Digital Economy

As mankind has progressed from the Stone Age to the Metal Ages to the Information Age that we are living in today, there has been a continuous train of progress, making life simpler as it went along. However the newest revolution to hit the anthropological progression is digitisation. This phenomenon has transformed all our lives and catapulted us into the Digital Age. Every aspect of our lives, from waking up in the morning to the digital alarm clock, to making calls on our cell phones and even checking blood pressure on the digital sphygmomanometer, all of them have been influenced greatly by digitisation.

Today, the entire economy is running on devices that have made regular day to day activities easier, more convenient as well as efficient. This transformation has given rise to the digital economy. The concept was initiated towards the end of the twentieth century when Nicholas Negroponte used a metaphor of shifting from processing atoms to processing bits.   Thus, a digital economy is based on digital technologies.

Digital technologies have been developed in hordes over the past few decades. Ever since the personal computer was developed in the 1970s, it has the paved the way for a flood of new technologies to come into existence. The pace with which the digitisation has overtaken the world is phenomenal. From digital calculators to digital music players to digital cameras, the digital economy has established a firm footing in the world. A digital economy is one where the structural framework of the economy is composed of digital technologies. In this respect there are several sub-economies which can come under the purview of a digital economy. The internet economy is one such example. A great variety of products – be they books, music, healthcare products or retail products – is available through the interlinked digital framework of the internet, creating in itself a compact economy of sorts.

Various aspects of human life such as legal services, medical consultancy, tax returns filings and banking cdigital economyan now be addressed through digital media like the internet, tele-conferencing and ATMs. The advantages of a digital economy are evident and vast in number. This has been identified by organisations all over the world, including governments of many developed and developing countries, who have made conscious efforts to digitise the economy in order to improve the efficiency of tedious governmental processes as well as provide convenience to citizens. E-governance is a fast developing concept which requires initial establishment of an information and communication technology (ICT) framework. After the parameters have been set in place, fast and efficient governance can reach the beneficiaries, as it removes various levels of unnecessary protocol that might have been required earlier. Thus, the digital economy requires an initial investment in order to set up the framework necessary to sustain these technologies after which they can be utilised efficiently.

Advantages of a digital economy

The features of a digital economy make it an inherently useful and advantageous system. Digitisation has provided the solution for storage requirements of articles like books, music, film and newspaper. Libraries filled with archives of newspapers, books and music cassettes would occupy vast amounts of space and labour for maintenance and recovery. However, digital libraries have been a godsend in such situations. With prints of old film and newspapers being digitised, they can be stored in compact forms. In addition to the savings in terms of storage space, there is also the advantage of having ease in recovery of such items as they can be looked up on a central database and obtained within seconds. Also, resources which would otherwise have been used in maintaining these records can now be employed elsewhere. This discussion leads us to the very first and most obvious advantage of a digital economy – minimal space requirements. The vast infrastructure that goes into setting up a digital economy (like the internet) is actually very small in physical terms.

Another example mentioned above is ATMs or Automated Teller Machines. These machines require simple commands and absolutely no human resources at the other end in order to facilitate cash withdrawal or balance enquiries. Further, wire transfers of money across the globe and digital cash media like credit cards and debit cards make the requirement of physical presence at a cash source, obsolete. Instant availability of cash and credit has eased transactions for customers across the world. There are no transportation requirements as far as a digital economy is concerned due to instant global movement and immediate availability of services. The virtual nature of these transactions makes them highly convenient. Online medical consults and mailing of diagnostic results make it easier for patients to get second opinions and consults, since their physical presence is not required. Though such services as medical and legal advice require personal interaction, digitisation does provide some degree of convenience and ease to both parties.

As technologies continue to develop rapidly, so does their user-friendliness. Gadgets these days such as mp3 players, tablets and mobile phones, are easy to handle and use superior technologies and softwares at lower costs. Thus a digital economy is efficient, cost effective as well as convenient.

Disadvantages of a digital economy

It is natural to look at both sides of the metaphoric coin when forming opinions about it. One of the few drawbacks of a digital economy is that it requires a substantial initial capital investment when establishing the necessary framework for any system. Although digital technologies get cheaper with each innovative development, they require some seed money for research and development as well as implementation. However, it is natural for any new economic framework to have teething problems. Such shortcomings can be resolved by making available the monetary resources required for such a setup.

The Future of Digital economy

Although it has been sufficiently stated that digital economy is a well established concept in our minds and world, it is also a phenomenon of the future. In other words, there is still a lot of scope for digital technologies to evolve and break their own records. Although some parts of the world are heavily ensconced in their digital lives, there are still others who are struggling to see the light as far as digital technologies are concerned. The ascent of this digital economy has not been evenly spread across the globe. Such large dissensions in the outreach of a digital economy need to be addressed. Efforts are being made to make digital technologies and gadgets more accessible to the multitudes still unaware of this technological revolution. For instance, India recently developed the world’s cheapest tablet computer which was sold to students at subsidised rates of $35. 

The digital age has come upon us and is displaying a rapid rate of growth and development. It has invaded the world and taken everyone and everything in its stride. The future seems bright and the present, cheerful. The age of the digital economy is here to stay.