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Digital economy

Definition


The digital economy is also called the Internet economy, the new economy or the web economy. The phrase digital economy comes from Don Tapscott's bestselling book, The

Digital Economy: Promise and Peril in the Age of Networked Intelligence (1995). Writing in the early days of the World Wide Web, Tapscott made a number of predictions that he felt the digital economy would bring about.

Tapscott believed the digital economy would shift the base of the economy away from traditional resources and toward knowledge. By digitizing knowledge and freeing it from physical constraints, information would spread freely and rapidly around the world. (See also Information Society.) This would lead to more fluid and flexible work environments. Socalled middlemen jobs connecting customers to products would either improve or go extinct. Mass production (making standardized products on a large scale) would yield to mass customization (making products that suit a customer's needs).

Multinational enterprises would yield to global organizations. The gap between the technologically literate and the technologically illiterate would grow and potentially cause major societal problems.

Writing in 2001, American economist Thomas Mesenbourg identified three major parts of the digital economy:

infrastructure, business processes and commerce transactions. Infrastructure (or e-business infrastructure) refers to money spent on computers, Internet cables, wires and routers, and the software and applications that run on them. This also includes money spent on tech support and programmers. E-business processes include the shift to selling products online. It also includes shifting logistics, communications and support ser ces to the digital sphere. Finally, e-commerce refers to the valu f 200/02 to the digital sphere. Finally, e-commerce refers to the value of goods and services sold online.



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