To what degree is the economy digitised?
We live in an age where digitisation is all around us. As we peer into the future, what could happen? This article lays the foundation for a 12 part series.
Photo: Ashwin Vaswani on Unsplash
Let’s explore the digital economy that we currently experience.
Consider how ubiquitous digital technology is in our daily retail transactions. In recent times, for example, I was on a consulting assignment to a far-flung Pacific Island. During my time there I enjoyed a latte at a cafe. The ease at which I paid for my beverage with a Travel Visa card through an electronic terminal at this very remote establishment is a wonder of modern technology.
Years ago this story would have been much different. One element of this story is the planning for this prosaic first world transaction. The planning would have included making sure I had enough local currency by interacting with people at banking outlet during opening hours! No doubt you have similar stories to this.
Consider too, the actual things that we purchase. No longer common, for example, is the youthful experience of excitedly carrying home the latest 12 inch vinyl disk. Now, we enter into some form of electronic agreement to gain access to artists that please our ears.
I could go on. But, wherever we are on Earth and whatever sector we can think of, we intuitively grasp that so much of today’s economy, so much of what is produced, traded, and consumed, has digital written all over it.
Defining the digital economy
So, what is the digital economy? Building on the foundational understanding that an economy is comprised of the production of, the trade in, and the use of goods and services, we can add digitisation to each of these three factors. For example, the digitisation of labour, of transactions, of decisions, and of value. The list goes on. As Negroponte put it in the mid-90’s, it’s a shift from the “processing of atoms to the processing of bits”.
The Australian Government defines the digital economy as “economic and social activities that information and communication technologies deliver”. Forbes refers to Don Tapscott’s prescient 1995 best seller, “The Digital Economy: Promise and Peril in the Age of Networked Intelligence” as not only the birth of the phrase “Digital Economy” but also as a guide to how the internet would change business.
To what degree is the economy digitised?
Various estimates put the value of the digital economy at about $5 trillion (USD). Considering that the global economy as a whole is worth more than $80 trillion and that this growth in the digital economy is from a standing start twenty years ago, what we are witnessing is no doubt historically significant (some would say revolutionary).
Where the components of this phenomena include, for example, ICT hardware software and services at over $3 trillion (the enablers of this revolution) and electronic games at over $100 Billion (its fruits). And where for some countries, up to 10% of their GDP relies upon the ICT sector (its importance).
Where the impact of this phenomena is witnessed in the speed at which companies of scale are built Harley Davidson took 86 years to get to a billion dollar valuation, Twitter just 3 years), in the ease at which we can find answers to almost any question (40,000 Google queries per second), and in the explosion of data (90% of the world’s new data is only 2 years old).
To what degree can the economy be digitised?
The journey over this series of articles is one of exploration and prospection. Both discovering the pervasiveness of digitisation of our economy and contemplating that which could appear.
A journey that is supported by two purposes. The first: reflections upon the opportunities and costs of a fully digital economy at personal, business and government levels. The second: considerations of contemporary economic themes using the lenses of established strategic foresight models.
A journey with a vista of the world that today’s teenagers will experience during their middle years.
A journey that will be worthwhile.