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Wealth of Nations 2.0

The global economy has existed for at least 5 centuries now. During the 1400s and 1500s, explorers traveled from different parts of the world to establish trade routes and set the first foundations for the global economy. Merchants from Spain, Portugal, France and different parts of Europe began to trade with Asia and China, and vice versa. Many “universal” products today, like chocolate, coffee and potatoes were the result of this very global economy. Indeed, these products were not native to the whole world back then.

From the development of sea routes, all the way up to the industrial era, “products” continued to be at the core of the global economy. However, in the last fifty years, after the World War and later, the fall of communism, services have grown to be equally important. In the 1980s, in developed countries, including America, large sections of jobs shifted from factory or agricultural sectors to services, and this trend was reflected in the global economy.

Preetam Kaushik is a writer, web 2.0 expert and freelance journalist covering the industry trends of business, IT and e-commerce. He is a beat and opinion writer for DailyDeal Media and a regular contributor to The Business Insider and YFS Magazine.

However, it was the emergence of technology and the internet that has truly revolutionized the global economy, a revolution after centuries; never has global trade between countries moved, developed and evolved at such a rapid pace. With easy global accessibility to businesses and consumers, technology has created the Digital Economy.

The 20th Century Ends, a New Era Emerges

In the 1980s, Robert Solow, a Nobel-prize winning economist, had joked about how he saw computers everywhere except in productivity statistics. Many wondered, if they were of any use at all. In a few years, out came personal computers, computer networks and intelligent bits of technology and the way for a new economy was paved.

Towards the end of the 20th Century, as internet and technology began to gain precedence in our lives and also businesses, the Digital Economy as we know it today began to evolve.

Nicholas Negroponte, a faculty member at MIT, observed something interesting and new. He saw, like many other thinkers and business leaders, the economy was going to be about “moving bits not atoms,” as he described it. Negroponte would go on to create the foremost technology magazine of today, Wired, which would capture the evolving trends of this new economy over a decade and most possibly, beyond.

A quick look through the archives of Wired reflects how the Digital Economy has grown. From the emergence of companies like Microsoft and Google to an era that Negroponte had predicted in his book ‘Being Digital’, where the information world, entertainment world and the interactive world would merge is all there.

From Trade Partners to Outsourcing Hubs

Almost every aspect of our personal and economic lives has been touched with advancements in the digital sphere. The manner in which our children learn things at school and do their assignments has changed from the way we did. Work systems have become far more productive, as networks connect offices in different parts of the globe, so the CEO of an American Company can speak to his Chinese counterpart at the click the mouse. Up until ten years ago this only existed in the realm of our imagination but today, in the Digital Economy, this is very much a business reality.

Undoubtedly, a new era of business and businessman has emerged. While creating a new breed of entrepreneurs to establish new companies for the Digital Economy to thrive, innovation has spurred more innovation. If you look at the three biggest companies of the Digital Economy today, Google, Apple and Facebook, they thrive on innovation, and yes, billions of dollars. Gone are the days of orthodox businessmen, reluctant and resistant to change.

The easy accessibility to the rest of the world has made technology-driven international trade the norm of the day. While the West has been trading with Asian countries for centuries in the new Digital Economy, countries like India, China and the Philippines have emerged as outsourcing hubs; helping companies in developed countries with menial tasks, so they can shift their focus almost entirely to innovation and expansion. But even the emerging countries have benefited, as their economies have begun to grow. With their economies growing, their domestic consumption has risen, fuelling further growth in these countries. Many of these countries have also shifted from agrarian economies, like India, to service and digital-focused economies.

The emergence of the Digital Age and Economy does not mean that the industrial or agricultural sector has suffered. In fact, these areas have grown immensely thanks to advancement in digital technology. For instance, agricultural economies are able to sell their produce to other countries and this is much better managed in the Digital Economy where transactions can be carried out at the click of a mouse. Manufacturing technologies have gained a boost, thanks to the technology-oriented digital age, thus making manufacturing more productive.

The New World Media and the Social Web

Although, the rise of the Digital Economy has not been without problems. Billions of dollars were lost in the dot-com burst in the early 2000s, which made many theorize that the New Economy, as it was called back then, was the creation of the then growing, IT industry, and the Wall Street. However, that wasn’t true and thanks to the lessons learnt in those years, the sector has been far more cautious.

The emergence of the Digital Age and Economy does not mean that the industrial or agricultural sector has suffered. In fact, these areas have grown immensely thanks to advancement in digital technology. For instance, agricultural economies are able to sell their produce to other countries and this is much better managed in the Digital Economy where transactions can be carried out at the click of a mouse.

The biggest boon of the Digital Age has been the growth of online media, which is why it is also known as the Information Age. Hundreds of thousands of traditional print media outlets, including Negroponte’s Wired can now be found online. Needless, to say, many more exclusive online information outlets have emerged. This information revolution in the Digital Age can be likened to the invention of printing technology and its contribution to spreading information, except the web’s impact is thousands of times more. This will only benefit the Digital Age and Economy, as knowledge and human intelligence will become its biggest assets.

The Digital Age has give rise to new trends like Social Networking, which has again, not only helped businesses but also people from different parts of the world connect. Thanks to Social Media like Twitter, now it only takes seconds for a product to go viral or ideas to be spread among millions of people. The Arab Revolution is also showing how social and political trends with shape up in the Digital Age, thus again affecting economics and world business.

The most obvious beneficiary of businesses, in the digital economy, has been e-commerce. E-commerce sites enable brick and mortar businesses to reach customers anywhere in the world, while making things far easier for customers, who can shop at the click of a mouse. The e-commerce industry generates billions each year and is an important part of the Digital Economy.

Now, with broadband technologies set to grow e-commerce will go on to be one of the most important ways to do business in the world. In addition to e-commerce, businesses have to adapt to the Digital Age, no matter which industry they belong to, whether it is health, finance, education, food grains or music; if they fail to adapt, they will only be making way for businesses that do. Digital Technologies are not just revamping businesses, but also societies and governments, that reach out to its people on the web now-a-days.

But this is just the beginning of the Digital Economy, and what a beginning it has been! As corporations and governments alike continue to invest billions of dollars into technology and the internet, space jets, teleportation and time travel don’t seem too far fetched anymore.

Photo by Frank Kovalchek

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