• Parag Diwan

Digital Economy - ICT is the Backbone

PRIMER II

The spread of Information, Communication Technologies (ICT)


The exponential proliferation of information and communication technology around the globe is the pillar of the digital economy. Countries that lead the world in generating emerging technologies and leveraging the full efficient capacity of their digital platforms will gain a strategic competitive edge.


The U.S. leads the globe in the area of technological advancement. The country's strategic edge is thanks to its industry dynamism, strong economic foundations, financing mechanisms, and a vibrant environment of innovation.


Emerging technologies have risen to popularity as a vital determinant of economic growth, national security, and international competitiveness. The digital economy has come to the forefront based on the significant development of ICT leading to the socioeconomic growth trajectory of the society. It impacts everything from capital redistribution to benefit sharing and growth.


The digital economy's growth pattern is important to track because it serves as a forward-looking barometer of economic growth and international competitiveness. The digital economy comprises goods and services, as discussed earlier, that are either manufactured or deployed using digital technologies. Therefore, the ICT industry underpins the digital economy. It serves as a reliable predictor of its growth. . The link between investments in the ICT industry and the advancement of the digital economy is omnipresent. This indicates that in developed, developing, and emerging economies, ICT contributes significantly to the growth of the digital economy.


Innovation, creative dynamism, and information and ICT development will propel the competitive edge of any nation in the field of the digital economy. A significant contribution to the development of the digital economy is provided by the ICT industry and ICT-enabled sectors. By analyzing its contributions to digital economics and consequent job creation certainly points towards the valuable role of the ICT field in the digital economy.


ICT Benchmarks Global Competitiveness


Large investments in ICT assets: Computer hardware, software, and the internet, and broadband infrastructure are crucial determinants of the growth of digital economics in advanced countries. A study suggests that increased GDP growth and country-specific global competitiveness can be primarily attributed to growth rates in ICT investment. The impact of ICT assets, measured as the value of ICT capital services as a percentage of GDP, is instructive in assessing the ICT sector’s full growth contribution. And on this front, the U.S. has secured a global lead, maintaining relatively strong competitiveness. India and China have emerged as front-runners in this space as well, particularly concerning the high levels of capital (or capital services) that ICT assets bring to GDP growth via the development of the digital economy.


In addition to the proven positive effect of the ICT industry on the global economy, there has been a transformative change from the ICT production sector to the ICT service sector. Due to deeper and wider mobile-cellular networks, this transition from a hardware-to a software-centered level of development has been especially pronounced in developed countries. Besides, greater connectivity among mobile internet users and the availability of smartphones and handheld devices has fueled the maturing mobile e-commerce and mobile-based usage of various digital platforms.


Given these trends, to preserve global competitiveness and to further enhance the digital economy, countries should prioritize investments in ICT. Targeted ICT developments in 5G technology and networks along with R&D innovation are combined to improve the digital economy and increase the distribution impact of the ICT industry to industries that are less technologically intensive.


Conclusion

Taking all these variables into account, it is apparent that for developed and emerging countries, the IT industry is essential to the digital pivot. In the developed countries, the share of real economic growth in the industry has gradually grown, propelling the sector to relative prominence. For the IT industry, the accelerated introduction of increasingly emerging technology such as cloud computing, robotic automation, artificial intelligence (AI), deep learning, the Internet of Things (IoT), and 5G technologies is exciting and should stimulate further developments in new areas of the digital economy specifically cyber-physical systems.

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Picture Credit: Google Images

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