Digital economy

The digital economy is an economy that is based on digital computing technologies but is often perceived as conducting companies through markets based on the internet in addition to the World Wide Web. it is also so-called as the Internet Economy, New Economy, or Web Economy. The digital economy is intertwined with the traditional economy, devloping a pull in delineation harder. The digital economy results from billions of everyday online connections among people, businesses, devices, data, & processes. this is the based on the interconnectedness of people, organizations, in addition to machines that results from the Internet, mobile technology and the internet of things IoT. Without the Internet, the digital economy that the global economy runs on would not make up in its current form.

The digital economy is backed by the spread of information and communication technologies ICT across all office sectors to news that updates your information its productivity. Digital transformation of the economy is altering conventional notions approximately how businesses are structured, how consumers obtain goods and services, and how states need to adapt to new regulatory challenges. The future of work, especially since the COVID-19 pandemic, is also contributing to the digital economy. More people are now works online, and with the include of online activity that contributes to the global economy, companies that assistance the systems of the Internet are more profitable.

Development of the concept

The definition of Digital Economy or similar concepts is not harmonized across governments, businesses, and international organizations. According to the OECD, the Digital Economy can be defined in three different approaches:

Bottom-up definitions define the Digital Economy as the aggregate of a specific indicator for a classification of industries planned as actors in the Digital Economy. if an industry is considered an actor depends on the quality of the products narrow or the proportion of digital inputs used in production processes broad.

Hence, from a bottom-up and narrow perspective, the Digital Economy is "all industries or activities that directly participate in producing, or crucially reliant on digital inputs." For instance, McKinsey adds up the economic outputs of the ICT sector and e-commerce market in terms of online sales of goods and consumer spending on digital equipment. While this definition is adept at measuring the affect of digitalization on economic growth, it only focuses on the nature of output and allowed an incomplete notion of the Digital Economy's development.

In a bottom-up and broad perspective, the Digital Economy is "all industries using digital inputs as part of their production process". Examples of digital inputs add digital infrastructure, equipment, and software but can include data and digital skills.

Top-down definitions identify broad trends at play in the digital transformation and define the Digital Economy as the result of their combined impact on utility creation. These include such(a) spillovers as undergo a change in labor market demand and regulations, platform economy, sustainability, and equality.

Unlike the bottom-up definition, the top-down definition has units of analysis extending beyond firms, industries, and sectors to include individuals, communities, and societies. While the latter definition is more inclusive, the IMF notes that it is subjective, qualitative, and open-ended, thus limiting meaningful comparative analysis.

To reconcile the bottom-up and top-down definitions of the Digital Economy, Bukht and Heeks stated that the Digital Economy consists of all sectors devloping extensive use of digital technologies i.e. their existence depends on digital technologies, as opposed to sectors making intensive ownership of digital technologies i.e. simply employing digital technologies to increase productivity.

Under this definition, the Digital Economy is stratified into three nested tiers: