lower barriers of entry do encourage smaller operators. The early development of search engines and social networking were characterised by experimentation by single operators or small groups of people, sometimes students, at home or at university. This pioneering image of isolated entrepreneurs developing great companies from scratch goes hand-in-hand with radical sounding rhetoric about taking on vested interests.

In this worldview, cutting out the middle man, a superfluous type of employee who will not move with the times, is seen as a demonstrably good thing. Thus, taxi drivers who complain about having their business taken away by Uber are often described as inflexible and prone to over-charging. But the middle-man has not disappeared in the digital economy; they have just got richer.

Think of the music industry. Online stores have resulted in the loss of many jobs as a result of physical record stores closing down. However, our changing habits have not cut out the middle-man. We buy most of our music from intermediaries like Apple . Even record labels, seemingly superfluous to the online music industry, continue to flourish .

In other words, while the poorer middle-men – record store assistants, or taxi drivers – have been ruthlessly squeezed, wealthier intermediaries continue to prosper. Even the supposedly lower barriers to entry in these industries have not prevented monopolies emerging in online markets in a way that is not as prominent in markets offline.

A role for universities

It would be easy to finish this piece with a long list of proposed solutions to these inequities. But what is really needed is the necessary intellectual work of persuading wider society that the digital economy does indeed pose problems. This is not helped by the sense that higher education, one of the best placed sectors to lead this debate, is not always up to this task.

While the views that are expressed in this article are shared by many in this sector, It is often difficult to seek institutional support for research in this area when the coalition government’s policy of requiring humanities-based schools and departments to be financially self-sustaining has driven many of them into the arms of big business or into partnership with STEM (Science, Technology, Engineering and Mathematics) colleagues who might not be as interested in a critical examination of the foundations of the digital economy.

Many of these solutions involve digital technology, with big data being the latest whose application promises to address various social and economic woes . How welcome it would be if funding bodies could also increase the number of schemes which ask why the rapid growth of the digital economy over the past two decades has failed both to reduce inequality and save us from the most severe financial crisis since the 1930s.

• Macroeconomics
• Creative industries
• Digital economy
• Income inequality
• Wealth inequality
• Thomas Piketty

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Digital Economy: The Economics of the Digital Economy

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• Shtal T Pliekhanov K Kravets K Bochkov D (2024) Trends in the development of digital subscription services in international markets Economics of Development 10.57111/econ/1.2024.62 23 :1 (62-69) Online publication date: 22-Mar-2024 https://doi.org/10.57111/econ/1.2024.62
• Mokhtari A (2024) DIGITAL TRANSFORMATION IN ALGERIA AS AN INEVITABLE NECESSITY IN LIGHT OF GLOBALIZATION Journal of Law and Sustainable Development 10.55908/sdgs.v12i8.3926 12 :8 (e3926) Online publication date: 19-Aug-2024 https://doi.org/10.55908/sdgs.v12i8.3926

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• Digital Economy

Digital economy is one collective term for all economic transactions that occur on the internet. It is also known as the Web Economy or the Internet Economy. With the advent of technology and the process of globalization, the digital and traditional economies are merging into one. Let us learn more about this concept of digital economy.

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What is digital economy.

Digital economy is defined 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 term was first coined in a book “The Digital Economy: Promise and Peril in the Age of Networked Intelligence” by author Don Tapscott in 1995.

There are three main components of this economy, namely,

• e-business infrastructure

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.

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Merits 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, Amazon) are from the digital world. Let us look at some important merits of the digital economy.

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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 have 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.

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Demerits 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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Q. Define Digital Economy.

A. Digital economy is defined 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.

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The conquest of mars: a new space race plagued by failures, openmind books, scientific anniversaries, hydrogen, the double-edged sword in the climate change story, featured author, latest book, the digital economy and learning.

Education is changing because the digital economy is shifting the skills and talents needed to lead a successful life and foster personal well-being. Talent gaps persist and are deepening around computer science and creativity. Learners need to be cognitively adaptive, and able to constantly learn new things and apply old knowledge to new contexts. Lifelong learning is the new normal. Three major shifts in education are identified: (1) changes in the funding of education; (2) changes in the duration of learning; and (3) changes in how we learn. Collaborations between industry, government, and education institutions will be the hallmark of education in the digital economy.

The digital economy is changing what we need to be able to do cognitively to lead successful lives and pursue well-being. Artificial intelligence, the Internet of Things, 3D printing, virtual reality, distributed ledger technology, biotechnology, and robotics are combining to change how we work and live. 1  Talent gaps persist and are deepening around computer science and creativity. The gig economy is changing employment and benefits structures around the globe as platforms enable people to share resources. Employment disruption is predicted to be considerable, though the pace of technological uptake, the nature of the welfare state, and the demographics of a given country will help determine the scale and duration of unemployment due to the automation of human work (OECD, 2018). 2  There will be new tasks and competencies in high demand. Higher education, in particular, will play a key role, in reskilling, upskilling, and educating the global labor force of the Fourth Industrial Revolution.

All that is technologically possible still may not be politically or economically rational or feasible. 3  This is why we are likely to see significant initial job displacement for the digital economy, regardless of what education institutions can do to upskill, reskill, and educate talent. The pace of change is such that there is likely to be considerable unemployment in the near term. Education institutors will be able to help individuals manage a transition to a new reality.

What is needed to thrive in the digital economy involves cognitive competencies matched with technological skills. The competencies are a shifting set of skills. Learners need to be adaptive, cognitively curious, and able to constantly learn new things and apply old knowledge to new contexts. The key to employability is cognitive adaptability. Employees will need to learn and unlearn constantly. Education systems need to prepare learners, both adult and youth learners: what I call,  learning resilience . Learning resilience is about the ability to adapt with ease to new truths in your knowledge, repeatedly. It is about being accepting of your prior knowledge being rendered irrelevant under new circumstances.

The current global education landscape was designed to meet the needs of the Industrial Revolution that emerged in the 1850s with the mechanization of physical labor. There has long been a growing divide between graduate skills and employer expectations. For universities and high schools alike, there is a battle for time between soft skills and hard skills—or social-emotional competencies versus technical skills. There is resistance from academics, who see themselves as content knowledge experts who develop and verify knowledge, to teach vocational skills. Yet in countries where higher education is not subsidized by the government, the burden of debt students take on in order to be employed cannot be serviced or justified by content knowledge alone. The change is that universities are no longer the sole purveyors of information. Information is everywhere. It is what you do with information that matters. Furthermore, the jobs that are available in the digital age are shifting so quickly that technical degrees cannot guarantee preparation for the future of work. This is why learning resilience is essential.

Primary, secondary, and tertiary education need to shift their focus to  how  to learn, not  what  to learn. And recruiters need to shift their metrics of talent to acknowledge soft skills and resilience

This is not to say that education as we know it is obsolete; indeed, it is essential to inclusive economic growth. What do you want a formal education to deliver to your future employee? Many jobs require technical skills and that content has to be learned. You cannot do coding without calculus. You cannot model economic outcomes without sound econometrics skills. And you cannot conduct research in the social sciences without sound information literacy. These competencies have to be learned in order to perform the associated trade. Content is still essential. But it is insufficient. Primary, secondary, and tertiary education need to shift their focus to  how  to learn, not  what  to learn. And recruiters need to shift their metrics of talent to acknowledge soft skills, and resilience. Content knowledge is still essential, but it is what you do with that information that really matters.

Competencies are the current focus of good education, however, and the mainstream literature in this area is leading the charge. The current books coming out on what education should be in the digital economy advocate for a specific set of skills being developed by universities. Joseph Aoun, the president of Northeastern University in Boston, famously calls for creativity, entrepreneurship, and numeracy in  Robot-Proof  (Aoun, 2017). Angela Duckworth (2016) calls for grit in  Grit: The Power of Passion and Perseverance . In one of the most important books on this issue, Erik Brynjolfsson and Andrew McAfee, in  The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies  (2014), write that talent needs enhanced capacities in the areas of ideation, large-frame pattern recognition, and complex communication. And for the very high-end employee, Cynthia Solomon and Xiao Xiao have edited a 2019 volume with MIT Press,  Inventive Minds, Marvin Minsky on Education , musing on how to develop inventive thinkers who can create. All of these publications offer important insights; however, none of them identifies the most important ingredient, though they are useful predictors and elements of leading a successful life in the digital economy and address ways in which education institutions can help get graduates there.

This has always been the approach of liberal arts Colleges. Liberal arts colleges, such as Ashoka University in India, NYU Abu Dhabi in the United Arab Emirates, Williams College in the United States, and Yale-NUS in Singapore, are developing truly global talent. They do this through small enrolment sizes per class, where undergraduates have access to the world’s best researchers, and apply authentic learning with student-centered pedagogy. Real effort is made to integrate the messaging of global movements, such as the Sustainable Development Goals (SDGs), and this is made tangible through innovative curriculum and experiential learning in the field. These learning environments are designed and developed to help learners be comfortable with ambiguity, and to transfer knowledge from one context to another and apply it in new ways.

These colleges graduate a small number of students annually relative to the global labor supply. The liberal arts model is too expensive per pupil to scale up to address the anticipated hundreds of millions of people who need to be reskilled over the next decade or two. However, the liberal arts model, of interdisciplinary understandings of humanity’s challenges, remains an excellent pool from which to draw on future-ready talent for the digital economy because graduates are taught to inquire, analyze, and create regardless of discipline, and to use a global outlook for addressing problems. These students are able to apply science, arts, and social science to strategic questions while developing social skills in an international setting. They have numeracy, digital literacy, and emotional intelligence. This is the thinker of the Fourth Industrial Revolution that we seek. The challenge is to scale its best attributes.

Small classroom sizes are costly, but essential to students receiving quality feedback and access to the professor or high-school teacher

The “how” of developing these skills is expensive. There is simply not enough financial support currently being spent on education and reskilling in the public sector in most countries today. The scale of the talent gaps means industry needs to collaborate with government and higher education to implement a skill shift in the global labor population. Small classroom sizes are costly, but essential to students receiving quality feedback and access to the professor or high-school teacher. Experiential learning is well evidenced to bring students to authentic learning environments that allow them to apply content in the real world, aiding retention of material as well. This, combined with internships, enables students to get exposure to how the content of a course or major will play out in a given workplace or type of industry. The combination of these things allows a student to reach a higher order thinking that results in the ability to problem-solve and create new knowledge. Regardless of what area a student chooses to study in, they must be able to write, to communicate ideas clearly (both quantitively and qualitatively), and to understand how knowledge is created. Inside the classroom, having cutting-edge researchers who bring their work into the classroom helps students understand how knowledge is actually created. This is essential in the age of fake news, augmented imagery, big data, and algorithm bias.

Three Major Shifts in Education for the Digital Economy

The three major changes coming for education as outlined below are based upon exposure to literature, private sector reporting, and practice around the globe. It is important to highlight the governance structures, economic stability, labor relations, and the uptake of technological advances as relevant context for each country and educational institution. Three major shifts in education are identified: (1) changes in the funding of education; (2) changes in the duration of learning; and (3) changes in how we learn. The following sections will walk through each major shift for the future of education.

1. Funding Mechanisms for Education

The biggest change that will come to the future of education is more deliberate engagement between industry, government, and educational institutions for funding learning and talent development. This was clearly called for in Klaus Schwab’s  The Fourth Industrial Revolution  (2016) and continues to be championed by the World Economic Forum. There is a well-established link in the literature between economic development and education of the population. Governments need people to live, work, and earn, in order to maintain various different kinds of social contracts. Amanda K. Oleson and colleagues in a 2016 book with Harvard Education Press,  Beyond the Skills Gap: Preparing College Students for Life and Work , advocate for employers sharing responsibility with the education sector for preparing students to work in the digital economy. If this does happen that will be an excellent change for education in the future digital economy. Industry will have to help pay to reskill and educate differently the global labor pool. This also involves paying to reskill teachers and professors too. The cost is part of the reason for the need in change of funding flows; the scale of the number of people is the other reason for the needed change. McKinsey Global Institute anticipates that nearly 1.2 billion people are currently working in automatable jobs. This is not to say that they will lose their jobs, but nearly all of them will be tasked with doing different work within their organizations in the coming decade. Yes, technology produces opportunities for financially efficient solutions, but in this case, not fast enough. Employers need to assist governments and education institutions to upskill and reskill the workforce.

Industry will have to help pay to reskill and educate the global labor pool differently. This involves paying to reskill teachers and professors too

Around the world, access to quality education is a challenge regardless of the digital economy. For those who do make it to and through higher education, the issue of funding is prohibitive. In the United States, the Federal Reserve claims that Americans are carrying $1.5 trillion in student loan debts in 2018. A full fee-paying student at Harvard University can expect to spend $78,000 a year in tuition, room and board, fees, and living expenses. In Europe fees are considerably lower; in Spain for example, public university fees range from €2,000–€3,500 per year, and private universities vary between €5,500–€18,000 per school year. In Argentina, higher education is free, but schools are overcrowded and quality can suffer as a result. In India, there are simply not enough seats to the order of millions of youth not having an opportunity to attend tertiary education. This is untapped talent. This is untapped economic opportunity. This is squandered well-being.

The gap between the haves and have-nots will continue to grow, especially along gendered lines, as computer access will determine potential for success in education and employability. It remains to be seen which, if any countries, will adopt some form of “universal basic income” for wealth distribution, or if most countries will go to a four- or three-day work week without pay decreases to address the growth in capital profit and corresponding decrease in human profit. Relying on philanthropy and tuition for higher education will need to change, and tax dollars alone will not be able to fund public education exclusively in welfare economies.

The final reason funding mechanisms need to change is that the lifelong learning demanded by the digital economy means that front-loading our education to the first fifteen to twenty-five years of life is no longer a sufficient model 

The final reason the funding mechanisms need to change is that lifelong learning demanded by the digital economy means that front-loading our education to the first fifteen to twenty-five years of life is no longer a sufficient model. This will be discussed in greater detail below, but it is important to note here that we will all learn throughout our lives from here on out. That change in education is now, not in the future. For adult and corporate education, it is not effective to purchase a course on critical thinking for your employees. You cannot develop resilience and creativity in a three-day training course. Learning to connect ideas and create solutions in novel ways takes time and funding to develop. A commitment to a resilient and effective workforce means providing financial support for lifelong learning from governments, industry, and education institutions. This includes funding research in the learning science as it pertains to adults particularly. It is anticipated that this field of study will be vitally important in the years and decades ahead. Indeed, funding such research could reflect corporate social responsibility.

2. Duration: Lifelong Learning, Upskilling

Education will no longer be front-loaded in the earlier years of life. Education is now a lifelong endeavor where people will have to learn, unlearn, relearn, and learn again. Lifelong learning is essential to survival and thriving in the digital economy. People can learn new facts and gain more knowledge, or they can learn how to do something through instruction of a given skill; or they can learn why something matters which can inspire creativity and drive success. Every organization needs a learning culture that is based on growing and improvement. High performing teams will be composed of those who know how to learn, and not what to learn. Cultures of growth and change need to be embedded to access in schools and in the workplace.

The pace of technological change shifts too quickly for talent development to stop at the age of twenty-five or younger. What we need to know shifts too quickly. And the millions of new jobs that will come into existence will demand technical and social skills we cannot predict at any given time. Lifelong learning is costly, which means governments and industry need to help subsidize it to keep the economy going. Executive education is likely to skyrocket in scope. Likely education institutions in the private sector that can offer badges and certifications of knowledge will be new players in the adult education sector in a way they have not been before.

Furthermore, as reported by the OECD in 2018, pay-compensated reduction in working hours may be a regulatory tool that can compensate for loss in income due to creative disruption of jobs. In this scenario, and the one of universal basic income, people will be freed up to learn new things. More hours of the week can be spent learning. This change in social structures will change how corporate education and training can work. There will be more capital to invest to make the education of adults a reality and a consistent practice.

The OECD has developed a Learning Compass as part of its Future of Education and Skills 2030 project, and seeks to guide education systems across the world to enable students to thrive in seeking well-being in the future. The Learning Compass, as shown in fig. 1, details ways of thinking rather than specific competencies and content knowledge. There are other such schematics being developed by comparable global agencies, as the world grapples with a major shift in what is needed in the workforce, today and in the future. The point is that how we prepare thinkers who can adapt to constantly changing environments is no longer front-loaded in the first twenty to twenty-five years of life, and rote memorization is entirely insufficient for a viable employee. Education centers, both private and public, will work to ensure that learners know how to think and learn, and this is key to their success and long-term well-being.

The OECD Learning Compass 2030 is a learning framework that aims to help students navigate towards future well-being. It creates a common language about broad education goals

The schematic of fig. 1 is helpful in understanding how people will best learn for successful lives. In the classroom, this means education will have to better leverage technology to both access more learners and free up human educators to do what they do best. This means grading will likely be automated in the near future. Algorithms are biased, but there are patterns we can identify and correct. For humans it is much harder to correct for implicit bias. Technology can deliver lectures, curate content, and mark assessments. Educators will need to learn how to facilitate learning, rather than simply share their knowledge. Student-centered learning is essential. Classrooms and online activities should be authentic and relevant to the students’ interests. Where economically and physically possible, students should be taught in small, diverse groups, regardless of age.

Workplace upskilling and reskilling of current employees will be a key feature of corporate action in this area for the medium term. This is also important in the longer term as GenZ employees seek firms who can offer valuable development opportunities relevant to the gig economy. Visa corporation is a great example of what this change should look like for larger firms. Visa University now has two physical campuses: one in Foster City, California, and one in Singapore in their Southeast Asia headquarters. They also have a massive online digital campus which is learner driven, rather than being compliance driven, as they had been before. They have also hired a chief learning officer, Kerie Willyerd, who is the co-author of  Stretch , a book about how to develop peoples’ skills in the automation economy. All of this is intended to develop a learning culture across the organization, one that is trackable with data and strategically aligned to the organization’s business goals and ethics. Larger firms will all need to take such measures to keep their current employees—who are valuably aware of the corporate culture already—and develop their new ones. Visa is also making money off its talent, running Visa Business School, which offers online courses, interactive workshops, and custom training in all areas of the payments industry. They have wisely positioned themselves to be a key player in education for the digital economy within the payments industry and beyond.

3. Changes in How and What We Learn—Technology and Education

The schools with the appropriate funding are making exciting strides in education. While sitting in their classrooms, students can visit a faraway archaeological dig, or a museum, or a hospital, through virtual reality. Students can wear virtual reality goggles and be propelled into a sustainable world where environmental degradation has been reversed. Students can 3D-print a series of molecules in a chemistry class to understand the scale of the atoms relative to each other. And they can watch an algorithm-produced video of a deceased poet from centuries back read their poem aloud. Augmented and virtual reality are changing what is possible in the classroom. Access to laptops and iPads gives educators real-time data about student understanding in their classrooms. Simulations allow nurses and doctors to practice surgery without a cadaver. When technology is available, it alters the relationship between the educator and the learning. Individualized, self-directed learning for students becomes possible. Content is transferred online, outside of class, and then the in-class time can be spent reviewing and learning to apply the material. This blended learning model is likely to be the new norm, as evidence suggests this is the most effective way for people to learn.

Virtual reality (VR) is already allowing those with access to learn anywhere about everything. An example of the technology being brought to bear on this is a firm called VERE360, which develops research-based education products in virtual reality so learners do not have to travel. This approach is also useful as it breaks away from traditional adult training because it better engages the learner. The goal of this firm is to deliver products in VR that help learners understand complex issues and topics that are difficult to understand, such as the complexity of climate change, or mental health. The technology deployed by firms such as VERE360 enables the personalization of corporate and classroom learning and intends to deliver the learning in a shorter time and a more engaging manner than traditional training. VERE360—and its competitors—are working to produce global content on social issues for socially drive organizations and education institutions on less expensive hardware. Hundreds of millions of people in the global workforce need exposure to this technology in order to be competitive and thrive in the digital economy.

In the opposite direction, the Hickory Hill Nature School in Connecticut, USA, 4  is an outdoor school where children are immersed in all-weather learning, whereby there is no indoor space. The purpose is to foster a deep and personal connection to the natural world. Inquiry-based and child-led, with small class size, the pedagogy aligns with evidence-based best practice for developing creative and cognitively flexible learners who are well connected to nature and sustainability. This is the primary and secondary version of liberal arts college without the technical skills scaffolded into the curriculum  per se . These sorts of school will likely proliferate in the digital economy as employers and parents seek to foster creativity and retreat from the numbers of learning. This type of learning will be valued in the future (currently there are only two such schools accredited in the United States) because it delivers a connection to nature that artificial intelligence will likely not possess, and because it is evidence-based best practice for fostering stewardship and emotional intelligence.

Assessment and grading are also being automated. When testing children, there are now ways to apply adaptive computer-based testing that allows each learner to demonstrate their academic proficiency at their own pace. Eric Mazur, Harvard’s world-renowned physicist and expert teacher, has developed Perusall, a software application that grades students’ reading annotations. Learning simulations will eventually be able to replace the teacher as the deliverer of content. How we certify knowledge will shift accordingly. Global talent will be able to badge itself in different ways and, hopefully, much less expensive ways.

The automation economy and the digital technologies that have brought it on will also influence changes in secondary and tertiary curricula. STEM and STEAM (Science, Technology, Engineering [Art], and Mathematics) remain very important, and produce talents that are in high demand in the workforce. However, environmental pressure mounts from the climate crisis as well. Students of the automation economy are also students (young and old) living in a time of ecological breakdown. Education institutions will need to adjust their curricula to help people grapple with the science, humanity, social impacts, and solutions. A good education will combine automation and environmental sustainability in the years and decades ahead. And an excellent education will produce resilient learners who can adapt to change effectively.

Online learning will have to be a part of the solution given the scale of the technologically displaced in the short and medium term. While Massive Open Online Courses (MOOCs) have not delivered the learning they were first purported to, the idea that learning can happen online in the absence of brick-and-mortar access to quality education is important. The number of humans who crave access to quality education is just too large to ignore the online model of free, open-access information. In the future, we will do better at leveraging this tool.

Students of the automation economy are also students (young and old) living in a time of ecological breakdown. Education institutions will need to adjust their curricula to help people grapple with the science, humanity, social impacts, and solutions

A curricular topic that will likely be added to formal and adult education is mindfulness. The stresses of constant change and better awareness of mental health means that education about how to self-regulate and practice self-care will be a societal must. Current models of education require the fortunate to access this support in their own time and within their own financial means. Very few can do so. But sleep, mediation, and nutrition will become vital education pieces in the digital economy. Not only for our mental well-being, but also because we will be living much longer lives in the digital economy, and self-care will be paramount as a result.

Unknowns of the Future of Education

Technology also changes the learners themselves. iPhones, social media, and the culture of the Internet has changed the human attention span, for example. Most people turn off after eight seconds. But this is a change that has not involved the alteration of the human body. Wearable technology is changing how students engage in the classroom and in athletics in schools. In the future, biometrics will likely tell education administrators about individual learning as real-time health data enters into the education process. What is unknown is how cultural sensitivities to privacy will influence the use of such technologies in schools. Where the technology is available and financially supported, will administrators and parents opt to use it? It remains to be seen if employers would have the legal right to use such technology.

At the more advanced end of the technology advancement spectrum, it is possible that people will be using implantable brain-computer interface (BCI) technology, or brain implants, to enhance their knowledge base. With this outcome, education as we know it would fundamentally change. There would be substantial equity and access issues to grapple with from the start but, nonetheless, the possibility of this eventuality is real. Elon Musk’s NueraLink company is working to develop implantable chips that would give the human brain artificial intelligence capacities. These people will be cyber-physical systems in their truest sense. How they are educated will depend on the neuroscience and psychological advances we can make as a society in the coming years. In addition to the access and equity issues involved, there will be significant ethical issues as a result of this new kind of intelligence and what it is  allowed  to learn.

The difference between machine probability and human creativity is real and will remain so, but how education institutions will teach people about the difference is little explored at this time. Likely, ethics training will be essential for global talent regardless of your industry or profession. There is very little, if any, preparation in the education world for this sort of technological change in how information is ascertained by humans. Nonetheless, it is an eventuality that is best placed in the long-term planning of a given organization, educational institution, and government.

These changes have fostered renewed interest in the sciences of learning all the more imperative. As MIT has reported in its report  Work of the Future, Shaping Technology and Institutions, Fall 2019 Report , these changes require a better understanding of how adults learn. Research is currently being done to connect the science of learning to workplace adult learning in practice. 5  It remains unknown how learners of different ages and educational attainment learn best, let alone how cultural context may impact that learning. This will be an area for important research and discovery going forward.

The digital economy is changing what is needed in terms of education to lead a successful life with well-being. Access and quality will continue to be challenges in the digital economy, but there are new opportunities in both areas due to the changes that technological revolution brings. New collaborations between governments, education institutions, and industry will foster a new area in education that is lifelong and technologically enhanced. There are known unknowns to consider in long-term planning, most notably the potential for neural implants changing how humans interact with information cognitively. Education in the digital economy will change in its funding structures. Education and learning will change in duration, no longer being front-loaded in the first decades of life. And education will be changed by technology itself, not just in the ways we deliver information and learning, but also in what is actually learned. Environmental sustainability and well-being will need to be understood by all for a successful life of wellness in the digital economy. These are exciting times for change, but to ensure the outcomes have a net positive impact on society more concerted and deliberate effort around education needs to be pursued by all stakeholders. The costs of not doing so appear to be dire.

Bibliography

—Aoun, Joseph E. 2017.  Robot-proof, Higher Education in the Age of Artificial Intelligence . Cambridge: MIT Press.

—Autor, David, Mindell, David M., and Reynolds, Elisabeth B. 2019.  Work of the Future, Shaping Technology and Institutions, Fall 2019 Report : MIT Work of the Future.

—Brynjolfsson, Erik, and McAfee, Andrew. 2014.  The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies . New York: W. W. Norton.

—Duckworth, Angela. 2016. Grit: The Power of Passion and Perseverance. New York, NY, US: Scribner/Simon & Schuster.

—Gleason, Nancy W. (ed.). 2018.  Higher Education in the Era of the Fourth Industrial Revolution . Singapore: Palgrave Macmillan.

—McKinsey Global Institute. 2017. “Harnessing Automation for a Future that Works.” Available at  https://www.mckinsey.com/featured-insights/digital-disruption/harnessing-automation-for-a-future-that-works .

—OECD. 2018. “The Future of Education and Skills: Education 2030.” Available at  https://www.oecd.org/education/2030/E2030%20Position%20Paper%20(05.04.2018).pdf .

—Oelsen, Amanda K., et al. 2016.  Beyond the Skills Gap: Preparing College Students for Life and Work . Cambridge, MA: Harvard Education Press.

—Schwab, Klaus. 2016.  The Fourth Industrial Revolution . New York: Crown Publishing Group.

—Solomon, Cynthia, and Xiao, Xiao. 2019.  Inventive Minds, Marvin Minsky on Education . Cambridge, MA: MIT Press.

—Willyerd, Kerie, and Mistick, Barbara. 2016.  Stretch: How to Future-Proof Yourself for Tomorrow’s Workplace . Hoboken, NJ: Wiley.

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OECD Digital Economy Papers

Dark commercial patterns.

English , French

• Science and Technology
• ISSN: 20716826 (online)
• https://doi.org/10.1787/20716826
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There is mounting concern that dark commercial patterns may cause substantial consumer detriment. These practices are commonly found in online user interfaces and steer, deceive, coerce, or manipulate consumers into making choices that often are not in their best interests. This report proposes a working definition of dark commercial patterns, sets out evidence of their prevalence, effectiveness and harms, and identifies possible policy and enforcement responses to assist consumer policy makers and authorities in addressing them. It also documents possible approaches that consumers and businesses may take to mitigate dark commercial patterns.

• Click to access:
• Click to download PDF - 3.76MB PDF

Cite this content as:

Author(s) OECD

26 Oct 2022

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Make Your Note

In Focus: Digital Economy

• 13 Jun 2023
• 12 min read
• GS Paper - 2
• Government Policies & Interventions
• E-Governance
• GS Paper - 3
• Inclusive Growth
• Achievements of Indians in Science & Technology

For Prelims: Digital Initiatives of the Indian Government, G20

For Mains: Digital Economy: Significant Impacts, Challenges, Way Forward

Why in News?

Recently, the Ministry of Electronics and Information Technology (MeitY) organised the second in-person meeting of the G20 Digital Economy Working Group (DEWG) in Hyderabad from 17 th -19 th April 2023.

• The first meeting of G20 DEWG was held in February 2023 setting the tone for productive and meaningful deliberations in the future.

What are the Important Things Pointed Out in the Meeting?

• The Significance and Increasing Scope of the Digital Economy: The digital economy is gaining prominence and impacting various aspects of economic activity globally. It emphasizes that the digital economy is no longer limited to a specific sector but is permeating every corner of the economy.
• India's Recognition of the Digital Economy: India's awareness of the growing importance of the digital economy, is highlighted by its G20 presidency and the meetings held to understand the opportunities and challenges associated with it.
• The Influence of the Digital Economy on Manufacturing: It is stated that even traditional manufacturing sectors are being influenced and transformed by the digital economy. This implies that the integration of digital technologies and processes is enhancing and modifying manufacturing activities.
• The importance of developing robust digital infrastructure.
• The significance of cybersecurity measures to ensure the protection of digital systems and data.
• Need to create and train a skilled workforce that can contribute to India's position in the digital economy.

What are the Digital Initiatives of the Indian Government?

• BharatNet Project: Aimed at connecting all villages in India with high-speed broadband by 2023.
• Startup India Program: Aimed at promoting entrepreneurship and creating a conducive ecosystem for startups.
• The Digital Saksharta Abhiyan (DISHA) Program : Launched in 2016, aims to make at least one member of every household digitally literate.
• The use of digital vouchers or e-rupee for conditional transfers to MSMEs (Micro, Small, and Medium Enterprises) and other segments of the business ecosystem can have a significant multiplier effect on the economy.
• Financial Inclusion: About 75% of adults worldwide have access to formal banking services, while in India, this percentage has already reached around 85%. The ability to save, spend, and borrow digitally has macroeconomic implications for a resource-rich country like India, as it allows for tapping into household financial savings and foreign savings to finance deficits for corporations and governments.
• The two programs complement each other, with Make in India promoting the production of digital devices, while Digital India promotes the adoption of digital services.

What are the Significant Impacts of the Digital Economy?

• Providing digital content and services in vernacular languages can enhance accessibility and inclusivity, enabling a larger population to benefit from the digital economy.
• However, the digital economy can enable the extension of services like medical services and educational services.
• For instance, the UMANG mobile app is a Government of India all-in-one single, unified, secure, multi-channel, multi-lingual, multi-service mobile app.
• G20 can play a facilitative role in realizing the transformative potential of the digital economy in the services sector. By encouraging openness and removing barriers resulting in a more interconnected and efficient global marketplace.
• Other Significant Impacts: The digital economy has had a significant impact on the economy and society. It has created jobs, boosted productivity, and business at the local level, and enabled more people to access services and opportunities. The growth of the digital economy has also led to the emergence of new business models and industries, such as e-commerce , digital payments , etc.

What are the Challenges?

• Digital Public Infrastructure
• Digital Skilling
• Cybersecurity.
• There have been notable achievements in these areas. India has established a robust digital public infrastructure and has made significant progress in digital skilling initiatives. Cybersecurity has also been a focus, although challenges remain.

The Information Technology Act of 2000 defines Critical Information Infrastructure as a computer resource, the incapacitation or destruction of which shall have debilitating impact on national security, economy, public health or safety.

• Safety and Security : However, challenges persist in ensuring the safety and security of digital transactions, particularly in the financial sector. The rapid speed at which transactions occur in the digital realm can be concerning. Correcting errors or addressing fraudulent activities can be extremely challenging due to the swift movement of money.
• Importance of Skilled Manpower : Neglecting the development of a skilled workforce in the digital domain can hinder the full potential of digital public infrastructure. Strengthening educational institutions to produce digitally literate workers is crucial to fully leverage the advantages of digital infrastructure.
• Technological Backwardness : One of the key challenges is the digital divide, with many people in rural areas still lacking access to digital services. The digital economy has also created new forms of inequality, with some people benefiting more than others.

What can be the Way Forward?

• Strengthening Transaction Security: Implementing effective checks and balances is crucial to mitigate these challenges. One positive example is the use of One-Time Passwords (OTPs) in India, which provides users with a short window of time to verify their transactions. Such measures help enhance security and provide an opportunity for users to reconsider their actions.
• However, each of these advancements carries its own risks, making it essential to ensure that transactions occur in a secure and vigilant manner.
• Approaches to Enhance Transaction Security: To address these challenges, various schemes have been implemented. Apart from OTP, some experiments involve changing the layout of the numeric keypad to prevent patterns and patterns on the keyboard, creating an alert for users. Additionally, when transactions exceed a certain threshold or deviate from normal patterns, call centers may reach out to customers for verification.
• Enhancing Cybersecurity: Overall, the key focus is to ensure that the digital economy operates with a high level of security, safeguarding the interests of end consumers. Vigilance, proactive measures, and continuous assessment of the challenges associated with the swift movement of funds are vital for a safe digital transaction environment worldwide.
• Digital Public Infrastructure and Digital Skilling: Digital public infrastructure and digital skilling are closely connected. They are viewed as two sides of the same coin, where the creation of public infrastructure must be accompanied by a skilled workforce capable of utilizing and benefiting from it.

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Q1. Consider the following statements: (2018)

• Aadhaar card can be used as a proof of citizenship or domicile.
• Once issued, Aadhaar number cannot be deactivated or omitted by the Issuing Authority.

Which of the statements given above is/are correct?

(a) 1 only (b) 2 only  (c) Both 1 and 2 (d) Neither 1 nor 2

Q2. To obtain full benefits of demographic dividend, what should India do? (2013)

(a) Promoting skill development (b) introducing more social security schemes (c) Reducing infant mortality rate (d) Privatisation of higher education

How Does the Digital Economy Affect Carbon Emissions? Evidence from Panel Smooth Transition Regression Model

• Published: 15 August 2024

Cite this article

• Wei Jiang   ORCID: orcid.org/0000-0002-2611-3682 1 ,
• Xiaoyong Wu 1 ,
• Qili Yu 1 &
• Mingming Leng 2  

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This essay uses the panel smooth transition regression (PSTR) model to study how China’s digital economy affects carbon emissions, selects data from 30 provinces in China during 2011–2021, and constructs a digital economy evaluation index system for empirical analysis. As a nonlinear model, the PSTR model can more accurately reveal the linkage between the digital economy and carbon emissions. Compared with other nonlinear models, this model can obtain the conversion rate of different influence intensities in the digital economy. According to findings, digital economic growth has a significant curbing influence on carbon emissions. But as it advances to a certain point, this inhibiting impact weakens. Furthermore, the digital economy’s expansion could boost technological advancement, foreign direct investment, urbanization, and industrial structure optimization to curb carbon emissions in the early stage. Similarly, with the development of the digital economy to a certain extent, this inhibitory effect will weaken or increase. With China promoting a low-carbon economy against the backdrop of the contemporary internet age, it is essential to comprehend the effects of the digital economy on carbon emissions.

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Digitization and carbon emissions: how does the development of China’s digital economy affect carbon intensity?

The effect of the digital economy on carbon emissions: an empirical study in China

Study on the effect of digital economy development on carbon emissions: evidence from 30 provinces in China

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Data Availability

The datasets generated or analyzed during this study are available from the corresponding author on reasonable request.

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This research is supported by the National Social Science Foundation of China (No. 20BJL020) and National Social Science Foundation of China (No. 22&ZD117).

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Jiang, W., Wu, X., Yu, Q. et al. How Does the Digital Economy Affect Carbon Emissions? Evidence from Panel Smooth Transition Regression Model. J Knowl Econ (2024). https://doi.org/10.1007/s13132-024-02262-8

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Digital Economy Report 2024

The Digital Economy Report 2024: Shaping an Environmentally Sustainable and Inclusive Digital Future highlights the urgent need for sustainable strategies throughout the life cycle of digitalization. From raw material extraction and usage of digital technologies to waste generation, the report explores the nature and scale of the sector’s environmental footprint, which remains largely unassessed. What is apparent is that developing countries are suffering disproportionately from digitalization’s negative environmental effects, as well as missing out on economic developmental opportunities due to digital divides. UNCTAD calls for global policies involving all stakeholders to enable a more circular digital economy and reduced environmental footprints from digitalization, while ensuring inclusive development outcomes. Previous editions of the Digital Economy Report have largely focused on the implications of digitalization for inclusive development, the importance of bridging digital and data-related divides, enabling value creation and capture in developing countries and fostering better governance of data and digital platforms. The Digital Economy Report 2024 turns attention to the environmental footprint of digitalization. The topic is timely, not to say overdue. Digital transformation is taking place in parallel with growing concerns related to the depletion of raw materials, water stress, climate change, pollution, and waste generation, which are all linked to planetary boundaries. The rapid pace and expanding scope of digitalization make it increasingly important to understand the relationship between digitalization and environmental sustainability. How the world’s ongoing digital transformation is managed will greatly influence the future of humanity and the health of the planet.

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Benefits and challenges of the digital circular economy

Digital tech can potentially help companies follow the circular economy model, but critics point out possible issues as well, including continuing demand for plastics. learn more..

• Guilliean Pacheco, Associate Site Editor

Many companies are looking to technology to address the growing challenges of the global climate crisis.

Some potential options have emerged from the Fourth Industrial Revolution , such as IoT, robotics and AI. But company leaders must understand both the pros and cons of using tech in the name of sustainability before moving forward with implementation.

For example, some companies are increasingly looking to AI for ways to minimize greenhouse gas emissions, such as transportation planning. However, AI is a resource hog, producing large amounts of carbon dioxide, and AI model training creates large amounts of heat, requiring more water to cool the data center.

The circular economy model is also an increasingly popular topic in sustainability discussions. Companies following the circular economy model focus on using resources efficiently as well as minimizing emissions and waste throughout their supply chain.

In Gaia's Web: How Digital Environmentalism Can Combat Climate Change, Restore Biodiversity, Cultivate Empathy and Regenerate the Earth , Professor Karen Bakker, an environmental scientist and tech entrepreneur, explores how using digital technology could potentially support a circular economy model.

Using digital technology for sustainability has its supporters and detractors. Supporters see the potential to eliminate waste and enhance resource efficiency. Detractors raise concerns about the expanded use of hardware and infrastructure like servers and the continuing demand for metals and plastics because of this technology use.

In this excerpt from Chapter 5 of Gaia's Web , Bakker shares insights into the pros and cons of a digital circular economy.

In circular economies, technologists strive to avoid both pollution and extraction of nonrenewable resources from Earth. Technological systems can thus conserve and reuse, but not consume. The only consumption is of renewable resources, between living things; for example, food and biologically based materials (like wool or wood) can be used, but then feed back into ecosystems through processes like excretion and composting -- regenerating living systems like soil, thereby providing renewable resources for the economy. Biological systems can consume and regenerate and are the primary source of growth in a circular economy. In making these arguments, advocates draw on long-standing theories of cyclicality, systems-thinking and metabolism in both living organisms and machines. Contemporary variants of the circular economy argument include ecologist Janine Benyus's concept of biomimicry, architect Walter Stahel's "functional service economy," the "cradle to cradle" design philosophy of architect William McDonough and chemist Michael Braungart, Gunter Pauli's "blue economy" and theories of industrial ecology and natural capitalism.

This collective set of developments is sometimes termed a Fourth Industrial Revolution: a convergent set of biological and digital innovations that will generate a complete makeover of industrial production (and industrial metabolism) through automation, cognitive computing, the Internet of Things and cloud computing-enabled data exchange in manufacturing technologies. Ecomodernists argue that these cyber-physical systems will enable decoupling, supporting continued economic growth as total environmental impacts shrink. Degrowth advocates argue that this is unlikely: even if feasible in principle, decoupling will not happen in the time frame necessary to avoid ecological tipping points, so alternative policy trajectories based on technological deceleration, redistribution, and material-energetic degrowth will be required.

Where do digital technologies fit within circular economies? Some proponents argue that digital technology is vital to a transition to a circular economy by enabling production that is highly resource- efficient, low-emission, low-waste and embedded in eco-industrial networks that are automated, decentralized, flexible, networked and intelligent. Long-lived products with entirely recyclable components would reduce both resource use and waste. This would enhance resource efficiency not only in production but also in supply chains, by radically enhancing transparency through tracking and control of entire value chains. Some proponents also argue that virtualization enabled by digital technologies will also dramatically shift fossil fuel and resource use.

In part, this depends on how these value chains shift geographically in the future; some argue that value chains will shorten and localize, thanks to the emergence of open-source business models in design and manufacturing, linked to networked micro-factories -- "fab labs" and makerspaces equipped with machines (like 3D printers and computer numerical control [CNC] machines) that can generate prototypes and devices from digital software files. This could enable a "design global, manufacture local" trend, reducing the need for global transportation of manufactured goods; easy-to-transmit commodities (knowledge, design ideas) are transmitted globally, while heavy, expensive-to-transport commodities (machinery, building materials) are local and, ideally, shared, reused and recycled. In opposition to the large-scale digital agricultural model discussed above, farmware cooperatives like Farm Hack or L'Atelier Paysan (in France) support small-scale farming by sharing designs for open-source agricultural machines. The WikiHouse project shares designs of dwellings with minimal environmental impacts. RepRap shares open-source designs for 3D printers that self-replicate. Open Bionics produces open-source, low-cost designs for bionic and robotic devices.

Critics point out that the materials requirements of the digital economy have led to increasing volumes of hardware and infrastructure. Computing centers, servers and transmission networks offer one obvious example of where this has been the case. As computing devices proliferate and become ubiquitous (e.g., wearables or smart textiles woven into clothing) these demands will continue to increase. The rapid rate of innovation makes it difficult to predict whether and when this will shift to reusable products and/or renewable inputs, but short-term trends do not seem positive for the environment. Most forecasts suggest increased use of metals, rare earth minerals, plastics and glass; amounts of e-waste are also expected to rise substantially in the next few decades, largely due to growing digitalization of industrial production and consumer goods. Will Digital Earth monitoring add to the tsunami of e-waste already being generated? Whether the digital optimization of industrial value chains can offset these increases remains to be seen.

Within this debate, issues of social justice often tend to be overlooked. The egregious human rights impacts of mining rare earth metals necessary for digital devices to function are, by now, well known. The energy transition from fossil fuels to renewables will create increased demands for minerals, which might create new economic opportunities but will also intensify risks of human and environmental rights, particularly in low-income countries. An estimated 40 million people worldwide are de facto modern slaves by force or by fraud, working in gold mines in Ghana, graphite mines in China, granite quarries in India and logging in the Amazon. As Benjamin Sovacool puts it, the use of forced labor and sometimes child labor in artisanal mines, notably in Africa, amounts to "subterranean slavery" supporting the sustainability transition. This forced labor, mostly in the world's poorest countries, provides a hidden subsidy to users of digital devices. Protests by local communities over the expropriation of land, inadequate compensation, and the health and ecological effects of mining are often met with violence, which in some regions -- particularly in sub-Saharan Africa -- is sometimes state-sponsored. The Digital Earth agenda rests on an often hidden foundation of environmental degradation, human rights abuse and socioeconomic injustice. Western science and industrialized moderns often choose to forget where raw materials come from, a collective amnesia about the dirty side of the cleantech revolution.

Guilliean Pacheco is an associate site editor for TechTarget Editorial's CIO, ERP and Sustainability and ESG sites. Guilliean graduated from the University of San Francisco with an MFA in Writing.

About the author

Karen Bakker was a Guggenheim Fellow, a professor at the University of British Columbia and the Matina S. Horner Distinguished Visiting Professor at the Radcliffe Institute for Advanced Study at Harvard University.

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How digital transformation will help India accelerate its growth in the coming years

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Economy Watch April - 2023 (PDF)

According to the european commission, the pace of digitalization in india was the fastest among most major economies between 2011 and 2019..

• Between 2011 and 2019, digitalization in India grew neck to neck with China at 11%.
• Digitalization in India has been progressing steadily, first covering large urban areas, followed by smaller urban areas and rural areas.
• Digital growth in India is getting a further fillip now and would become a major factor in sustaining India’s long-term growth story.

What is digital economy?

F irst coined in the 1990s, the term digital economy has expanded in consonance with the transforming nature of technology to include digital technologies, products and services across a wide spectrum of sectors. Digitalization is by nature multidimensional. It requires a broad definition to cover all activities that use digitized data as a part of the digital economy (IMF, 2018). Joint collaborative research by Huawei and Oxford Economics pegged the size of the global digital economy to be around US$11 trillion i.e., 15.5% of global gross domestic product (GDP) in 2016 1 , which is expected to reach US$23 trillion (24.3% of global GDP) by 2025.

Backward and forward linkages

The ADB (2021) framework for measuring digital economy identifies backward and forward linkages associated with core digital economy. According to this framework, core digital products are classified into five product groups namely: (a) hardware, (b) software publishing, (c) web publishing, (d) telecommunications services, and (e) specialized and support services. It defines digital economy as the contribution of economic transactions that involve both digital products and digital industries to GDP (or Gross Value Added (GVA)). 

Digital products are the goods and services that primarily generate, process, and/or store digitized data. ADB’s framework makes a distinction between the core digital economy with digitally enabling and digitally enabled products. Digitally enabling products reflect backward linkages of the core digital economy while digitally enabled products capture forward linkages. Examples of digitally enabling products include semiconductors used for electrical conductivity that are integral components of computer manufacturing but, by themselves, do not have a direct function in relation to digitized data 2 . Examples of digitally enabled products include car manufacturing, which uses digital components into the vehicles such as in-car entertainment, vehicle systems management, self-driving capabilities etc. Digitally enabled sectors also include media content and retail sales.

As per RBI, industries with the highest forward linkages in India from the aggregate core digital economy in 2019 were construction (6.1%), renting of machinery and equipment (4.2%), food beverages and tobacco (3.8%), textiles and textile products (3.6%), and electrical and optical equipment (3.5%) 2 . 

Quantifying India’s digital leap: overall impact of the Digital India movement

Both the value and volume of  digital payments  in India have grown at a fast pace in recent months, including the COVID-19 affected months covering the period from November 2019 to January 2023, as shown in Chart 1. The number of digital transactions increased more than three times from 300 crores in November 2019 to 1,052 crores by January 2023. 

The value of total digital payments relative to nominal GDP was 8.7 times the nominal GDP in FY19. Although it fell during the COVID-19 year, this multiple is rising again.

In July 2015, the GoI launched the ‘Digital India’ initiative to improve online infrastructure and increase internet accessibility for citizens, empowering them to become more digitally advanced. This initiative encompasses three key dimensions namely, a) establishing a secure digital infrastructure, b) delivering digital services and c) ensuring that every citizen has access to the Internet. GoI’s persistent effort to digitalize the Indian economy and make India’s population at large participate in it is already showing results. It has considerably reduced the distance between government and citizens by enabling the delivery of substantial services directly to the beneficiary in a transparent and corruption-free manner. In fact, India has emerged as one of the pre-eminent nations of the world to use technology to transform the lives of its citizens 3 . Further, the digitalization drive has also led to a faster formalization of the economy 4 .

Size of digital economy in India

As per the RBI, 5  the share of India’s core digital economy 6  increased from 5.4% of GVA in 2014 to 8.5% in 2019. In US dollar terms, India’s digital economy exhibited a growth rate of 15.6% over the period 2014 to 2019, which was 2.4 times the growth of the Indian economy. Further, the share of digitally dependent economy (digitally enabled sectors) is estimated at 22.4% in 2019.

RBI has also decomposed the overall output multiplier into digital and non-digital output multipliers. The output multiplier is defined as capturing the direct and indirect impact of a unit change in final demand covering digital and non-digital sectors on the economy’s total output. The RBI then estimated separately the digital and non-digital output multipliers for 2014 and 2019. It is shown that while the non-digital output multiplier fell from 1.68 to 1.57 during this period, the digital multiplier increased from 1.34 to 1.50.

A recent study by MeiTY (2019) has estimated the size of India’s digital economy at US$200 billion in 2019, which is expected to rise to US$500 billion by 2025 in their ‘business as usual’ scenario. However, they also point out that potentially, the size of India’s digital economy can be increased up to US$1 trillion by following a set of policy initiatives covering 30 digital themes under 9 national goals: (1) 21st-century IT infrastructure and software capabilities, (2) E-governance of the future, (3) Healthcare for all, (4) Quality education for all, (5) Energy for all, (6) Next-generation financial services, (7) Doubling farmers’ income, (8) Make in digital India, make for India, make for the world and (9) Jobs and skills of the future.

Impact on employment and growth

The RBI report points out that employment in the digital sectors of the Indian economy is still quite limited. Based on India’s current population (2022) and the worker population ratio in 2019-20 as per Periodic Labour Force Survey (at 38.2%), the total employed workers in the core digital economy were estimated at 4.9 million. Among the digital sectors, the highest share of employment at 59.8% is for the computer programming consultancy and related activities followed by telecommunication services at 15.2%.

India’s explosive growth of the digital economy is itself going to serve as a significant enabler of India’s overall economic growth. As compared to developed countries, India’s pace of digitalization has been very high in recent years, particularly over the period from 2011 to 2019 (Table 1). The pace of digitalization as measured by CAGR in the Information and Communication Technology (ICT) sector during this period has been as high as 10.6% with only China exceeding India’s growth marginally. With the advent of 5G and the setting up of semiconductor industries in the country, India is expected to accelerate further its pace of digitalization in the next few decades.

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According to a recent study published by ACI Worldwide in collaboration with GlobalData, India is way ahead even in comparison with China in terms of the number of digital payments. According to this source, the number of real time payments in 2021 were at 48.6 billion in India as compared to 18.5 billion in China and 8.7 billion in Brazil. This is indicative of the ease with which the Indian population has adopted digital platforms for making payments even if the average value of such payments may be rather low.  

Digitalization as a growth enabler  

India is projected to become one of the largest economies by the middle of this century in market exchange rate terms. This has been highlighted in EY’s recent publication titled  “ India@100: realizing the potential of US$26 trillion economy ” . In this growth journey, digitalization is expected to play a key role.

• Huawei and Oxford Economics (2017), Digital Spillover, Measuring the true impact of the digital  economy, Huawei Technologies Co., Ltd. ( https://www.huawei.com/minisite/gci/en/digital-spillover/files/gci_digital_spillover.pdf )
• For definition and methodological details, see ADB (2021), Capturing the Digital Economy: A Proposed Measurement Framework and its Applications.
• https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1885962
• https://rb.gy/6sxsj
• December 2022 monthly bulletin of the RBI
• Constitutes economic activity from ICT goods and digital services producers

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The growing digitalization of India’s economy may itself serve as a major factor for sustaining a robust growth over a long period of time. Thus, digitalization is a critical and distinguishing feature of India’s unfolding growth story in the 21st century.

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The environmental aspect as an important part of the digital transformation in metallurgy

• Gromova, Elizaveta A.

The fourth industrial revolution is the continuous automation of traditional production processes and production practices using modern intelligent technologies. In the context of the fourth industrial revolution development the digital transformation of the economy is a prerequisite for the possibility of competing at the global level. Digital transformation is an important step for the Russian economy. Metallurgy is traditionally considered a conservative industry, but it has a great digital potential. With industry in mind, the environmental aspect plays a significant role. Thus, the goal of the study is to analyze the experience of digital transformation of a metallurgical enterprise in the context of the environmental agenda. NLMK Group is a vertically integrated metallurgical company that implements the principles of agile manufacturing. It pays great attention to the introduction of modern digital technologies along with the environmental component. NLMK is currently ranked first in the ESG RAEX rating.

• digital transformation;
• agile manufacturing;
• metallurgy;
• environmental agenda;
• Russian industry