|The digital economy is the range of economic activities that use digitized knowledge and information as key factors of production. / Photo by: ImageFlow via Shutterstock|
With governments urging their citizens to stay at home and businesses closing, the pandemic has had a global impact. While economics are secondary to people’s health, we can’t deny that some countries are struggling to shield their economy from the consequences of the pandemic. However, there is another range of economic activities called the digital economy that is eyed as a potential growth driver to offset the Covid-19 impact.
The digital economy is the range of economic activities that use digitized knowledge and information as key factors of production. Digital technologies, such as FinTech, big data, cloud computing, and the internet, are used to gather, store, share, and analyze information digitally and then transform it into social interactions. The digital economy creates efficiencies and benefits since digital technologies drive innovation as well as fuel economic growth and job opportunities. It likewise pervades almost all aspects of society and influences the manner that people interact.
The top economic regulator in China, for instance, has recently told newspaper China Daily that the fast development of the digital economy in China will be a “key growth driver” to offset the impact of the novel coronavirus. National Development and Reform Commission’s deputy secretary-general Gao Gao said that their country has seen huge benefits that are brought by the integration of digital transformation and information technology amid the pandemic.
Digital transformation and IT amid the pandemic
Gao added that mobile payment, e-commerce, telemedicine, and big data helped play a role in the resumption of work as well as prevention of the disease in their country. Now, people have a better understanding of the related sectors, like online education and telecommuting. He likewise believed that several industries will help accelerate the push for the country’s digital transformation and that digital economy “will be a critical engine for economic growth.”
It will boost China's construction of new infrastructure, like industrial internet, data centers, and 5G to better shield the economy against the impact of the pandemic. Gao further mentions that more efforts will be done to promote the development of artificial intelligence, cloud computing, the internet of things, big data, and other technologies and will foster a digital economy that will lead to more employment.
The NDRC further plans to focus on the sector’s weak links and invest more in those related fields.
|Big data helped play a role in the resumption of work as well as prevention of the disease in their country. / Photo by: Mikko Lemola via Shutterstock|
Digital economy agreement between the two countries
It is not just China that is giving attention to the digital economy. Australia has also recently signed a digital economy pact with Singapore. Their digital economy agreement is believed to pave the way for digital trade opportunities and data transfer. In a report provided by a digital magazine for IT professionals Computer Weekly, it noted that through the pact, transfer of data between Singapore and Australia for business purposes will be allowed. This includes the transfer of data in the financial industry. Businesses are not forced to utilize local computing centers and create data storage centers as part of the condition in doing business.
The act will help businesses in both countries remain competitive by designing innovative services and goods, having access to market intelligence, and identifying growth opportunities. The privacy act of Australia, which promotes and protects the privacy of individuals, is still applicable, especially when Australian data will be transferred to another country.
Singapore Cyber Security Agency’s chief executive David Koh noted that the two countries recognize the need to expand efforts to address the cybersecurity landscape. Their agreement will pave the way for more opportunities for Australia and Singapore to collaborate and contribute to a resilient and secure cyberspace.
Internet access and technology
Our World in Data, a scientific online publication that focuses on large global problems, published the share of population that used the Internet in the following years in Australia vs. Singapore: 2000 (Australia: 46.76%, Singapore: 36.00%), 2005 (AU: 63.00%, SG: 61.00%), 2008 (AU: 71.67%, SG: 69.00%), 2010 (AU: 76.00%, SG: 71.00%), 2012 (AU: 79.00%, SG: 72.00%), 2014 (AU: 84.00%, SG: 79.03%), 2016 (AU: 88.24%, SG: 84.45%), and 2017 (AU: 86.54%, SG: 84.45%).
Harvard Business Review likewise shared the countries that are leading the data economy. The United States emerges as a superpower among other countries. It is followed by the United Kingdom, China, Switzerland, South Korea, France, Canada, Sweden, Australia, and the Czech Republic. To come up with the rank, researchers mapped the digital competitiveness and digital evolution of different countries around the world. They used these four criteria:
1.Volume – the amount of broadband consumed by the country;
2.Usage – the number of active users on the internet to determine the breadth of usage behaviors, contexts, and needs,
3. Complexity – The volume of broadband consumption per capita to determine the complexity and sophistication of digital activity; and
4. Accessibility – The “institutional openness to data flows” as a means to know if the data generated allows wider accessibility and usability by multiple applications, innovators, and AI researchers.
The shift towards virtual events, digital
In uncertain times like the pandemic that the world is facing today, it is also important for companies to quickly adapt and seek growth opportunities. Through e-commerce and the use of digital technologies, simplification and optimization of product lines, sales channels, customer engagement, and business models can be achieved.
The reduction of in-store activity is also driving the increase in e-commerce activity. While hotel websites showed a fall of 8.9% in its transaction and 8.2% in website traffic rate after the Covid-19 outbreak France in March, there was an increase of 3.1% in the transaction of supermarket online shops and a 4% increase in web traffic of these online shops. There was also a 6.1% increase in the website traffic of online fashion retailers but a decline of 9.9% in transactions. Online pharmacies had increased their traffic by 15.3% and transaction by 2.1%, according to data that was provided by the database company Statista. Chinese e-commerce company JD.com has moreover seen everyday household items quadruple when major retailers temporarily shut their stores.
The pandemic has created an economic shock in various countries. Governments have used economic stimulus packages, including direct cash disbursements to households, to fight the fallout. The digital economy can serve as a silver lining for the public. It can boost productivity, and expose firms to new business models, management, technologies, channels, and ideas.