DIGITAL ECONOMY – PROS AND CONS

DIGITAL ECONOMY – PROS AND CONS

An economy is the large set of inter related production and consumption activities that aid in determining how scarce resources are allocated. The production and consumption of goods and services are used to fulfill the needs of those living and operating within the economy, which is also referred to as an economic system. An economy applies to everyone from individuals to entities such as corporations and governments.

Over the past decade there have been significant changes in how people and business connect. Building on the popularity of social networks, enterprises have established their own business networks to connect suppliers, customers and internal systems. With the expansion of connectivity, infrastructure, network-effects, falling computing and sensor costs, open software architectures and the deregulation of digital, markets are accelerating the adoption and use of digital technologies and enabling the emergence of a whole new generation of investment and business models. This has resulted in growing global trade. This is what simply known as Digital Economy.

Digital economy is defined as the economic activity which arises as a result of billions of everyday online connections among people, businesses, devices, data and processes. In other words, we can say that it is an economy that focuses on digital technologies that are based on digital and computing technologies. So, it includes activities that are supported by the web and digital communication technologies namely business, economic, social and cultural activities.

Digital economy or the Internet economy is increasingly influencing our social and economic activities and even the way we live. The internet and its accessory activities including Information and Communication Technologies have given birth to new products, services, jobs, enterprises and even markets. World’s largest firms – Google’s Alphabet, Facebook and Amazon are from the digital world.  As social media, virtual reality and cloud services are expanding; the boundary between the traditional economy and digital economy is getting difficult to be identified.

Now, let us discuss the advantages of Digital Economy:

•  It promotes the use of internet – Hyper-connectivity, super-computing, cloud computing, cyber security and smart products have created a world where traditional boundaries of products and service offerings no longer exists. Individuals, businesses and societies are connecting in real time, creating a world that is more collaborative, intelligent and responsive. The technology powering the digital economy is taking connectivity to a new level, transforming nearly every aspect of operations and customer engagement. Early adopters are growing shareholder and stakeholder value faster than their peers; while those failing to adapt are falling behind. Thus the digital economy fosters the use of web based technology for the speedy growth of economy.
•  It fosters E-Commerce – E-commerce is the activity of buying or selling of products over the internet. Thus with the rise of the digital economy, E-commerce has also gained importance and increasingly gaining the market. Every task related to buying, distribution, marketing, creating, selling is now just a click away. The businesses that adapted and adopted the internet and embraced online business have flourished. This is all because of the digital economy.
• Digital goods and services – Nowadays, goods are available to us digitally. We don’t need to go to the market and purchase goods and even the services as well are now available on the internet. In case of banking services, the banks allow their customers to perform banking activities through their official website. This allows the customer to access their account 24*7 without having to visit a physical branch. Similarly, there are many goods that available in digital format which we can purchase and make use of it. Examples of digital goods include e-books, music files, digital images, templates, manuals, etc. Thus certain goods and services have been completely digitized in this digital economy.
• Creates new source of revenue – Digital economy has digitized certain goods and services. This has created a new source of earning money especially in the IT sector. IT companies offer various services in areas of social networking, mobility, analytics, cloud computing and artificial intelligence. Software vendors like Tata Consultancy Services (TCS) and Infosys offer solutions on these platforms depending on the requirements of their clients and in this way they generate revenue. 
• Creates new job opportunities – Digital economy has created new job opportunities specifically for IT professional and technicians. With the setting up of new digital business and startups, the job opportunity for semi-skilled, skilled and highly skilled workers has increased. 
• Transparency - All the transactions in the digital economy happen online. Therefore, there is no need for cash which indirectly has reduced the black money and corruption in the market giving our economy more transparency.

Now let us see some of the disadvantages of digital economy:

• Loss in employment – As we are depending more on technology, we are moving away from the natural as well as human resources in our society. 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 has reduced. Due to this technology and the digital economy, we are losing our jobs.
• Complex process – Digital economy requires complex processes and technologies. To build the platform and their upkeep require experts and trained professionals. Therefore, we can say that the digital economy is not readily available, especially in rural and semi-rural areas.
• 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.
• Required training – With the emergence of digital economy, the need for digital skills has become significant. Thus for companies to exist in this digital world it has to undertake training program for its employee to impart digital skills. Conducting training program may be costly for the company.

   With the coming of digital economy, competition and productivity has increased in the market. Moreover, it drives innovation, job opportunities as well as economic growth is achieved. Thus, one need to understand the digital economy as a whole and the impact of the digital economy as whole for a better and developed future.  

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