Digital economy

The digital economy is a portmanteau of digital computing and economy, and is an umbrella term that describes how traditional brick-and-mortar economic activities (production, distribution, trade) are being transformed by the Internet and World Wide Web technologies.^[1][2]

The digital economy is backed by the spread of information and communication technologies (ICT) across all business sectors to enhance productivity. A phenomenon referred to as the Internet of Things (IoT) is increasingly prevalent, as consumer products are embedded with digital services and devices.^[3]

According to the WEF, 70% of the global economy will be made up of digital technology over the next 10 years (from 2020 onwards). This is a trend accelerated by the COVID-19 pandemic and the tendency to go online.^[4] The future of work, especially since the COVID-19 pandemic, also contributed to the digital economy.^[5] More people are now working online, and with the increase of online activity that contributes to the global economy, companies that support the systems of the Internet are more profitable.^[6]

Digital transformation of the economy alters conventional notions about how businesses are structured, how consumers obtain goods and services, and how states need to adapt to new regulatory challenges. The digital economy has the potential to shape economic interactions between states, businesses and individuals profoundly.^[7] The emergence of the digital economy has prompted new debates over privacy rights, competition, and taxation, with calls for national and transnational regulations of the digital economy.^[7]