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As technology changes, so does the digital landscape

August 11th, 2017

Digital technologies have changed the world and in a very little window of time, taking big steps towards the digital revolution over the last 20 years. Nevertheless, countries continue to move at different speed in the road to a digital planet and there are roadblocks on the journey that still are very resilient.

The World Economic Forum’s Digital Evolution Index was introduced in 2015 to trace the emergence of a digital planet and how physical interactions are being displaced by digitally mediated ones. Two years later, there are many hotspots around the world where these changes are happening rapidly and others where momentum has slowed.

There are now more mobile connections than people on the planet, and more people have access to a mobile phone than to a toilet. Cross-border flows of digitally transmitted data have grown manifold, accounting for more than one-third of the increase in global GDP in 2014, even as the free-flow of goods and services and cross-border capital have ebbed in the aftermath of the 2008 recession.

Apple, Alphabet, Microsoft, Amazon, and Facebook are now five most valuable companies in the world. The most valuable non-American company, 7th overall, was China’s e-commerce giant, Alibaba Group. With products that rely on network effects, these players enjoy economies of scale and dominant market share.

Automation, big data, and artificial intelligence enabled by the application of digital technologies could affect 50% of the world economy. There is both anticipation and apprehension about what lies on the other side of the threshold of the “second machine age.” More than 1 billion jobs and US$14.6 trillion in wages are automatable by today’s technology, which could open the door to new ways to harness human energy.

Politics, regulations, and levels of economic development now play a major role in shaping the digital industry and its market attractiveness. With the world’s largest internet user population – 721 million – China has a parallel digital market because so many of the major global players have no presence there. India, with its 462 million internet users, has a digital economy representing arguably the greatest market potential for global players

Retail e-commerce sales worldwide are expected to hit $4 trillion by 2020, about double of where it is now. A major hurdle is the continuing stickiness of cash, which has not been displaced by digital alternatives despite myriad options. In 2013 85% of the world’s transactions were in cash. France, Sweden, and Switzerland are among the least cash-reliant countries in the world.
The Digital Evolution Index also groups countries according to their progress on moving towards a more digital world. Singapore, the UK and New Zeland anre some of the countries that stand out because of their digital development level, while South Africa, Peru and Greece face significant challenges.

“We all know technology can do more to improve economies and make our lives better, but growth is only achievable if everyone has confidence in the developing ecosystem,” the authors say. “In our pursuit of a truly connected world, trust and security are critical to successful digital development.”

Photograph:Reuters