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A digital economy is an economy that is based on digital computing technologies. It is a worldwide network of economic activities enabled by information and communication technology. This is also sometimes called the internet economy, the new economy, or the Web economy. This economy is worth three trillion dollars today. The entire value has been generated in the past 20 years since the launch of the internet. Nicholas Negroponte, the founder of the Massachusetts Institute of Technology’s media lab and author of the 1995 book being digital, has described the digital economy as using bits instead of atoms. To complete in the years ahead, organizations– whether they are for-profit businesses, service-oriented entities, such as healthcare systems, or nonprofit and government institutions– will need leaders and employees who can innovate. They will have to be prepared to explore how best to develop or use emerging technologies or risk being left behind as the digital economy moves forward.

This economy is all industries using digital inputs as part of their production process. An example of digital inputs includes digital infrastructure, equipment, and software but can include data and digital skills. flexible or tiered approach breaking the digital economy. In this new economy, digital networking and communications infrastructure provide a global platform on which people and organizations devise strategies, interact, communicate, collaborate, and search for information.

Entrepreneurs In the Digital Economy

Many entrepreneurs seized on the technologies that fuel the digital economy to create new companies and business models that could not have existed power existed at the size and scale they do today in the past generations these new companies include the ride-sharing platforms Uber and Lyft the home rental platform Airbnb, and content-on-demand services, such as Netflix and Spotify.Introduction of digital economy

Transformation examples

There are some examples of traditional companies transforming to succeed in the digital economy as well for example most retailers initially developed websites to enable online sales. All the people move more fully into the digital economy forward-thinking retailers now leverage technologies to reach and serve customers through a variety of channels. People can collect and analyze each customer’s browsing and sales data to better understand their interests. And they can use the data to reach out to customers switch on social media allowing for better service and ultimately higher sales and increased brand loyalty.

Importance of the digital economy

Some organizations and individuals use technologies to simply execute existing tasks on the computer the digital economy is more advanced than it is not simply using a computer to perform tasks traditionally done manually or on analog devices. This economy highlights the opportunity or need for organizations and individuals to use technologies to execute those tasks better faster and often differently than before. It is the single most important driver of innovation, competitiveness, and growth, and it holds huge potential for entrepreneurs and small and medium-sized enterprises. New digital trends such as cloud computing mobile web services smart grants and social media are radically changing the business landscape reshaping the nature of work the boundaries of enterprises and the responsibility of business leaders. Businesses that fail to get digitally connected will become excluded from the global market. This economy enables firms to cut out an aspect of the retail chain and send personalized goods directly from factories or warehouses to people’s goods, rather than through shops. It is analog objects that generate digital signals that can be measured, tracked, and analyzed for better decision-making.

Advantages of Digital Economy

1- Promotes Use of the internet- The massive growth of technology and the internet that began in the USA is now a worldwide network. So there is a dramatic rise in the investment in all things related to hardware, technological research, software, services, digital communication, etc.

2-Rise in E-commerce- The digital economy has pushed the e-commerce sector into overdrive. not only direct selling but buying, distribution, marketing, creating, and selling, have all become easier due to the digital economy

3-Digital Goods and services- Gone are the days of movies, DVDs and music CDs or Radios. so these goods is available to us in the form of digitally. Such as websites, Hotstar, amazon prime video. etc. There is no need to visit your bank if you can do every transaction online. So certain goods are digitalized in the modern times and use online payments.

4-Transparency- Many  transactions and their payment in the online way to pay in this economy happen. Cash transactions are becoming rare. This helps us to  reduce the black money and corruption in the market so to  make the economy more transparent.

5- Reduce costs- In this economy reduce costs for business so it saves money as well as time. Greater flexibility in work, enabling people to work from home.

6-Full information- The internet has enabled consumers to have greater information and choice to purchase according to their needs or save time.Benefits of digital economy

Demerits of Digital Economy

1- Lack of experts- This economy requires complex processes and technologies to build the platform and their upkeep required experts and trained professionals. So these are not readily available, especially in rural and semi-rural areas, that’s the main reason for the blackness of experts.

2-Huge Investment- This economy requires a strong infrastructure high functioning Internet strong mobile networks and telecommunication. All of this is a time-consuming and investment-heavy process in a developing country like India, development of the infrastructure and network is very slow and it is a very costly process.

3- Loss in employment- The employment level is decreased in this economy because we are depending more on technology, we are moving away from the natural as well as human resources day by day. so this is affecting the unemployment ratio which has grown with the advent of technology. due to this economy, we are losing our jobs.

4- Less community- It may hold events book signings find individuals I enjoy the experience of browsing physical books with a digital alternative undercutting traditional forms old fashioned bookshops are forced out of business we have lost physical interaction between sellers and buyers which was an important aspect of the buying experience so additional bookshop can act as a focal point for the local community.

5-Privacy issues- Facebook collects a large range of data on its users and this has been bought by political interests who can give very targeted political ads to its users so privacy problem is there.

Future of digital economy

The complete in the years ahead organizations whether they are for-profit business is service-oriented identities such as healthcare system government institutions are nonprofit organizations will need both leaders and employees who can innovate. They will have to be prepared to explore how best to develop our use of emerging technologies or risk being left behind as the digital economy moves forward. However, computer and networking technologies have the potential to transform not only the way we shop but also the way our economy operates. GS technologies are the digital economy where market agents behave differently under different sets of economic rules from the physical economy. Then we examine major research issues in Internet infrastructure pricing, network effects, online auctions, advertising, consumer search physical and monetary issues, and market globalization.

We conclude by noting that computer and networking technologies not only improve efficiencies at the margin but also present a new type of market which might be a textbook example of a perfect market that requires a more vigorous reexamination of traditional economic assumptions and results.Define digital economics


The digital economy makes price measurement harder and raises questions about possibly neglected welfare effects but not every welfare change belongs in the official price index although no form line year purpose of index feasibility and credibility count. These are not insignificant but can’t explain slow GDP and productivity growth. This economy represents today 15 percent of the global world GDP it is relying on personal data which has been regulated by the EU’s directive of 1995, which had the goal to integrate the EU within the digital market. The goal of the single market concerning consumers is to offer a panel of choices at a better price. Due to the network effect barriers to European businesses that want to enter the market remain even higher this big tech platform does not give a wide possibility of combined with the volatility of the market. Its business models present some key features which are potentially relevant from a tax perspective these features include mobility concerning intangibles users and business functions reliance on data network effects the spread of multi-sided business models tendency toward monopoly or oligopoly and volatility due to lower barriers to entry into markets and rapidly evolving technology.






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