Digital Business Around the World

What is the digital economy and how do you know when a country has developed one?

Here, we introduce you to a framework developed by the G20 to monitor and assess the size and penetration of the digital economy in a given country.

The digital economy refers to:

… the dynamic system of interactions between a nation’s citizens, businesses and government that capitalise upon digital technologies to achieve a social or economic good.

(Booz Allen Hamilton, 2002, cited in Chaffey, 2014, p. 155)

In the context of the digital economy, the traditional boundaries for communications, interaction and doing business are removed. Businesses should invest in new technology, new business models and new processes that will develop performance and create greater value, but how can countries evaluate their readiness and capacity for a digital economy?

There are different factors and models to monitor and assess the size and penetration of the digital economy. These can be categorised into four main themes (adapted from the toolkit for measuring the digital economy, G20, 2018):

1. Infrastructure

The development of physical, service, and security infrastructures underlying the digital economy.

2. Empowering society

The evolving role of the digital economy in people’s lives, how citizens access and use digital technologies, and their ability to fully exploit the potential of those technologies.

3. Innovation and Technology Adoption

Innovation in digital technologies, new digitally-enabled business models, the role of IT as an engine for innovation and adoption of IT and other emerging technologies by businesses.

4. Jobs and Growth

Digital technologies contribute to economic growth and employment creation. This theme refers to indicators such as the labour market, employment creation, investment in IT, value-added, international trade, e-commerce and productivity growth.

Understanding these themes helps business managers to identify internal and external factors that can either support them towards, or prevent them from achieving, digital transformation, and consequently define a strategic plan to implement digital business.

References

_{Chaffey, D. (2014). Digital business and e-commerce management: strategy, implementation and practice. Pearson Education. Locate link (Available to fee paying students)}

_{G20 DETF. (2018, November). Toolkit for measuring the digital economy. Web link}