What is Digital Economy?
As the story of globalization progressed, it was always accompanied by several socio-cultural changes but no change was as prominent as the development of modern technology and one of the most important technological advancements of this period was the growth of the Internet. With the rapid expansion of the internet, the traditional and digital economies are slowly merging into one. And as the name suggests, the digital economy refers to the economy based on computing and digital technologies. It includes the economic, business, cultural, and social activities that are highly dependent on the internet. Digital technology in essence refers to the transactions and commerce activities that take place in the online domain.
Components of Digital Economy
In the context of the present circumstances of the world, the Digital economy can be divided into three key components that are:
e-business
e-business infrastructure
e-commerce
Key Attributes of Digital Economy
Some of the key attributes of the digital economy are:-
It is Digitized: Various analogue objects produce digital signals which can be easily measured, tracked, and even analyzed for efficient decision making. Also, lower costs for modern technology are allowing operators to invest more processing out into the business.
It is Connected: The Workers, assets, suppliers, and even stakeholders are all linked together by wireless communications. It enables various people to make better decisions that promote safety, visibility, and efficiency across the enterprise.
It is Shared: The digital economy operates on the principle of sharing. Buying only what is required often reduces costs and allows the companies to pay only for the value received.
It is Personalized: One of the most important characteristics of the digital economy is customer personalization. Hence, it enables customers to get benefits from their favorite brands whenever and wherever they want.
It is Direct: The Leveraging of remote intelligence to monitor, manage, report, and resolve asset problems throughout the service lifecycle, eradicates the need to have local personnel on the ground.
FAQs on Digital Economy
1. What are the merits of the Digital Economy?
As the digital economy grows, it has been observed that large parts of the population have been greatly benefitted from this platform. Some of the key benefits of the digital economy are:-
It promotes internet use. The internet has transformed the world into one global village where any person sitting in one corner of the world can connect to people thousands of miles across the globe without much hassle.
It enhances the use of digital services. Whether it be Online net streaming, digital education, use of APIs etc, the use of digital services has seen massive growth.
There has been a boom in the e-commerce sector
The transparency has greatly increased in the government and other sectors due to the introduction of digital technology.
2. Why are the disadvantages of the digital economy?
Although there are many advantages of using online services, there are some disadvantages too which should not be ignored. Some of these disadvantages are:
Reduction in Employment: There has been a loss of employment for people working in the traditional industry.
Not Cost-effective: It takes massive investment to create the infrastructure required to ensure the proper functioning of the digital economy.
Shortage of Professional Experts: There will always be a demand for skilled professional experts in this sector.
3. What is the importance of the Digital Economy?
In the present world circumstances, the digital economy has grown to a substantial state. Hence it is giving good competition to innovations. This Competitiveness leads to good growth. For the growth of enterprise at both the small and medium levels, the digital economy has become a key aspect. Thus, the growth of technologies is a key determinant for the country’s development and businesses. It has reshaped the working process and the responsibilities of business leaders.
4. Explain the working of the Digital Economy?
The digital economy comprises different activities in the economy. These economies use digital information for production activities. They also use knowledge to work in the digital environment. Hence it has the best benefits that bring up efficiency in digital technologies. It is also helpful in driving innovation and thus fuels up different opportunities for the employment of people which leads to good economic growth.
5. Elaborate on the necessity of the Digital concerning the COVID pandemic?
During the spring of 2020, we saw the unprecedented event of a global pandemic with the spread of COVID-19. The cities were shut down and people were locked in their own homes, the only saving grace of this time was the existence of digital technology. People turned to online deliveries for groceries and other essential items and means of entertainment and recreating shifted to the online world. Such a development would have been unthinkable a few years earlier but thanks to the introduction of affordable 4G internet in India, we were able to withstand these changes.