Language
Country/Area
No result found
From atoms to bits: How does the digital economy change the way businesses operate?
The digital economy is a concept that integrates digital computing and economics, describing how traditional physical economic activities (production, distribution, trade) are transformed by the Internet and global network technologies. Its definition is also broader, referring to "how digital technologies change the way we work, organize and operate our economies." With the popularization of information and communication technology (ICT), the digital economy has greatly improved productivity in all industries.
In recent years, the Internet of Things (IoT) phenomenon has become increasingly evident as more and more consumer products are embedded with digital services and devices. According to the World Economic Forum, 70% of the global economy will be digital in the next decade. This trend has been accelerated by the COVID-19 pandemic, with more people choosing to work online, and the increase in online activities has enabled businesses that support Internet systems to achieve higher profits.
The rapid growth of the digital economy is forcing businesses to rethink their structures, the way consumers access goods and services, and creating new regulatory challenges for countries to adapt.
Digital transformation is forcing companies to fundamentally change their business philosophies, reflecting the shift from the atomic age to the meta-age. Nicholas Negroponte once said vividly: "When information existed in atomic form, the various means and huge companies of the industrial age were necessary; but when the focus shifted to bits, traditional large enterprises were no longer necessary." This reflects the decentralized nature of the digital economy.
Definition of Digital Economy
The digital economy, also known as the new economy, is often used to refer to economic activities carried out using digital computing technology. The term became popular in the early 1990s. Scholars focus on digital business infrastructure (IT, networks, human capital), digital business operations, and the development of e-commerce.
Whether it's new apps or social media, they are blurring the boundaries of the traditional economy and adding complexity.
The development of the digital economy
Different definitions and related concepts of the digital economy are emerging. The OECD study proposed three definition methods, including bottom-up indicators, top-down analysis based on trends, and a flexible hierarchical approach. Different approaches provide diverse perspectives on how to view the digital economy.
Elements of the digital economy
The digital economy is not only an industry that relies on digital technology, but the wave of digitalization has also spread to almost all economic fields. Whether it is information technology or digital trade, the core elements of the digital economy include data dependence and network effects.
As the focus of business shifts, many companies choose to adjust their business models accordingly and focus on building digital infrastructure. The government is also investing in infrastructure to improve the overall operational efficiency of the digital economy.
As the digital economy develops, traditional businesses are faced with the challenge of how to cope with the changes, and time is of the essence for their response.
For example, in a 2021 survey, 16% of EU companies believed that the availability of digital infrastructure would be a major obstacle to investment. In addition, changes in digital trade have also had an impact on traditional businesses. For example, many retailers are facing bankruptcy due to their failure to foresee the future of the digital economy.
Impact and Future
From the production model of the atomic age to the current digital economy of the bit age, the way enterprises operate is undergoing fundamental changes at an unforeseen speed. This shift affects not only the business world but also profoundly affects personal life, including work arrangements and spending habits.
As the digital economy continues to grow, we can't help but wonder what impact this change will have on our future?
