Thursday, January 27, 2022
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The 21st century economy

its another meeting day headed by Ebonyi DG Aloke Ejike A.


Digital Economy and Its Meaning

The traditional definition of “economy” according to the Oxford Dictionary is “the state of a country or region in terms of the production and consumption of goods and services and the supply of money”. According to Wikipedia, the term “Digital Economy” refers to “an economy that is based on digital technologies. The digital economy is also sometimes called the Internet Economy, the New Economy, or Web Economy.

Digital economy is also 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.

Components of Digital Economy

There are three main components of this economy, namely,

  • e-business
  • e-business infrastructure
  • e-commerce

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.

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.

merit of digital economy

  1. Promotes Use of the Internet
    If you think about it, most of your daily work can today be done on the internet. The massive growth of technology and the internet that began in the USA is now a worldwide network. So there is a dramatic rise in the investment on all things related – hardware, technological research, software, services, digital communication e.t.c
  2. Rise in E-Commerce
    There 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.

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.

inksupdate team



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