The term “digital economy” has become one of the most widely used economic concepts in this era, as it is rapidly circulating in the fields of economy, technology, and the Internet, and in light of the digital transformation at a high speed and using the latest technologies. What is the digital economy? When did it appear and how do we keep up with it? What are its features, advantages, and disadvantages?
The digital economy results from billions of daily online connections between people, businesses, devices, data, and processes. It has led to the emergence of many new trends, ideas, and giant companies such as Google, Apple, Microsoft, and Amazon, one of the most famous global companies that rely on the digital system.
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Defining the digital economy
The digital economy is defined as the activity resulting from daily communications via the Internet, and the backbone of it is a hyperlink, which means the increasing connection and interdependence between people, institutions, machines, mobile technology, and the Internet of things. It is generally a perception of the sector of economic activities related to digital technology. These activities are based on classic or modern economic models such as web models. In its application, it depends on several dimensions, the most important of which are:
- The wide and rapid spread of the World Wide Web, allowed various people and businesses to explore the world and conduct multiple and complex commercial operations at the same time, enabling people to buy everything they want from anywhere in the world, and as quickly as possible without having to go-to shopping stores directly.
- It is an economy that depends primarily on a system that is driven and organized by knowledge, the spread of information, and control over it. Companies are based on purifying human talent and qualified human capital, and in their distinctive role, it is able to give employees a greater opportunity for change.
The emergence and development of the concept of the digital economy
The concept of the digital economy was introduced by Canadian business director and strategist Don Tapscott in 1995. The Internet, at the time, was still in its infancy as a global network, with the first commercial Internet browser released in October 1994. Websites only published content and did not process transactions. People accessed the Internet by phone (at 9,600 broadcasts per second) at best.
Today, it is characterized by technologies that were unknown at the time of its emergence as a concept, including fixed broadband access at speeds of tens of megabits per second, mobile broadband, smartphones, and their applications, interactive websites, social networks, collaborative platforms, cloud computing, and the Internet of things. These technologies embody the potential stemming from the networked power of the digital economy and its ability to redefine collaboration and leadership, raise human productivity, initiate the eradication of many industries, and challenge the power of established firms. This has become a reality in most developed and emerging countries, affecting their growth and development potential.
The emergence of the digital economy
- The digital economy depends mainly and mainly on digital computer technologies, and clearly, it is doing business. Through marketplaces based on the Internet and the World Wide Web, it is known as the Internet economy or the Web economy.
- The digital economy is increasingly intertwined with the traditional economy, which makes separating them very difficult.
Characteristics of the digital economy
- The large spread of data in addition to the security of the information for that, and the resulting interdependence between huge amounts of data.
- Implement strategies that effectively harness this information, analyze and interpret it, and information security has become very important in preserving this valuable data.
- It makes it secure in the digital economy resulting from digital technology and enables it to create its own new infrastructure.
- The growing demand for applications and devices that facilitate rapid communication of information reached $9 trillion in 2020.
- Which benefited all types of industries and also exceeded the Internet revenue in the technology and communications sector and increased sales. It also reached $309 billion this year, with mobile phones, tablets, and ultra-fast laptops accounting for more than 80% of web spending.
- The digital economy is also a perception of the sector of economic activities that are related to digital technology. These activities are also based on classic or modern economic models such as web models.
Among its most important characteristics:
- Digital Goods Where all goods are digital.
- The spread of knowledge and its increase exponentially.
- Providing smart products. Intellectual assets.
- Continuous learning and training.
- Networked Thought vs Isolation Thought.
- The spread and enormity of information are enormous.
- The virtual company is where the company does its business online.
- The virtual market where market displays all the products by default.
- The virtual university where learning takes place through virtual universities.
Fundamentals of the digital economy
- Infrastructure: the digital communications network and the Internet.
- Existence of virtual entities: such as a school, university, company, or market.
- Consumer: email, web, digital money, electronic checks. Establishment: low costs, the predominance of intellectual assets, continuing education, and training.
- Establishment: low costs, the predominance of intellectual assets, continuing education, and training.
- Markets: perfect competition, leaving absolute supremacy to the consumer.
- Government: e-government.
- Banking system: represented in electronic banks.
- International Trade: Trade takes place with various countries and via electronic commerce.
- Economic development: by facing the digital divide.
- Enhancing Internet Use: It has become possible to carry out daily business on the Internet and the explosive growth of technology and the Internet has led to the existence of a global network.
- Huge increase in investment in all things related to the following: hardware, technology research, software, services, and digital communications.
- Rise in e-commerce: The position of companies that have used the Internet and do business online has risen.
- The digital economy has pushed the e-commerce sector into high gear.
- Don’t just rely on direct selling, but buying, distributing, marketing, and creating, are all made easier by the digital economy.
- Providing digital goods and services: In the past, there was DVD movie, music, or records and nowadays these goods are available to us in digital form on the Internet and there is no need for any tangible products anymore.
- Transparency: Most transactions and payments in the digital economy happen online. Cash transactions are becoming rare nowadays. This helps keep money and corruption in the market and makes the economy more transparent.