Digital economy blueprint

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DIGITAL ECONOMY BLUEPRINT

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CHAPTER 1.0 INTRODUCTION

CHAPTER 1.0

 

INTRODUCTION

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DIGITAL ECONOMY BLUEPRINT

1.0 INTRODUCTION

1.1 FOUNDATION OF THE DIGITAL ECONOMY

Digital Economy has gained substantial importance 

within the global economy as a driver of innovation 

and competitiveness. As part of the global village, this 

new ecosystem presents a unique opportunity for our 

economic growth.  As digital technologies become 

the cornerstone of our daily activities, Governments, 

businesses and individuals must adapt to this new re-

ality. Going digital is no longer simply part of how we 

conduct our day-to-day activities but the bedrock of 

our economic growth.

The Digital Economy is growing faster than overall 

economies especially in the developing countries. Ev-

idence shows that information and communications 

technologies (ICTs) account for 17% of GDP growth 

in developing countries (World Bank 2016).  The 

fastest growth of e-commerce is in the global South 

(UNCTAD 2015) and the Internet economy in devel-

oping economies is growing at 15-25% annually” 

(WEF 2015).

The economic/business models that are shaping the 

modern digital ecosystem are the sharing economy, 

gig economy and the platform economy. An ear-

ly promise of the internet was disintermediation.It 

was hoped that when everyone was on the internet, 

there would be no middle man and buyers and sell-

ers could interact directly. This removal of arbitrage 

would hopefully lead to increased trade efficiencies, 

improved competition, lower costs, increased transac-

tion volumes and an overall better economy. The one 

thing that was not immediately clear was that the vast 

number  of  actors  would  make  finding  products  and 

services harder, hence the prominence of search and 

“findability” as a key determinant of online success.

Completing a trade transaction online requires three 

components: trust (escrow), payment and fulfillment.  

These three components have hitherto been provid-

ed as services to online providers by third parties, 

hence significantly increasing the complexity of the 

transaction dynamics of online commerce while  low-

ering  the  anticipated  benefits  of  disintermediation. 

Platforms are online markets that provide automated 

matchmaking between the supply and demand sides 

which facilitate end-point identification and rating, as 

well as  pre-engineering of fulfillment and payment.

Digital Economy policies and the underlying frame-

works have become commonplace within Nation 

States that seek to transform their overall economic 

outlook.  Their  main  focus  then  becomes  identifica-

tion of digital ecosystem enablers that are necessary 

to transform a country. This practice has been adopted 

by organisations like International Bank for Recon-

struction and Development (the World Bank), which 

has identified five digital pillars: digital infrastructure, 

digital  skills,  digital  financial  services,  digital  plat-

forms and digital entrepreneurship.