Definition

Impact of the Digital Economy

Statistics Canada has found that advancements in technology and the Internet have "fundamentally changed" how Canadians and Canadian businesses interact, as well as how they produce, distribute and consume goods and services. In 2017, the agency found that the gross domestic product (GDP) connected to the digital economy was $109.7 billion. This represented 5.5 per cent of Canada's total economic activity. That's a bigger proportion of the total economy than that produced by mining, oil and gas extraction, or by transportation and warehousing. The digital economy is also growing faster than the overall economy. Statistics Canada found 886,114 jobs associated with the digital economy in 2017. This represented 4.7 per cent of all jobs in the country.

Much of the digital economy has grown through either an economy of scale (reducing costs by increasing production) or an economy of scope (increasing revenue by diversifying the products and services available).

Traditionally, getting an advantage through economy of scale has been the surest way to succeed since the first industrial revolution. If a company is producing and selling stoves, making one stove will be quite expensive. But by streamlining the mass production process that goes into making stoves, the total price drops and each stove can be sold at a lower price. For example, a vehicle manufacturer uses the same type of engine, chassis and gearbox to build several different vehicles. In the digital economy, companies like Uber and Airbnb get their advantage from the scale of their global customer base.

An economy of scope keeps costs down by doing many different things in one spot. Amazon has become a digital department store that sells a wide range of products. It also

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An economy of scope keeps costs down by doing many different things in one spot. Amazon has become a digital department store that sells a wide range of products. It also sells its own products, like the Amazon Echo smart speaker, and runs streaming services for music and videos.

The digital economy has also seen a shift to the gig economy, which often creates a worse deal for workers. Instead of having a permanent job with a regular salary and benefits, workers in the gig economy are hired to work piecemeal. A driver for Lyft, for example, only gets paid per ride. Unlike in a permanent job, the worker gets no health benefits, sick days, or any of the other safety nets found in traditional forms of labour.

The idea of a "gig" comes from the arts community, where a musician would be paid per gig. The digital gig economy has lowered income for many artists by making their products freely available online. Streaming services such as Spotify can let customers play a hit song as often as they like, but the musician may earn under $50 and see a dramatic drop in album sales. Billions of dollars in advertising have also shifted from newspapers to online giants like Google.

Climate Impact

With phrases like "in the cloud" and "virtual assistants," the digital