The digital economy relies on digital computing technologies which are increasingly perceived as conducting business through markets supported the web. The digital economy can also be referred to as the Internet Economy, New Economy, or Web Economy. The digital economy is now increasingly intertwined with the normal economy, making a transparent delineation harder.
The impact of the digital economy on retail sales of consumer product goods is now substantial. One effect has been the fast proliferation of shops with no physical presence, like eBay or Amazon. Traditional retailers, like Walmart and Macy’s, have restructured their businesses to adapt to a digital economy. Some retailers, like Forever 21, have declared bankruptcy as a result of their failure to anticipate and adapt to a digital economy
Component of Digital Economy on Business
The main component of the digital economy is governed by virtue of its traditional role in providing primary funding for the country. The government have an important role to play in sustaining infrastructure development and improving the business. Through national ICT policies, governments provide a national vision for infrastructure development that’s aimed toward enhancing digital services within their jurisdictions and beyond.
A progressive government within the digital economy supplies businesses, citizens and organisations with a transparent roadmap for the adoption of technology. A government’s investment in digital processes also helps to enhance its own operations.
Governments as early adopters of digital practices provide leadership that other organisations and individuals can emulate. They further create demand for technology and digitally-enabled services. A government also can leverage the advantages of ICT by, among other actions:
Digital Economy use a 10th of the world’s electricity. The move to the cloud has also caused an increase in electricity use and carbon emissions by the digital economy. A server room at a knowledge centre can use, on the average, enough electricity to power 180,000 homes.
The Digital Economy is often used for mining Bitcoin which, consistent with Digiconomist, uses a mean of 70.69 TWh of electricity per annum. The number of households which will be powered using the quantity of power that bitcoin mining uses is around 6.5 million within the US
The lack of digital technology awareness is one of the many factors hampering digital transformation in provinces with low economic activity. This is according to Marilyn Radebe, MICT SETA board member and founder of Precisional Growth, reflecting on the outcomes of the recently-held first Limpopo Digital Transformation Summit.
The summit sought to bring the ICT sector to Limpopo and create a marketplace for people in that province to engage and use the latest technological advancements. Referencing Statistics SA data, Radebe notes Gauteng remains the province that contributes the biggest share to the national economy, while Limpopo, North West, Free State and the Northern Cape contribute the least.
As a result, she emphasises the need for career fairs with a digital transformation focus, to up career awareness of the opportunities in the digital economy
Furthermore, tertiary institutions, together with their leadership, have to adopt digital technologies, to ensure students develop problem-solving skills and adopt an interest in the use and creation of the latest digital technologies, according to Radebe.
“As the old saying goes, you don’t know what you don’t know. If a child or person is not exposed to people who form part of the digital economy, they wouldn’t know the opportunities that exist within the digital economy; therefore, they wouldn’t necessarily pursue a career or opportunities in the digital economy.”
The South African government has prioritised skills development in an effort to equip citizens with the necessary skills to thrive in a digital society. Through the Department of Communications and Digital Technologies, the government has made a commitment to training one million young people in data science and related skills by 2030. The MICT SETA board member stresses that SA’s existing workforce needs to look at how to reskill themselves in order to form part of the digital economy. She also notes:
“Our new entrants into the labour market need to be equipped and skilled with the necessary digital skills and know-how.
“Digital transformation only happens when digital technology is used to solve problems and without problem-solving skills, we cannot use digital technology to digitally transform. Therefore, it is critical that problem-solving skills are developed at an elementary level within our schools as a means to stimulate our digital economy.”
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