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Digital Economy

Digital Economy

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Published by bistamaster
impacts, threats-opportunity, digital economy
impacts, threats-opportunity, digital economy

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Categories:Types, School Work
Published by: bistamaster on Mar 08, 2011
Copyright:Attribution Non-commercial


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Innovations in information and communications technologies have created adigital revolution that is changing the way the world works, learns,communicates and transacts business.The growth, integration, and sophistication of information technology andcommunications are changing our society and economy. Consumers nowroutinely use computer networks to identify sellers, evaluate products andservices, compare prices, and exert market leverage. Businesses use networkseven more extensively to conduct and re-engineer production processes,streamline procurement processes, reach new customers, and manage internaloperations.The concept of a digital economy emerged in the last decade of the 20thcentury. Nicholas Negroponte (1995) used a metaphor of shifting fromprocessing atoms to processing bits. He discussed the disadvantages of theformer (e.g., mass, materials, transport) and advantages of the latter (e.g.,weightlessness, virtual, instant global movement).The communications industryhas undergone dramatic changes as a result of new technologies. One of themost important indicators of progress in the communications industry is thewidespread proliferation of broadband Internet access.At the beginning of 2007, there were about 300 million consumer broadbandconnections in a world of around 6.5 billion people. Of those 300 millionbroadband connections, 20 million offered speeds of 2 mbps or more .Digitaltechnologies are transforming business, government and society.
A digital economy is an economy that is based on electronic goods and servicesproduced by an electronic business and traded through electronic commerce.
The essential in the new economy is a structural shift from the industrialeconomy toward an economy characterized by information, intangibles andservices and a parallel change toward new work organizations and institutionalforms. Many new terms have been coined for this new economy such as“knowledge-based economy,” “borderless economy,” “weightless economy,”“networked economy,” “digital economy,” “the information-based economy,”and “the networked economy” to name a few .Shikhar Ghosh , in his article “Making Business Sense of the Internet”, HarvardBusiness Review 1998, contends that the Internet presents four distinct types of opportunities:
Companies can establish direct links to their customers (whichincludes other businesses)
Technology lets companies bypass others in the value chain
It enables companies to develop and deliver new products and servicesto new customers
A company can use the Internet to become the dominant player in theelectronic channel of a specific industry
Components Of Digital Economy-
3 primary components of digital economy are:
Firstly the infrastructure of communication system. It includes hardware,software, telecommunication networks, support services, and humancapital used in electronic business and commerce.
Secondly the onlinebusinessprocedure, which can even support theoffline business procedure,
Thirdly the transaction procedure: booking, ordering, delivery and pay-inonline business are different from the offline business particularly in term
of market, consumer, customer, marketing communication, businessprocedure, delivery, and payment system.In additions, online business runs in various types, for instance C2C(consumer-to-consumer), B2C(business-to-consumer), B2B(business-to-business) andB2G(business-to-government).
Special Characteristics of the "Digital Economy"
While the full-scale dissemination of electronic commerce is expected in thefuture, in such an age of electronic commerce it is believed that the age of the"digital economy" will arise, which has different aspects of economic activitiesthan there were in the past. That is to say that the following will occur.
Economic activities become possible without the physical movement of people, things, money, etc., and there is rapid development in theglobalization of economic activities. (Dealing with the globalization of the economy will become more urgent.)
Contracts, the transfer of value and the accumulation of assets isconducted by electronic means. (In order for people to be able to feelsecure in conducting such new forms of economic activities, it willbecome necessary to assure security and trust in these activities.)
Information technology, which is the foundation of the "digitaleconomy," continues to develop at a rapid pace, and for this reason therewill be considerable changes in the ideal situation of economic activities.(So as not to lag behind such changes, it is necessary to formulateeconomic rules swiftly and flexibly.)
There is widespread dissemination of electronic commerce, and digitalinformation will pervade into all aspects of the lives of the people. (It isnecessary to consider ways to avoid the occurrence of impediments to the

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