Sundar Pichai, the famous Indian-American CEO of Google Inc. has said “India will be a global player in the digital economy”. Digital economy is an alternative to traditional economy wherein the economy is based on digital computing technologies using the internet. Currently, India’s digital economy generates about 200 billion USD of economic value, i.e. 8% of India GVA. While the digital economy has many benefits that include its size and out-reach, it certainly is imbued with many problems, foremost being its limited accessibility. The essay evaluates whether digital economy can be considered a source of social and economic leveller?
What is the digital economy?
Digital economy is underpinned by the spread of Information and Communication Technologies (ICT) across all business sectors to enhance its productivity. It refers to an economy that is based on digital computing technologies. It results from billions of everyday online connections among people, businesses, devices, data, and processes. It is based on the interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the internet of things (IoT).
Digital transformation of the economy is undermining the conventional notions of business structures, services, information and goods and how states need to adapt to these new regulatory challenges. In this new economy, digital networking and communication infrastructures provide a global platform over which people and organisations devise strategies, interact, communicate, collaborate and search for information.
There are three main components of the digital economy:
·E-business infrastructure (hardware, software, telecom, networks, human capital, etc.)
·E-business (how business is conducted, any process that an organization conducts over computer-mediated networks)
·E-commerce (transfer of goods, for example when a book is sold online)
Impact of digital economy
With the advent of technology and the process of globalisation, the digital and traditional economies are merging into one. Over the last 15 years, there has been a tremendous growth of digital platforms and their influence on our lives. Now consumers are influenced by things they see on social media and other popular websites. Now it has become integrated into every aspect of the user’s life – healthcare, education, banking, entertainment etc.
·Innovation: 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.
·Economy: The Digital Economy is worth three trillion dollars today. What is impressive is the fact that this entire value has been generated in the past 20 years since the launch of the Internet. It is widely accepted that the growth of the digital economy has a widespread impact on the whole economy. Asia’s e-commerce transactions account for 25% of the business to the consumer market in the world.
·Retail: 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.
·Cashless: 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. The Government of India has been stressing on switching to cashless transactions.
Is it a social leveller?
But what if the problem is the digital economy itself rather than our incapacity to fully exploit the opportunities it seemingly presents? 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. In this, cutting out the middle man 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. While the poorer middle-men - record store assistants, or taxi drivers - have been 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.
There are many issues that keep digital economy from being a social leveller, as the playing field is far from being level:
·Loss of employment
·Huge initial investment
·Lack of equal access to internet facilities
·The digital divide
·Need for trained professionals and advanced technologies
While Asia continues to benefit from this digital transformation, understanding the digital economy remains a challenge because of its complexity. Digital transformation is about not only big data and digital platforms but also how those advanced technologies can be utilised to maximise opportunities for innovation, new business models and processes, and smart products and services. Further, the digital economy is allowing regional businesses to move away from the local and into the global, in keeping with the long-term trends toward market liberalisation. However, given the widening digital skills gap and differences in the level of regulations and infrastructure in Asia, not all countries can take full advantage of the benefits offered by the digital economy. Many times, people in developing Asian countries do not have access to a basic online account.
To create more inclusion in the digital economy, there needs to be a deep understanding of the differences in access and adoption within the populations of different countries.
The rapid growth of the web and the digital space has failed to make any considerable impact on poverty. The digital economy has many benefits and scope. Many of these solutions involve digital technology, with big data being the latest whose application promises to address various social and economic woes. It is possible that with proper guidelines, laws and governance it will be a propeller of positive change. The digital economy has the potential to radically change the social environment and economic activities all around the world.