According to Thomas Mesenbourg (2001), three main components of the ‘Digital Economy’ concept can be identified:
- e-business infrastructure (hardware, software, telecoms, networks, human capital, etc.),
- e-business (how business is conducted, any process that an organization conducts over computer-mediated networks),
- e-commerce (transfer of goods, for example when a book is sold online).
But, as Bill Imlah comments, new applications are blurring these boundaries and adding complexity; for example, consider social media and Internet search.
In the last decade of the 20th century. Nicholas Negroponte (1995) used a metaphor of shifting from processing atoms to processing bits. “The problem is simple. When information is embodied in atoms, there is a need for all sorts of industrial-age means and huge corporations for delivery. But suddenly, when the focus shifts to bits, the traditional big guys are no longer needed. Do-it-yourself publishing on the Internet makes sense. It does not for a paper copy.”
In this new economy, digital networking and communication infrastructures provide a global platform over which people and organizations devise strategies, interact, communicate, collaborate and search for information. More recently, Digital Economy has been defined as the branch of economics studying zero marginal cost intangible goods over the Net.
Impact
The Digital Economy is worth three trillion dollars today. This is about 30% of the S&P 500, six times the U.S.’ annual trade deficit or more than the GDP of the United Kingdom. What is impressive is the fact that this entire value has been generated in the past 20 years since the launch of the Internet.
It is widely accepted that the growth of the digital economy has widespread impact on the whole economy. Various attempts at categorizing the size of the impact on traditional sectors have been made.
Digital Citizenship 