Digital Economy Definition: 3 Digital Economy Examples

The digital economy refers to every sector of the overall economy that utilizes information and communications technology (ICT). As the digital revolution continues, ICT has become more and more essential to run nearly every area of the traditional economy as it also powers innovations. For example, in the world of healthcare, biotechnology software and internet databases have made it easier than ever to effectively treat patients for a litany of diseases.

Similarly, startups continue to develop new ways to use digital technology to provide consumers with products and services they desire. As of now, the digital economy accounts for about 15.5 percent of global gross domestic product (GDP), and this percentage looks likely to only grow larger in the coming years and decades.

The digital transformation of the global economy unfolds to a greater and greater extent each year. Consider these key characteristics of the digital economy as a whole:

• Artificial intelligence: Both the public and private sectors now utilize artificial intelligence (AI) and automation software to make their organizations run more efficiently. On the positive side, this lowers costs for consumers and employers alike. On the other hand, it does so primarily by disrupting the need for human workers, leading to a loss of jobs and wages for many people.
• Big data: Digital platforms take in various inputs from users, collating gigantic streams of data about every person engaging with their services. This allows companies to create a hyper-tailored experience for each of their users, targeting advertisements and services specific to their needs. Some critics insist this is an invasion of privacy, while proponents rebut this assertion by saying users give the information voluntarily.
• Digital supply networks: As more industries come online, certain companies can increasingly rely on digital infrastructure and supply networks than real-world offices and factories. While there remains a need for physical manufacturing facilities for many products, plenty of others are now completely available via digital supply networks. Think of social media sites, streaming providers, and various mobile apps.
• Hyperconnectivity: Broadband technology lies at the heart of how quickly people can connect through the internet. While there remains a digital divide between the rich and poor when it comes to broadband access, policymakers can help bridge that gap in the years ahead to ensure everyone can use this sort of infrastructure.
• The Internet of Things (IoT): The digital world is expanding beyond traditional computers and mobile phones into physical appliances throughout your home. Everything from your thermostat to your lighting fixtures will connect to and benefit from online resources via the Internet of Things.
• Mobile technology and ads: Smartphone devices have become, perhaps, the most widely available computing systems globally. At all hours of the day, you can reach into your pocket to engage with the entire world of e-commerce via the digital economy. Similarly, companies can reach you with advertisements through your mobile device at all hours of the day.
• Sophisticated algorithms: Elegant and intricate lines of code fuel all the digital services and online platforms you use to complete economic activities on the internet. These algorithms help you shop at the same time they help companies advertise to you. Additionally, programmers code algorithms to learn about your tastes and interests to better target what you might need or want as a consumer.

The digital economy is growing rapidly throughout many types of industries. Here are just three key examples to keep in mind:

1. 1. Sharing economy companies: In the sharing economy, companies allow everyday people to become contractors and stakeholders. These business models allow you to turn your physical or monetary assets into something other people can use. Think of rideshare services, food delivery apps, and financial services allowing you to send money to friends at the click of a button.
2. 2. Smart appliance providers: In the digital age, nearly everything in your home will eventually connect to the Internet. Smart appliances enable you to program your thermostat from miles away, turn on the lights before you enter your house, or record a television program from your phone.
3. 3. Social media networks: The digital media ecosystem relies heavily on social platforms where people share their experiences, likes, dislikes, and desires. Companies take in all this data and partner with advertisers to create a tailored experience for each user, urging them to buy products they specifically want already.

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