The digital economy is the worldwide network of economic activities enabled by information and communications technologies (ICT). It can also be defined more simply as an economy based on digital technologies. Multiple definitions for the term exist, with variations in what should be included in this new economic paradigm.
The term was coined by Don Tapscott, author of the 1995 best-selling book “The Digital Economy: Promise and Peril in the Age of Networked Intelligence”
There are several key components that enable the digital economy. There’s the technology infrastructure itself – the hardware, software and networks. There are the digital processes by which business happens, in other words, the e-business component. Another key component is e-commerce, the digital transactions through which customers buy and obtain products and services from organizations.
The digital economy is sometimes called the Internet economy, the new economy or Web economy. But some economists assert that the digital economy is more advanced and complex than the Internet economy, which, under one definition, simply means economic value derived from the Internet. Additionally, the term “digital economy” is not synonymous with earlier terms used to describe the technology-driven changes happening in 20th century economy, such as “information economy” and “network economy.”
A digital economy involves the exchange of electronic goods and services by electronic businesses. The digital networking and communication infrastructure creates a platform over which different organisation scan interact, devise strategies and search for information.
Because of growing population and resource mobilisation ,digital economy is to business trading and services only ,it involves every aspect of life from health to education and from business to banking.
Digital Economy the so-called revolution in ICT is nowadays associated with computers and Internet, which enable their users to communicate with thousands of people worldwide. Another advantage of ICT is that it enables managers to effectively manage their work in organizations helping with huge databases and decision making.
The combination of networked computing technologies and new business models is creating entirely new markets and new businesses work practices today to form a digital economy. It is a convergence of communications, computing and information technology.
*The essential elements of a digital economy are:*
1. Codification of knowledge,
2. Transformation of information into commodities
3. New ways of organising work and production.
Digital economy is a shift from the industrial economy towards an economy characterised by *intangibles, information, innovation and creativity.*
It can also be described as a common virtual marketplace where consumers and businesses can benefit readily from good value products and services and where suppliers can market and distribute their products more efficiently. It represents the pervasive use of information technology hardware, software, applications and telecommunications in all aspects of the economy including internal operations of organisations that is business, government and non-profit.
The technologies underlying the digital economy also go far beyond internet and personal.
*ADVANTAGES OF A DIGITAL ECONOMY*
The features of a digital economy make it an inherently useful and advantageous system.
• The first and most obvious advantage of a digital economy – minimal space requirements.
• Ease in recovery
• Small physical infrastructure
• Require simple commands and absolutely no human resources
• Eased transactions for customers across the world.
• No transportation requirements
• High Degree of Convenience
• User Friendly
*DISADVANTAGES OF A DIGITAL ECONOMY*
• Requires a substantial initial capital investment
• Require some seed money for research and development
• Requires money for Implementation
*FUTURE OF DIGITAL ECONOMY*
Although it has been sufficiently stated that digital economy is a well established concept in our minds and world, it is also a phenomenon of the future. In other words, there is still a lot of scope for digital technologies to evolve and break their own records.
The digital age has come upon us and is displaying a rapid rate of growth and development.
Digital economy is efficient, cost effective as well as convenient.
The future seems bright and the present, cheerful. The age of the digital economy is here to stay.
Digitisation has provided the solution for storage requirements of articles like books, music, film and newspaper. Libraries filled with archives of newspapers, books and music cassettes would occupy vast amounts of space and labour for maintenance and recovery. However, digital libraries have been a godsend in such situations. With prints of old film and newspapers being digitised, they can be stored in compact forms. In addition to the savings in terms of storage space, there is also the advantage of having ease in recovery of such items as they can be looked up on a central database and obtained within seconds. Also, resources which would otherwise have been used in maintaining these records can now be employed elsewhere. The vast infrastructure that goes into setting up a digital economy (like the internet) is actually very small in physical terms.
Another example mentioned above is ATMs or Automated Teller Machines. These machines require simple commands and absolutely no human resources at the other end in order to facilitate cash withdrawal or balance enquiries. Further, wire transfers of money across the globe and digital cash media like credit cards and debit cards make the requirement of physical presence at a cash source, obsolete. Instant availability of cash and credit has eased transactions for customers across the world. There are no transportation requirements as far as a digital economy is concerned due to instant global movement and immediate availability of services. The virtual nature of these transactions makes them highly convenient. Online medical consults and mailing of diagnostic results make it easier for patients to get second opinions and consults, since their physical presence is not required. Though such services as medical and legal advice require personal interaction, digitisation does provide some degree of convenience and ease to both parties.
As technologies continue to develop rapidly, so does their user-friendliness. Gadgets these days such as mp3 players, tablets and mobile phones, are easy to handle and use superior technologies and softwares at lower costs. Thus a digital economy is efficient, cost effective as well as convenient.
*Disadvantages of a digital economy*
It is natural to look at both sides of the metaphoric coin when forming opinions about it. One of the few drawbacks of a digital economy is that it requires a substantial initial capital investment when establishing the necessary framework for any system. Although digital technologies get cheaper with each innovative development, they require some seed money for research and development as well as implementation. However, it is natural for any new economic framework to have teething problems. Such shortcomings can be resolved by making available the monetary resources required for such a setup.
*The Future of Digital economy*
Although it has been sufficiently stated that digital economy is a well established concept in our minds and world, it is also a phenomenon of the future. In other words, there is still a lot of scope for digital technologies to evolve and break their own records. Although some parts of the world are heavily ensconced in their digital lives, there are still others who are struggling to see the light as far as digital technologies are concerned. The ascent of this digital economy has not been evenly spread across the globe. Such large dissensions in the outreach of a digital economy need to be addressed. Efforts are being made to make digital technologies and gadgets more accessible to the multitudes still unaware of this technological revolution. For instance, India recently developed the world’s cheapest tablet computer which was sold to students at subsidised rates of $35.
The digital age has come upon us and is displaying a rapid rate of growth and development. It has invaded the world and taken everyone and everything in its stride. The future seems bright and the present, cheerful. The age of the digital economy is here to stay.