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Chart 1. Global ICT developments, 2001-2017



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Chart 1. Global ICT developments, 2001-2017 
Source: ITU World Telecommunication /ICT Indicators database. 
Modern Uzbekistan is a part of the world 
economic community, therefore the ongoing 
integration processes on the international market 
require economic entities to actively enter the 
global information community. In this case, 
Uzbekistan pays special attention to the issues of 
ICT development and it should be noted that since 
the beginning of the 1990s, the ICT market of 
Uzbekistan has been forming as a separate 
segment in the economy. The events of the last 
decade provided a huge amount of evidence of the 
real significance of ICT for the way of life of the 
people. In this regard, priority measures for the 
introduction of ICT into the economy, social 
sphere and management systems are reflected in 
the Decree of the President of the Republic of 
Uzbekistan [2]. 
Information on the ongoing activities of 
expanding the coverage and increasing the speed 
of connection to the Internet, establishment of 
interaction with leading foreign companies in the 
field of software and telecommunications, further
development 
of 
the 
“Electronic 
government” system was provided. 
More than 140 enterprises, where more than 
thousand programmers are working today, 
received the status of a resident in Mirzo Ulugbek 
Innovation Center, established in accordance with 
the Decree of the President of the Republic of 
Uzbekistan of 30 June 2017. The most modern 
technologies and methods of teaching are being 
widely introduced at Tashkent University of 
Information 
Technologies 
named 
after 
Muhammad al-Khwarizmi. 
To date, information technology is of great 
importance in the development of our republic. 
Over the past years, the policy of the Government 
of the Republic of Uzbekistan on the wide 
introduction and development of information 
technologies in the republic has been gradually 
bearing fruit. In particular: 
- аs a result of ongoing work on the 
development of the national segment of the 
Internet, the number of domains in the domain 
“UZ” has reached 30,168 sites (an increase of 


168 
119%). The number of users of the national e-mail 
system uMail.uz, exceeded 398 500 users (an 
increase of 151%); 
- developed more than 1 728 software 
products from the side 360 companies developing 
software products. Of these, 818 are in the social 
sphere and education, 249 in the direction of 
economy and finance, 244 in the direction of 
production and others; 
- 14 projects have been implemented (Single 
Portal of Interactive Public Services, Xarid, Soliq, 
Bojxona, Byudjet, Nafaqa, Clearing, License, 
Interagency 
Integration 
Platform, 
Single 
Identification System, databases, information 
registers of individuals and legal entities as well 
as vehicles) from the created information systems 
and 
electronic 
government 
databases, 
implemented as part of the implementation of the 
integrated program for the development of 
national information and communication constant 
system;
- 10,620 (93.8%) of 11,325 in general, 
secondary and higher educational institutions are 
connected to the ZiyoNET network, the number of 
resources of the ZiyoNET network exceeded 
130,000 (119% growth);
- 295 state information resources were 
introduced, 499 state information systems; 
- The number of users of electronic digital 
signatures reached 1,720 thousand. 
In our opinion, the development of the 
digital economy in Uzbekistan should include the 
following five areas of activity:
- normative regulation;
- cadres and education;
- formation of research competences and 
technical reserves;
- information infrastructure;
- information security.
To ensure information security it is 
necessary to implement the following activities: 
First, creation and implementation of 
domestic highly effective means, methods and 
systems of information protection in national 
information and telecommunications systems; 
Second, 
development 
and 
practical 
implementation of effective tools, methods and 
systems of national information resources 
protection from destruction, and unauthorized 
access, reliability and security enhancement of 
their storage; 
Third, development and planned realization 
of special organizational, procedural-institutional 
and pedagogic measures to prevent and neutralize 
information threats in the spiritual sphere of 
society, formation of public consciousness in the 
direction of counteracting these threats.
Uzbekistan also needs to achieve significant 
successes in the development of a digital platform 
for the provision of state and municipal services. 
The digital economy provides for digitalization 
and integration of all business processes occurring 
vertically and horizontally in any economic 
system. All data on management, production, 
analytical and other processes are available in real 
time. 
II.
D
EFINING CONCEPT OF DIGITAL ECONOMY 
AND WAYS OF MEASURING DIGITALIZATION INDEX
The concept of digital economy is evolving 
all the time because of its multifaceted and 
dynamic nature and due to the transformational 
power of digital technologies. For instance, the 
USA government defines a digital economy as 
“the global network of economic and social 
activities that are enabled by platforms such as the 
Internet, mobile and sensor networks” [24]. 
The digital economy is sometimes called the 
Internet Economy, the New Economy, or Web 
Economy [25]. It is often perceived as conducting 
business through markets based on the internet 
and the World Wide Web. According to OECD, 
the digital economy enables and executes the 
trade of goods and services through electronic 
commerce on the internet [25]. European Union 
consider digital economy as “the single most 
important driver of innovation, competitiveness 
and growth in the world”. The Economist 
Intelligence Unit and IBM joint study defines 
digital economy as one that “can provide 
businesses and governments” According to the 
UK Government, digital economy includes the 
manufacture of digital equipment, publishing, 
media production and computer programming. 
The digital economy is therefore a subset of 
broader new term in policy discourse, having 
concepts, such as the 'information age' or 'the 
global information society' that attempt to 
comprehend the total set of transformations that 
have been enabled by ICTs and the interactions 
between and among them. The digital economy 
concept, however, focuses explicitly on the 
economic impact of ICTs: on the structures that 


169 
generate wealth through the production and 
exchange of goods and services and the resources 
that are related to these. The nature of the digital 
economy is such that many of these resources 
such as digital literacy have social as well as 
economic dimensions. As a result, the relatively 
sharp boundaries that existed in the twentieth 
century between economic and social policy, and 
between the public and private spheres, are 
becoming fuzzy. Old ways of doing things, 
including 
governance, 
are 
not 
necessarily 
sustainable. 
Digital products, interactions and markets 
have distinctive characteristics that underlie 
ongoing economic and social change. These 
often-transformative characteristics can support, 
or challenge, policies. Ongoing work by the 
OECD has identified some of the most prominent 
characteristics in a proposed set of eight “vectors 
of digital transformation”, listed below under 
three headings: 1) scale, scope and speed; 2) 
ownership, assets and economic value; and 3) 
relationships, markets and ecosystems. These 
“vectors” are suggested to improve the 
understanding of the digital transformation and 
related policy implication [27]. 
Building a digital economy is not merely 
about transforming physical goods and services 
into digital products. In a digital economy, data 
can be the product; it can be used to create digital 
goods and services and can be a source of 
information that leads to further action. The 
digitization of economic growth and trade will be 
increasingly driven by the use and extraction of 
value from data. The evolution of special purpose 
standards for networked vehicles towards IP based 
communication networks and the high volume 
data processing requirement call for big data 
virtual network [22]. 
Data collection and analysis can add value 
to goods exports. Global data flows underpin 
global value chains, creating new opportunities 
for participation the digitization of economic 
growth and trade is driven by the use and 
extraction of value from data, which has been 
described as the “oil of the digital era”. As with 
oil, data now supports an expanding range of 
economic activity and international trade.
There are a number of aspects that are 
increasingly prominent in the digital economy and 
which are potentially relevant from a tax 
perspective. Specifically, these features include: 
mobility, with respect to the intangibles on 
which the digital economy relies heavily, users, 
and business functions as a consequence of the 
decreased need for local personnel to perform 
certain functions as well as the flexibility in many 
cases to choose the location of servers and other 
resources;
reliance on data, including in particular the 
use of so-called “big data”; 
network effects, understood with reference 
to user participation, integration and synergies; 
use of multi-sided business models in which 
the two sides of the market may be in different 
jurisdictions; 
tendency toward monopoly oligopoly in 
certain business models relying heavily on 
network effects; 
volatility due to low barriers to entry and 
rapidly evolving technology.
The 
importance 
of 
cutting-edge 
technologies in providing mobile coverage in 
factories and in industrial buildings is coherent 
with operating mobile networks, as well as the 
5G, which is currently in the state of 
standardization. Furthermore, building on the 
available data transfer rates, current article - 
relying on the standardization process – estimates 
the preference of the 5G within manufacturing. In 
the world of IoT (Internet of Things) and Smart 
Factories, the available mobile networks most 
likely will not be able to handle the high traffic 
load sufficiently [18].
Measuring digitalization index is different. 
Therefore, major approved catalyst for developing 
digitalization 
can 
be: 
network, 
hardware, 
software, content [19].
The importance of the internet and data for 
growth and trade has been underpinned by 
growing global connectivity and mobility. 
Currently, approximately half of the world is 
online. For most economies, the digital share of 
gross domestic product has the potential to grow 
by around three percentage points between 2015 
and 2020-the equivalent of a 12.5 percent increase 
worldwide. Today, the United States leads the 
ranking, with a digital economy valued at around 
US$5.9 trillion, which equates to 33 percent of 
gross domestic product. Forty-three percent of 
employment in the United States' workforce is 


170 
digital. If we measure the accumulated investment 
in software, hardware and communications 
equipment, digital capital stock represents 28 
percent of total stock. 
By contrast, Italy's labor force may be 37 
percent digital, but only 10 percent of its capital 
stock is digital-a relatively smaller capital 
investment than most other economies-resulting in 
a digital economy worth just 18 percent of gross 
domestic product. 
Data collection and analysis is adding value 
to goods exports. For example, data collected 
from sensors on mining and farming equipment 
allows business to improve their operation and 
thereby the value from their use. Distributed 
ledgers provide further opportunities to add value 
to goods exports. 
In conclusion in terms of developing the 
ICT sector itself, governments devote the largest 
focus on encouraging innovation in SMEs and 
start-ups, followed by supporting businesses to 
invest and export as ways to further their impact. 
The 
most 
commonly 
used 
policies 
are 
governmental funding projects or training 
program aimed at giving businesses the tools they 
need to innovate, followed by incubators and 
accelerators, which are hybrids combining both a 
monetary aspect along with a training component 
and are primarily directed at developing digital 
economy. 
III.
D
IGITAL TRANSFORMATION OF THE 
ECONOMY AND SOCIETY
Much of this year's growth in internet users 
has been driven by more affordable smartphones 
and mobile data plans. More than 200 million 
people got their first mobile device in 2017, and 
two-thirds of the world's 7.6 billion inhabitants 
now have a mobile phone. 
More than half of the handsets in use today 
are ‘smart' devices too, so it's increasingly easy 
for people to enjoy a rich internet experience 
wherever they are. 
Social media use continues to grow rapidly 
too, and the number of people using the top 
platform in each country has increased by almost 
1 million new users every day during the past 12 
months. More than 3 billion people around the 
world now use social media each month, with 9 in 
10 of those users accessing their chosen platforms 
via mobile devices [14]. 
You'll find the key insights from this year's 
reports in our more detailed analysis below, but 
here are the essential headlines for digital in 2018: 
The number of internet users in 2018 is 
4.021 billion, up 7 percent year-on-year; 
The number of social media users in 2018 is 
3.196 billion, up 13 percent year-on-year; 
The number of mobile phone users in 2018 
is 5.135 billion, up 4 percent year-on-year [14]. 
In developing countries, the contribution of 
ICT capital to GDP growth has been fairly 
modest-around 15 percent of growth-reflecting 
lower digital adoption. With rapid diffusion of 
digital technologies into developing countries, this 
number could rise in the future. In addition, the 
indirect contributions of ICT capital to economic 
growth, through improvements in total factor 
productivity (TFP), could be large as well, 
although rigorous evidence linking the two is still 
missing. 
High speed internet access and associated 
technologies are often heralded as a means to 
bring about not only connectivity, but also 
innovation, economic development, new jobs, and 
regional prosperity [17]. 
Digitization and interconnection have been 
empowered by exponentially growing computing 
power, with the number of transistors per square 
inch in an integrated circuit having doubled every 
18 to 24 months, or a 100-fold improvement in a 
decade, for nearly 50 years. This growth is well 
illustrated 
by 
the 
mainstreaming 
of 
the 
smartphone since 2007 and is further accelerated 
by computing delivered via the cloud as a service. 
Combined with constant mobile connectivity, a 
wide range of new products, applications and 
services has emerged over the past decade, 
forming a growing ecosystem of technologies and 
applications, which, through increasing use by 
individuals, firms and governments, is driving the 
digital transformation. Key components of this 
ecosystem are: 
The Internet of Things (IoT), which 
comprises devices and objects whose state can be 
altered via the Internet, with or without the active 
involvement of individuals. It includes objects and 
sensors that gather data and exchange these with 
one another and with humans. The networked 
sensors in the IoT serve to monitor the health, 
location and activities of people and animals and 
the state of production processes, the efficiency of 


171 
city services and the natural environment, among 
other applications. The number of connected 
devices in and around people's homes in OECD 
countries is expected to increase from 1 billion in 
2016 to 14 billion by 2022. These devices are a 
key source of data that are feeding big data 
analytics. 
Big data analytics, which is a set of 
techniques and tools used to process and interpret 
large volumes of data that are generated by the 
increasing digitization of content, the greater 
monitoring of human activities and the spread of 
the IoT. It can be used to infer relationships, 
establish dependencies, and perform predictions 
of outcomes and behaviors. Firms, governments 
and individuals are increasingly able to access 
unprecedented volumes of data that help inform 
real-time decision making by combining a wide 
range of information from different sources. Big 
data analytics also enable machine learning, a 
driver of AI. 
Many other technologies underpin the 
current digital transformation, including cloud 
computing, open-source software like Hadoop, 
robotics, grid and neural computing, virtual 
reality, etc. Some of these have applications in 
almost all sectors of the economy and can be 
considered true “general-purpose” technologies. 
Others have more narrow applications in specific 
sectors. Together they are combinatorial and form 
an ecosystem of technologies that underpin a 
wide-ranging and rapid digital transformation of 
the economy and society, and increasingly of 
governments, in many areas, and which is leading 
to shifts in markets and economic behavior that 
are fundamentally different from the analogue era 
to which we are used. 
IV.
N
EW EXISTING BUSINESS MODELS AND 
TECHNOLOGICAL ADVANCEMENTS
Digital transformation requires companies 
to rethink and innovative their business models. 
However, small and medium sized enterprises 
have scarce time and resources for experimenting 
with their BMs and implementing new strategies 
[21]. 
The technology ecosystem that drives digital 
transformation is composed of many core 
technologies and is continuously evolving in 
terms of characteristics, opportunities and 
challenges raised by two of the currently most 
promising technological developments: machines 
performing human-like cognitive functions, also 
known as artificial intelligence, and blockchain, a 
distributed and tamper-proof database technology 
[15]. 
The analysis of successful digital business 
models suggests that actions that take advantage 
of the applications mentioned above can digitally 
transform traditional businesses. These actions 
include: 
Blockchain is one such change that will 
challenge the status quo in every sector, and it will 
prove as a boon for digital economy. Blockchain 
technology enables multiple parties to reach an 
agreement on the authenticity of a transaction in a 
decentralized manner. 
The true innovation of blockchain is its 
ability to automate trust among the parties using 
it. Transactions are settled in a collective fashion 
and recorded on a distributed ledger, which 
removes the need for an established third party to 
create a trusted relationship. Participants can 
directly use the blockchain as the source of truth 
instead of one another. This embedded trust 
allows consumers, enterprises, and governments 
to automate how they manage any transactional 
relationship.
Blockchains can be used to store digital 
representation of real-world assets. Combined 
with radio-frequency identification tags, for 
instance, blockchains can be used to record the 
provenance of agriculture products, determining 
the particular farm or even the single paddock that 
high-quality beef came from, potentially adding 
value and creating new market opportunities.
Many of these applications will need to find 
ways to verify the identity of participants while 
remaining sensitive to privacy concerns. A 
common misconception is that the distributed 
nature of blockchains makes them inherently 
secure. 
There is a privacy risks in that the 
immutability of data can clash with privacy norms 
that personal information can be deleted the so-
called right to be forgotten. While not a legal 
contract, smart contracts can be having real-world 
consequences such as payments and settlement. 
How existing law would apply to execution of a 
smart contract that caused loss or dam-age needs 
further work. blockchain has the potential to 
change the rules by automating trust, increasing 
transparency, and simplifying business processes.


172 
However, to unleash its full potential, it 
needs to be based on set of standards that meets 
the complex needs of the enterprise. Today's 
organizations are seeking solutions to transform 
their business processes and need the ability to 
build blockchain networks. It is imperative to 
differentiate between the two. In simple words, 
blockchain is the technology, whereas bitcoin is 
such implementation it. It is a form of digital 
currency based on blockchain technology. 
Bitcoins is one of the first applications of 
blockchain technology for financial applications 
[29]. In just a few years, the Bitcoin network 
experienced significant adoption. The network has 
grown from processing less than 100 transactions 
per day in 2009 to over 250 000 confirmed 
transactions daily in 2017. Despite its volatility, 
the Bitcoin price also followed significant growth. 
From a few fractions of a US dollar in 2009, the 
price of Bitcoin reached over USD 1 200 in 
March 2017. 
Unlike other databases, a blockchain is an 
append-only database, in the sense that data can 
only be added to a blockchain but, once recorded, 
cannot be unilaterally deleted or modified by 
anyone In the case of Bitcoin, the information 
recorded on the blockchain can only be altered if 
one or more parties were to capture more than half 
of the overall computational power invested into 
the network – the so-called 51% attack. Given the 
current size of the Bitcoin network, such an 
attack, albeit possible, would be extremely 
difficult and costly to achieve. 
The Bitcoin blockchain can therefore be 
regarded 
as 
certified 
and 
chronological 
transactions, whose authenticity and integrity are 
ensured by cryptographic primitives. Because 
every transaction must be digitally signed by the 
private key of the account holder, the blockchain 
represents verifiable proof that one party 
transferred a particular number of bitcoins to 
another party, at a particular point in time.
Cloud computing often provides customers 
with a cost-effective alternative to purchasing and 
maintaining their own IT infrastructure, since the 
cost of the consumer resources is generally shared 
among a wide user base [30]. The advantages of 
cloud computing are largely driven by economies 
of scale in setting up the infrastructure and 
maximizing server usage by sharing space among 
clients whose needs for space and processing 
power may vary on a flexible basis. 
The most common examples of cloud 
computing service models are:
Infrastructure-as-a-service – In the most 
basic 
cloud-service 
model, 
providers 
of 
infrastructure as a service (IaaS) offer computers 
– physical or (more often) virtual machines – and 
other fundamental computing resources. IaaS 
clouds often offer additional resources such as a 
virtual-machine disk image library, raw and file-
based storage, firewalls, load balancers, IP 
addresses, virtual local area networks, and 
software bundles. The customer does not manage 
or control the underlying cloud infrastructure, but 
has control over the operating system, storage, 
and deployed applications, and may be given 
limited control of select networking components.
• Platform-as-a-service – Platform as a 
service is a category of cloud computing services 
that provides a computing platform and 
programming tools as a service for software 
developers. Software resources provided by the 
platform are embedded in the code of software 
applications meant to be used by end users. The 
client does not control or manage the underlying 
cloud infrastructure, including the network, 
servers, operating systems, or storage, but has 
control over the deployed applications.
• Software-as-a-service – A common form 
of cloud computing in which a provider allows the 
user to access an application from various devices 
through a client interface such as a web browser 
(e.g., web-based email). It can be provided either 
to business customers (B2B) or individual 
customers (B2C). Unlike in the old software 
vendor models, the code is executed remotely on 
the servers, thereby freeing the user of the 
necessity to upgrade when a new version is 
available – the executed version is always the 
latest, which means that new features go 
instantaneously to market without friction. The 
consumer generally does not manage or control
3. 
Resource 
pooling: 
the 
provider's 
computing resources (e.g. storage, processing, 
memory, 
network 
bandwidth, 
and 
virtual 
machines) are pooled to serve multiple users using 
a multi-tenant model. 
4. Rapid elasticity: capabilities can be 
rapidly and elastically provisioned. 


173 
5. Measured Service: resources use can be 
monitored, controlled, and reported providing 
transparency for both the provider and consumer 
of the utilized service. the underlying cloud 
infrastructure, including the network, servers, 
operating 
systems, 
storage, 
or 
individual 
application 
capabilities, 
with 
the 
possible 
exception of limited user's specific application 
configuration settings. 
V.
R
ECOMMENDATIONS AND CONCLUSIONS
Information 
and 
communication 
technologies (ICTs) are the backbone of the 
digital economy and society. It focuses on the ICT 
sector 
communication 
markets, 
broadband 
networks and the Internet of Things (IoT). The 
information 
explosion 
and 
the 
increasing 
recognition that information and knowledge are 
key ingredients in the modern economy have 
given further impetus to the development, GDP of 
country and growth of the digital economy. When 
well harnessed, the digital economy has the 
potential to enable business enterprises to 
penetrate and compete in the international market, 
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