The digitalization of economic activity is the key for defining incorporation of data and internet into every form of economic activity and production. Under the current scenario digitalization is used in every area to ease the pressure of manual functioning. Social distancing to curb the coronavirus has contributed to a major share in the digitalization process. The rapid pace of change has led to concerns about possible under-measurement of economic activity and economic welfare associated with digital products. The questioning of the existing measure of GDP has been further motivated by the puzzle of low productivity growth at a time of rapid technological change. Internet platforms and smartphones have given consumers access to many new services since their dramatic growth in the mid-2000s, while GDP and productivity exhibited slow growth in advanced economies

 Many market researchers have attributed the productivity slowdown as a reason for the digital economy in GDP, advancing a wide of range of criticisms, from the “exclusion” of free digital products in the conceptual framework, to the miscalculation of improved digital products, globalized production and new forms of financial services. Improved measurement of digital products and transactions could improve measurement of inflation, balance of payments developments affecting external sector stability, and financial stocks and flows of relevance for countering money laundering and tax evasion

The digital economy could encompass an enormous, diffuse part of most economies, ranging from agriculture to R&D. Digitalization drives entrepreneurial innovation, productivity, and regional economic growth. It also has implications for growth, the labor market, and political participation. And it places new demands on education and training -– not only in the field of information and communication technologies. If we look at the perspective of education economics, people’s ability to adapt to the changing world of work through the education and training system is of fundamental importance.

Countries that lead the world in generating advanced technologies and leveraging the full productive capacity of their digital economies can gain a strategic competitive advantage. Information and communication technologies (ICTs) provide new opportunities and new challenges for developing economies. ICT adoption, digitalization and automation provide formidable new opportunities in terms of increased efficiency and productivity, the creation of new services and occupations and increased connectivity.  Digitization — the mass adoption of connected digital services by consumers, enterprises, and governments — has emerged in recent years as a key economic driver that accelerates growth and facilitates job creation. In the current environment of a sluggish global economy, digitization can play an important role in assisting policymakers to spur economic growth and employment. While economic growth and rising productivity are the major expected outcomes of digitalization, digital economy can contribute its major share to GDP to a country’s economic growth.

Source – Omnes’ Editor