“Digital economy”
 Emerging Digital Technologies

Trends in Emerging Digital Technologies:
o The evolution of the digital economy is closely associated with progress in several
frontier technologies (developed technologies that carry new opportunities), including
some key software-oriented technologies, such as block chain, data analytics and AI.
o Other emerging technologies range from user-facing devices (such as computers and
smartphones) to 3D printers and wearables (smart watches), as well as specialized
machine-oriented hardware, such as IoT (Internet of things), robotics and cloud
computing
1. Blockchain technologies
o Blockchain technologies are a form of distributed technologies that allow multiple parties
to engage in secure, trusted transactions without any intermediary (mngher shakhs waseet
benhum).
o It is best known as the technology behind cryptocurrencies (like Bitcoin), but it is also of
relevance for many other importance to developing countries.
o These include digital identification, property rights and aid disbursement (financial aids
given to students)
o Open-source platforms (is a platform where anyone can see, modify, and distribute the
software as they see fit), allow programmers to develop decentralized applications to run
on their blockchain.
o Some blockchain applications are already in use in developing countries, for example in the
areas of fintech (computer programs and other technology used to support or enable
banking and financial services), land management, transport, health and education in Africa
o For more explanation: blockchain is like a technique or software that enables
transactions between people (mngher ma yb2a feih taraf talet zy el bank aw kda),
transaction of data, money, property and so on.) (mainly nas btstakhdemha m3
transactions el bitcoin enaha t7wl lee 7ad tany)
2. Three-dimensional printing (3D Printing)
o Three-dimensional (3D) printing, also known as additive manufacturing, can potentially
interrupt manufacturing processes by boosting (enhancing) international trade in designs
rather than in finished products.
o It offers opportunities for developing countries to leapfrog (overcome) traditional
manufacturing processes.
o Indeed, a number of 3D-printing ventures can already be found in some developing
countries.
o For example, in Africa, such ventures exist for local entrepreneurship in Togo, for filling
import gaps in Nigeria.
o For more explanation: 3D printing da technology t2dar tebnely 3D object odamy kda
lee ay haga, ya3ne lw msln 3yza asn3 laptop w 3yza atkhyl el design bta3o mmkn
astkhdm 3D printing fa yebneholy kda 3D odamy.
3. Internet of things
o Internet of things (IoT) refers to the growing array (group) of Internet connected devices
such as sensors, meters, radio frequency identification (RFID) chips and other gadgets
that are embedded in various everyday objects enabling them to send and receive various
kinds of data.
o It has wide applications, including in energy meters, also for monitoring soil and weather
conditions in agriculture, and for wearables.
o In 2018, there were more “things” (8.6 billion) connected to the Internet and the
number of IoT connections are forecast to grow to exceed 22 billion by 2024.
o For more explanation: zy radio el 3rbya byb2a shaghal 3n taree2 eno motasel bel
satellite w byn2l esharat mngher tadakhol el ensan, aw zy motor el 3rbya lw feih
moshkla msln lambet el engine btnwr mngher ma ab2a mshaghal el 3rbya aw
mngher tadakhol el ensan bardu. Aw zy el smart watch btb2a shaghala mngher
fisha.
4. 5G mobile broadband:
o Fifth generation (5G) wireless technology is expected to be critical for IoT due to its
greater ability to handle massive volumes of data.
o 5G networks can process around 1,000 times more data than today’s systems
o In particular, it offers the possibility to connect many more devices (e.g. sensors and
smart devices).
o While 72 mobile operators were testing 5G in 2018, 25 of them are expected to
launch the service in 2019, and another 26 in 2020.
o In order for developing countries to maximize the impact of IoT, significant investments
in 5G infrastructure will be required.
o Moreover, the deployment of 5G may further increase the urban-rural digital divide, as
setting up 5G networks in rural areas with lower demand will be commercially
challenging.
For more explanation: 5G reaches 10 gigabits per second – up to 100 times faster
than 4G. 5G will enable the connection of many machines and devices and it will be
faster and allow the sharing of massive amounts of data easily and fast.
5. Cloud computing:
o Cloud computing is enabled by higher Internet speeds, which have drastically reduced
latency (the delay between a user's action and a web application's response to that action),
between users and data centers.
o Data storage costs have also decreased.
o The cloud is transforming business models, as it reduces the need for in-house IT
expertise, offers flexibility for scaling, and consistent applications rollout (launch) and
maintenance.
o For more explanation: Cloud computing is the delivery of different services through
the Internet. These resources include tools and applications like data storage,
servers, databases, networking, and software. (zy el iCloud 3al iPhone elli bykhzn
kol el chats w el data mngher tadakhol el ensan)
6. Automation & robotics and AI:
o Automation and robotics technology are increasingly used in manufacturing, which could
have significant impacts on employment.
o There are concerns that such technologies may constrain the scope for developing
countries to adopt export-led manufacturing (An export-led growth strategy is one where
a country seeks economic development by opening itself up to international trade) as a
path to industrialization, and that the more developed economies may increasingly use
robots to “reshore” (lead) manufacturing jobs.
o According to the International statistics global sales of industrial robots doubled it is
expected to increase from 381,300 units in 2017 to 630,000 units by 2021
o Developments in AI, including machine learning, are enabled by the large amounts of
digital data that can be analyzed to generate insights and predict behavior using
algorithms, as well as by advanced computer processing power.
o AI is already in use in areas such as voice recognition and commercial products.
 Fostering digital entrepreneurship and innovation:


Importance of innovation
o Governments in many countries are increasingly aware of the importance of
harnessing (controlling) the benefits of the digital economy for innovation, growth and
social prosperity.
o This awareness comes as the cost of data collection, storage and processing continues
to decline dramatically and computing power increases, social and economic activities
are increasingly migrating (shifting) to the Internet.
o Technologies, smart applications and other innovations in the digital economy can
improve services and help address policy challenges in a wide range of areas,
including health, agriculture, public governance, tax, transport, education, and the
environment, among others.
o Indeed, information and communication technologies (ICTs) contribute not just to
innovation in products, but also to innovation in processes and organizational
arrangements.
Barriers faced by entrepreneurs:
o The extent and speed of the direct effects of access to the Internet and various digital
technologies on local economic development have been limited so far.
o The low levels of e-trade readiness, entrepreneurs in the digital economy of many
developing countries face various barriers to scaling (growing) their activities:
I. Firstly, global digital competitors are already well-established in the most scalable
(innovative) digital product categories. (el competitors bto3 el entrepreneurs
ma3rofeen globally w 3nduhum innovative programs)
II.


Secondly, servicing local markets digitally may require setting up blended digital
analog processes (sor3a f takhzeen el data w transmitting signals) to build up a user
base or create a unique value proposition. In their absence, digital platforms in
developing countries are often unable to become physical-asset-light, (msh adreen
yetla3o lel noor) in the way as their counterparts in developed countries. They
therefore need to apply different business models.
Entrepreneurship Ecosystem: domains (systems of interdependent actors and
relations directly or indirectly supporting the creation and growth of new ventures
(businesses))
1. Policy
2. Finance
3. Culture
4. Support
5. Human Capital
6. Markets
Building Digital entrepreneurship conducive (possible) environment: (how to build it)
o Policymakers should also seek to integrate (make) efforts to promote digital
entrepreneurship into broader policies to promote innovation.
o Building an ecosystem conducive to (that can lead to) digital entrepreneurship takes time. It
is especially important to facilitate a long-term build-up of immobile (fixed)
entrepreneurial resources.
I. Physical resources (e.g. broadband Internet, government-subsidized office space in
hubs and incubators) and financial resources (e.g. grants, loans) are necessary but
insufficient conditions for digital entrepreneurship to thrive. (grow or develop)
II. Investment in hubs, incubators and technology parks can be a waste of resources if
they remain unused due to other bottlenecks (obstacles), such as limited market
access or weak entrepreneurial knowledge.
o Governments should consider focusing less on initiatives (mobadrat) (e.g. hackathons (A
hackathon is an event, usually hosted by a tech company or organization, where
programmers get together for a short period of time to collaborate on a project) or
boot camps) or on infrastructure projects (e.g. tech parks), and more on efforts to foster
(enhance) entrepreneurial knowledge creation through subsidized mentoring programs
(programs ta3lemeya), vocational training, apprenticeships (training) and internships.
o Allow local digital enterprises (businesses) to scale (grow) internationally in new digital
product categories while continuing to make a virtue (good use) of their geographical
positioning. Innovative business models and processes that have worked well in a
particular country could be explored in other markets with similar conditions, (n2dar
o
o
o
o
o
o

nastafeed menha 3andena hna) and governments could look for ways to facilitate such
international reach (i.e. facilitating cross border e-commerce)
Policy support could also be provided for creating exchange programs for entrepreneurs
which encourage and explain to them how to internationalize. (ntl3hum mena7 bara w
ngeeb entrepreneurs men bara 3andena)
Governments may seek to support the creation of regional innovation platforms and
ecosystems.
Policymakers could provide incentives to different clusters (groups) within a region to
develop complementary (ykamelo b3d) but deep technical knowledge bases.
Improving women’s access to the opportunities offered by the digital economy is
important for bridging (overcoming) the gender digital divide, and for broadening the
opportunities for women entrepreneurs to find jobs and earn (additional) income.
Empowering women through digital technologies involves fostering the upward mobility
(rising to a higher social or economic position) of women beyond the informal sector, the
rural areas and micro loans/ initiatives, as well as beyond subsistence (minimal) levels.
Encouraging and empowering women entrepreneurs to participate or become active
players in the digital economy include creating better funding opportunities, and
providing role models and mentoring.
Supporting the digitalization of enterprises:
o Governments and actors involved in development activities may find it useful to learn
from private sector experiences in order to intervene in ways that help enterprises and
civil society seize (catch) opportunities created by developments in technology.
o Many small business owners in developing countries, and especially in LDCs (least
developed countries) lack the necessary capabilities, skills and awareness to take full
advantage of the digital economy.
o There are different ways for MSMEs (Micro, Small, and Medium Enterprises) to gain an
online presence to market their goods and services to potential buyers in their own
country or in foreign markets.
o The introduction of digital platforms has helped overcome some traditional obstacles,
such as the need for in-house resources, information technology equipment and expertise,
by establishing and maintaining a web presence (the presence of websites)
o Policymakers could choose to engage with the platform owners to ensure that their
platforms can be fully utilized locally, and that existing regulations do not hamper
(prevent) access.
o In Egypt, for example, contacts with Google, led to the opening up of the Google
Play app market for Egyptian developers, which created opportunities for them to
sell their apps

Recent Policy trends to support innovation
Most OECD (Organization for Economic Co-operation and Development) countries and many
partner economies have established or are close to adopting national strategies addressing policy
priorities related to the digital economy.
I.
Germany's Digital Agenda 2014-17 highlights "the increased exploitation of the
potential of innovation in order to achieve further growth and employment" as its primary
objective (in addition to enhancing high-speed networks and trust).
II.
Mexico's National Digital Strategy (2013) aims to make Mexico "the leading country in
digitization in Latin America" with a strong focus of fostering innovation and
entrepreneurship in the digital economy, among other priorities.
III.
Mexico's Creative Digital City initiative aims to create an urban "ecosystem" that
concentrates the creative industries (film and television studios, mobile apps, interactive
media, etc.) to harness the creativity and talent of people in Guadalajara together with the
use of technology to boost innovation with a view maximizing the economic,
environmental and social benefits
IV.
In Brazil, the Strategic Program for Software and Information Technology Services
(TI Major) (2012) is a broad program designed to enhance Brazil's performance in the
ICT sector, with a focus on innovation, entrepreneurship and competitiveness.
V.
Colombia's Plan Vive Digital (2010) includes the Digital Talent Initiative, Apps.co for
digital entrepreneurship and the Digital Content Initiative. Colombia's FITI initiative
includes the ambition to support the formation of over 59 000 new IT professionals in
Colombia through forgivable loans and the promotion of scholarships awarded by higher
education systems and private enterprises.
 Disruptive Business Models:

The Subscription Model
o A business model where a customer must pay a subscription price to have access to
product/service.
o Types of disruptors using the model: Shaheed, Watch IT, Netflix

The Freemium Model
o A business model where a customer has a free access to the basic service but has to
pay for additional features.
o Types of disruptors using the model: Canva, LinkedIn
o Canva is a graphic design platform, used to create social media graphics,
presentations, posters, documents and other visual content

The Free Model
o A business model integrated by companies that don’t charge the end users.
o Types of disruptors using the model: google

The Market Place
o A business model used by a company that only facilitates a platform where parties
economically interact with each other.
o Types of disruptors using the model: Jumia, NOON, Alibaba

The Access-over-Ownership Model
o A business model that grants the customers the use of the product without buying it.
Everything is delivered as a service.
o Types of disruptors using the model: zipcar
o Car sharing company that enables cars reservations

The Hypermarket Model
o A business model used by digital companies that function as hyper stores, offering
enormous amounts of products and or services.
o Types of disruptors using the model: Amazon

The Experience Model
o A business model used by companies that provide their customers with an unseen
experience.
o Types of disruptors using the model: Disney

The Pyramid Model
o It is a collective term for all the companies which are generating major parts of their
revenues by affiliates and resellers.
o The company is on top of the pyramid and lets the revenue streams upwards.
o Types of disruptors using the model: Amazon

The Ecosystem Model
o A business model where companies build an entire universe of products and services
in which customers get lost.
o Types of disruptors using the model: Apple support App
 Ecommerce influence on digital economy

Ecommerce definition:
o Definition of Electronic Commerce or e-commerce is the exchange and processing of
business transaction information using computers connected through a network. (buying
and selling goods and services through internet, e.g.: Amazon, EBay)
o E-commerce does have unique advantages for businesses. It allows a shop, a showroom
or an office to open 24 hours a day, seven days a week.
o It also means that time zones are not a problem.
o A Web site can bring a prospect (possibility) from the point of advertising and
information directly to the point of sale, without involving any other medium.
o E-commerce has reinvented the way businesses operate.
o E-commerce has also allowed the establishment of completely new types of businesses
such as online shopping and Internet banking. These new ways of thinking, and processes
involved in commerce, provide many benefits and advantages.
o E-commerce brings substantial (essential) net benefits to the economy. The real impact of
e-commerce is its ability to reduce costs and prices and make doing business more
efficient.
o The increased productivity will result from lower production costs, lower inventory
holding costs and lower overall input costs to a business. These savings permeate
(spread) through the entire value chain and impact significantly in business interactions
with other businesses

Ecommerce in digital divide
o The term Digital Divide means a lack of equal access to computer technologies and the
Internet in particular, creating a gap between those who have and those who have not.
o The Internet, information and communication technologies (ICTs) and growth of
ecommerce has created enormous influence on services, market structure, competition
and restructuring of industry and markets.
o These changes are transforming all areas of society, work, business, and government.
o The use of information and communication technologies (ICTs) for e-commerce deepens
and intensifies the socioeconomic divisions among people, businesses and nations.
o On one hand, e-commerce has provided new opportunities for economic growth. On the
other hand, it has created a social problem of digital divide.

What is the ‘digital economy’ and ‘digital trade’?
o Digital economy: The digital economy is made up of economic activities conducted or
facilitated through digital technologies.
o Digital trade: While there is no single accepted definition of digital trade, the OECD
reports that there is a growing consensus (agreement) that it encompasses digitally-
enabled transactions of trade in goods and services that can either be digitally or
physically delivered, and that involve consumers, firms, and governments.
In other words, digital trade is anything that is enabled by digital technologies whether or
not it is digitally or physically delivered.
For example, digital trade would include the purchase and physical delivery of a paper
book through an online marketplace as well as the purchase and digital delivery of an ebook. ’Digital trade’ and ‘e-commerce’ are often used interchangeably.

Why do we need an agreement in the digital area?
o Digital trade is growing exponentially and this creates opportunities for countries. Digital
trade is especially important for any economy, which is largely made up of small and
medium sized businesses.
o Digital technologies help these businesses overcome the challenges of scale and distance
to enter global markets that were previously only accessible to larger businesses,
accelerating their growth.
o The many benefits for consumers from digital technologies include more convenience,
lower prices, more choice and better information.
o Digital technologies can also potentially support the increased participation in trade by
women, and rural communities, helping spread the benefits of trade across our
communities and regions.
o Barriers to digital trade are arising: The changing nature of trade in the digital era is
leading to new barriers to trade arising.

WTO (world trade organization) e-commerce negotiations:
o Why do we need negotiations?
I. The volume of international trade in goods and services that is occurring via ecommerce continues to grow exponentially.
II. Recent research by Mckinsey estimated that cross-border data flows (used as a proxy
for digital trade) grew by 45 times between 2004 and 2014 and generated $2.8
trillion in global economic revenue in 2014 alone.
III. Digital technology is impacting the world in many different ways. It is driving the
creation of new products, services and business models. It is disrupting (affecting) the
way that whole industries do business. It is changing how people live their lives. And
it is also changing how government makes decisions and interacts with society.
IV. These changes provide both challenges and opportunities for the global trading
environment, traditional trade rules and architecture, as well as domestic policy
approaches. So it’s important that international trade rules are developed to govern
these areas as they evolve.
V. This includes finding a balance that facilitates economic growth for both individuals
and businesses, while ensuring adequate (enough) safeguards for quickly evolving
policy areas online, such as personal privacy, consumer protection, cyber security,
customs procedures and taxation structures.
o Who is involved?
I. Given this importance, over 70 members at the WTO, confirmed intentions in January
2019 to launch negotiations on ecommerce.
II. This announcement followed a year of exploratory discussions which had been
agreed in a joint statement by Ministers in December 2017 at MC11 in Buenos Aires.
(the eleventh ministerial conference took place at Bueno Aires Argentina)
III. The WTO deals with the global rules of trade. Its main function is to ensure that trade
flows as smoothly, predictably and freely as possible between its members.
 Digital Economy Policies
Policies required to build Digital Economy

Policies to facilitate value creation & capture:
o New policies at national & international levels needed to build an inclusive digital
economy.
o Technology is not deterministic, but it creates both:
1. Opportunities
2. Challenges
o The global nature of the digital economy will require more: dialogue, consensusbuilding & policymaking, all at the international level.
o Policymakers need to make choices that can help reverse the trends toward widening
inequalities and power imbalances.
o In close dialogue, it’s up to governments with other stakeholders (academia, private
sector, civil society & technological community) to shape the digital economy by
defining the rules of the game.
Digital economy’s policy areas that need particular attention

Policy areas that need particular attention:
1. Strengthening the readiness of developing countries to engage in and benefit from ecommerce and the digital economy.
2. Labor market, skills and social protection policies.
3. Digital entrepreneurship and innovation policies, leveraging niche areas and domestic
opportunities, including for women.
4. Intellectual property policies in the digital economy.
5. Digitalization of MSMEs
6. Data policies for capturing values
7. Development cooperation with more attention to the digital dimension
8. Competition policies for the digital era
9. Taxation of digital platforms
Need for new policies and regulations

Need for new policies and regulations tailored to national objectives backed by more
international support:
o Each of the following need new policies and regulations, that can create a fairer
distribution of gains.
➔ Digital Divides
➔ Differences in readiness
➔ High concentration of market power
● Need for policy space for experimentation to assess the benefits and disadvantages of
different options.
● National efforts in developing countries and more international support leads to inclusive
digital transformation.

Connecting the dots in policy-making
o Most developing countries face many constraints in trying to benefit from the digital
economy.
o Governments and other stakeholders need a basic understanding of the dynamics of the
digital economy before they can formulate and implement relevant policies.
o They can benefit from access to empirical evidence of their own performance in policy
areas that have a bearing on their ability to participate productively in the digital
economy.
o In view of the cross-sectoral nature of digitalization, countries should adopt a
coordinated response to the formulation and implementation of policies to secure
benefits from digitalization.
o Digital transformation is complex and evolving rapidly.
o Policy decisions must increasingly be made under uncertainty about future digital and
other developments.
o While progress has been made in answering some of the most pressing and difficult
questions that governments face today, more work is needed to:
➔ Understand some complex issues
➔ Design resilient policy frameworks in response.
o “Going Digital Summit in March 2019”:
➔ Held at OECD headquarters in Paris, France.
➔ The OECD Going Digital Summit addressed the growing importance of digital
transformation for issues across the spectrum of public policy
➔ Discussions were structured along the lines of the seven dimensions of the Going
Digital Integrated Policy Framework:
1. Enhancing access
2. Increasing effective use
3. Unleashing innovation
4. Ensuring good jobs for all
5. Promoting social prosperity
6. Strengthening trust
7. Fostering market openness
➔ It was outlined how digital transformation can:
1. Boost growth and wellbeing
2. Create efficiencies in the public sector
3. Support development and gender equality
4. Improve measurement frameworks
5. Drive new regulatory and public policy approaches
➔ For countries at lower levels of digital readiness, it is important to raise awareness
and understanding of the key issues at stake.
o As policy priorities will differ among countries, due to their varying levels of
development, there is no one-size-fits-all approach.
o Their policy approach needs to be holistic and multidisciplinary, and involve relevant
stakeholders.
This requires an effort by governments to create suitable mechanisms that enable
the collection of relevant information for producing the intelligence needed to:
“formulate and implement appropriate policies and strategies”.

Good practices in this context include:
I. The identification of high-level advocates in a lead ministry who can create a
dedicated cross-ministerial team to develop coherent policy responses.
II. Another way is to follow and form a national task force or committee on ecommerce with a lead agency and assigned responsibilities.

Governments to enable countries to create more value from the digital economy:
o On the one hand, the introduction of new technologies and their applications creates
radically new opportunities:
1. For individuals: to find information, resources and new jobs, as well as to offer their
skills and services in global markets.
2. For firms in the digital sector, enhanced use of ICTs and various digital applications
may create more demand for both ICT goods and services.
o In digitally-enabled sectors, firms may take advantage of e-commerce and other digital
platforms to:
1. Reach new clients
2. Improve their productivity
3. Develop new business models.
o In terms of economy-wide impacts, the successful leveraging of the digital economy may
generate more economic growth, employment and taxable revenues.
o On the other hand, the potential benefits are far from automatic, and there are major
challenges, costs and risks involved.
o To start with, countries are at different stages of preparedness to engage in and seize
opportunities from digitalization and platformization.
o This calls for efforts to build the capacities needed to help more people and businesses
in developing countries to become developers, producers and exporters in the digital
economy.
o Secondly, there is a need to revisit national and international policies that can affect
the creation and distribution of wealth. These include policies relating to:
➔ Data
➔ Competition
➔ Taxation
➔ The labor market and intellectual property (IP)
➔ Trade
➔ Development cooperation.

Digital economy complications faced by governments
o A particular complication is the rapid evolution of the digital economy and the lack
of reliable evidence as to which policies may or may not work in certain settings.
o Even the most advanced economies have only just started to assess how best to deal with
digital disruption.
 Vectors of digital transformation/digital economy:
Introduction:
o Developing a coherent and whole-of-government approach to digital transformation
requires understanding the changes underway in a non-technical manner that speaks to a
wide audience.
o The shift to digital products, digitally-enabled markets, and their interaction has
basic properties that differ from analogue or physical equivalents and antecedents.
o These properties, often disruptive, can affect policy-making in various ways.
o In order for policies to be effective in the digital economy and society, it is necessary that
they account for these properties which are interdependent and overlapping but fall
into three broad categories:
a) Scale, Scope and Speed
b) Ownership, Assets and Economic Value
c) Relationships, Markets and Ecosystems.
o These factors work together to create complex economic and social effects that reflect
a fundamental change in the nature of production.
o This includes the growing role of:
➔ scale in operations and demand-side economies (i.e. network effects that increase
value as more users enhance the utility of the product)
➔ as well as of scope (especially in the completeness of product offerings).
In addition, high speed to market combined with economies of scale and scope can contribute
to “winner take most” outcomes.
A. Scale, Scope & Speed:
1. Scale without Mass:
o Unlike physical products, which tend to have high fixed costs and substantial marginal
costs that decline with scale.
o Digital products tend to have mainly fixed costs and low, close to zero, marginal costs.
o This characteristic combined with the global distribution enabled by the Internet
allows successful firms and platforms to scale:
❖ Quickly
❖ Internationally
❖ And sometimes with very few employees or tangible assets.
o A good example of this phenomenon is WhatsApp, Spotify and Netflix
o The capacity to scale without mass may also affect competition in some markets.
o Firms that sell software or digitally-delivered services can possibly scale up faster and
more easily than other firms, due to:
❖ Lower costs of production
❖ Easier penetration of multiple markets
❖ Higher intensity of knowledge assets
which can be re-used at close to zero marginal cost.
o Such digitally-enabled industries are typically characterized by:
I. Direct network effects whereby the value of the service provided by a product
increases with the number of users.
Indirect network effects, whereby the number of users of one service
increases the value of complementary services
II.
III.
Economies of scope in data collection and analysis
And as a result, high and increasing levels of price and product differentiation.
o Over time, these characteristics may help industry leaders to pull ahead, as these factors
may represent an additional obstacle to the entry of new players and hinder the
growth of competitors.
2. Panoramic Scope:
o Panoramic Scope “Economies of scope” were once viewed as a benefit realized by
conglomerates that could support many product lines by sharing common costs such
as legal, finance, accounting, and marketing, or through vertical integration.
o The ability to categories, code and store digital information in standardized form
reduces a broad range of transaction costs providing the basis for more efficient
interaction.
o [conglomerates: is a corporation that is made up of a number of different, sometimes
unrelated businesses. In a conglomerate, one company owns a controlling stake in a
number of smaller companies all of whom conduct business separately and independently]
o In turn, this provides firms with the ability to:
 Tailor products to individuals in near real-time
 Greatly increasing economies of scope
 Leading to new business models
 Blurring sectoral boundaries (e.g. one firm being in retail, ICT services and
fulfilment/logistics)
 Changing the landscape for market competition
o In the complexity of the digital environment, demand-side economies of scope are
generated by the capacity to manage applications in a way that reduces learning costs
and attracts, engages, and maintains customer relations over time.
3. Speed: dynamics of time Digitalization accelerates economic and social activity:
o Digitalization accelerates economic and social activity, where:
 markets clear faster
 ideas spread more quickly
 the time associated with distance shrinks, as does the time it takes to
identify, engage and develop a community.
o Advantage increasingly goes to first movers and fast followers, and to agility supported
by rapid, iterative learning. This property underpins three practices that have been
associated with the digital era:
1. Businesses models that promise to move fast and break things
2. Achieving scale before profits, which is facilitated by the near-zero marginal cost
of communicating and sharing information over space that can, in turn, lead to
superstar effects or winner-take-most outcomes.
3. Launching an idea before it is perfected with the assumption that iterative learning
will come from its use in the market.
o These characteristics motivate firms to learn quickly – including how best to exploit
a slow-moving policy environment. Moreover, by their ability to quickly scale and
learn, firms can attract a customer base, which can also help them create a supportive
constituency for any possible policy debate
B. Ownership, Assets and Economic Value:
o The vectors of scale, scope, and speed provide a competitive advantage and shift
investment toward intangible sources of value many of which can be digitized.
o These intangibles, like software and data, are increasingly combined with traditional
tangible investments in tools, machinery, autos and buildings – creating new that
can be continually adapted to:
❖ Fit changing conditions
❖ Exploit new opportunities.
o A key element of the digital transformation of capital equipment and structures is the
flow of data generated through embedded sensors that monitor performance
(e.g., jet engines, water meters).
C. Relationships, Markets and Ecosystems:
o Before the Internet, there was no common infrastructure to connect users, digital assets,
and physical objects.
o As noted below, the Internet’s “end-to-end” principle means that any one user can
connect to any other user.
o Hence, while digitization changes the nature of products, the Internet has enabled
changes in the formation, maintenance and nature of relationships.
o The Internet has made digital products accessible and usable worldwide while radically
reducing the costs of communicating and transacting.
o This has enabled a shift in production to extended supply chains and global value
chains since complementary relationships in the digital environment can extend in
multiple directions.
o Similarly, networked digital technology enables the design and configuration of
special-purpose networks, whether for social interaction or to create new knowledge.
o Ad hoc networks can be designed and configured using simple tools such as a mailing
list or website without having to deal with a carrier or other intermediary.
o Well-designed digital interactions can quickly exchange large amounts of structured
information, thereby removing functions previously performed by specialized
experts.
o For example, airlines now design their websites to allow customers to plan their own trips,
reducing the need for a professional travel agent
 Digital economy Strategies

Brazil:
o The first digitalization plan set by the Brazilian federal government began in February
2017, then in 2018, a new development plan was established.
o The Brazilian Digital Transformation Strategy, E-Digital (2018-2021).
o The strategy aims to work on different levels of the government to enable the
digitalizing process of production, driven by:
❖ Enhancing digital training and education
❖ Achieving the desired economic growth
o The strategy works on two blocks of thematic axes, the:
1. Digital transformation axis:
It compromises:
a. Data-driven economy
b. Connected devices
c. New business models
d. Digital government and citizenship.
2. The enablers of the digital transformation axis:
It compromises:
a.
b.
c.
d.
e.
Network infrastructure and access
Research and development and innovation
Confidence in a digital environment
Education and professional training
International dimension.
As noticed the enablers axis aims to create an ideal and adequate environment to ensure
efficient digital transformation.
 Challenges Brazil face in the digital transformation process:
1. Infrastructure expansion:
o One of the main and crucial challenges Brazil face is infrastructure expansion, this
challenge rises from its huge territorial area and large population.
o The challenge is illustrated in the expansion of fixed and mobile broadband and terrestrial
transport networks.
o The current fixed broadband access is only 40% for households, but it’s increasing with a
decreasing rate, due to the existence of a remote and immense area of Brazil,
accompanied by the high cost of expanding and the low-income of the Brazilian
population
2. Digital inclusion:
The challenge of digital inclusion rises from many factors, as explained by the Brazilian
federal court of Audit, these factors include:
a. Internet inaccessibility: remote areas and distribution problems hindered the digital
inclusion of such citizens.
Of the 4,717 districts of Brazil, 2,012 districts lack Wi-Fi accessibility.
b. High cost of Internet service: as the cost of the internet services in Brazil is
considered one of the most expensive, this restricts middle and lower-class citizens
from being financially capable to tolerate the cost.
c. Digital Illiteracy: one of the main hinders of digital inclusion is the adult and
elderly digital illiteracy, as the mobile ownership is 41% among the adult
population, which does not exceed half the adult population
3. Workforce digital skills and the digital divide:
o Digital illiteracy plays as a huge hinder in the face of digital transformation.
o Digital illiteracy comes as a product of the poor Brazilian education system and
standards, as it is associated with basic educational attainment.
o Furthermore, the inaccessibility of low-income, lower education levels, minorities
and elderly to the internet and ICT technologies creates a massive digital divide
among the nation.
4. Regulatory and institutional framework:
o The absence of regulatory obligations for service providers to cover rural or distant
areas from centers with adequate infrastructure, huge areas still lack appropriate
coverage (Brasília, 2018, p. 17).
o As well, the absence of a regulatory environment that support and facilitate the
attraction of new investments, cybersecurity regulations and mitigate bureaucracy to
spur competitiveness on the national domain.
 Brazil’s potentials and Digital transformation impact on economic growth:
o E-digital plan aims to address the above challenges and work on it with more than 100
strategic actions coordination among the different governmental initiatives.
o Moreover, the EU-Brazil 12-year strategic partnership, which aims to bilaterally
cooperate in developing its ICT sector and digital transformation serves as a huge
potential for Brazil to boost its digital transformation.
o No doubt the Brazilian efforts to harness the digitalization process has its
implications, a study shows that in 2016, the digital economy accounted for 22% of the
GDP, and is estimated to grow of 25.1% in 2021.
o It also points out the potential growth of the digital economy will lead to about a 5.7%
increase in GDP.
o In 2020, the real GDP growth rate reached 2.7% compared to -3.6% in 2015, and one
of the main factors of this growth can be attributed to the adoption and working on
the E-digital strategy (McKinsey).
o Furthermore, Brazil was ranked among the top ten countries in the largest producers of
telecom services (UNCAD, 2019, p. 55).
o It also ranked second in the e-commerce index and fourth in ICT development index
among Latin American countries (UN, 2013, pp. 14-20).
o Even though the internet economy is estimated to be 1.5% to 2.2% (UN, 2013, p. 14),
the Brazilian government is paving its way to become a digital hub in its region, by
highlighting its main challenges and try to overcome it, however, since it’s regarding as a
long-term goal, the evolvement of Brazil into a sophisticated digital economy is yet
to be observed.

Russia
➔ In 2011, Russia initiated the state program “Information society 2011- 2020”, which is a
long term program that aims to transform Russia into an information-driven society.
➔ In 2017, Digital Economy of the Russian Federation program 2017-2025 was developed with
an annual budget of $1.8 billion.
➔ The above-mentioned long-term strategies along with other short- and medium-term
strategies pave the way for Russia into:
❖ adopting digital technologies
❖ harness the regulatory and legal framework
❖ improve R&D, digital skills and education.
 Challenges face Russia in Digital Transformation:
a. R&D and Business Environment Despite the well-developed Russian innovation
infrastructure, the innovation mentality is still far behind.
o This is apparent in the low levels of R&D spending generally and R&D spending in
ICT specifically, low cooperation and links between enterprises and universities to
develop researches, especially in the digital economy field, few numbers of start-ups
due to the low venture capital availability.
o Although Russia climbed the ladder from the 112th place in World’s bank doing
business index in 2013 to reach 35th in 2018.
o The business environment still faces many challenges, for instance, lack of
innovation in the Russian business environment, which can be attributed to:
➔ The high levels of taxation
➔ Low levels of intellectual property rights
➔ High levels of corruption with limited independence of the judiciary branch
(World Bank, 2018a, p. 6).
b. Low Russian regional areas digital inclusiveness another challenge that faces Russia is the
inconsistency in digital adoption among its regional areas.
o As known, Russia enjoys an enormous territory, occupying 77% of Asia and 39%
of Europe.
o It faces a great challenge in:
➔ balancing digital provision among the different regional areas
➔ aside from that, the miss-coordination among the Federal-regional-municipal levels
➔ and disparities in economic development among different parts of the nation not only
hinders the process of digital transformation but also prevent low-developed areas from
aligning effectively to the nation’s plans and strategies
c. Digital illiteracy and culture barriers
o As in most developing countries, the lack of digital skills among its workforce
plays as a crucial barrier.
o In the Russian experience, this can be attributed to the:
➔ The old-fashioned educational system
➔ Vivid in the inflexibility of the educational system: it does not provide necessary
basic skills and experience for youth
➔ Lack of advanced and up-to-date equipment and technologies within Russian
campuses).
o Regarding the cultural barrier, Russian policymakers have always adopted the
centralized/hierarchal approach in governance, accordingly, this exceeds the more
flexible, decentralized, horizontal-cross team synergy that the digitalization process
not only promotes but fully rely on it.
d. Data governance and inefficient data management.
o Digital economy relies massively on data, thus, efficiently managing data within
the economy is required.
o However, Russia has a problem within data governance and management, as the
miss-management among the federal-regional-municipal level created a
duplicative database at different levels of government.
o Self-interest release of data for agencies due to the absence of a legal framework.
o Finally, Russia was supposed to digitize civil registries in 2015; however, the
process was hindered and was not completed till now
 Russia’s potentials and Digital transformation impact on economic growth:
o Despite the aforementioned challenges, Russia is succeeding in the digital adoption
and transformation that respectively was reflected in the economic growth.
o As for the share of the digital economy in GDP reached is estimated to be 3.9% in 2015,
and estimated to rise to 5.6% in 2021 (World Bank, 2018a, p. 12).
o There is another study by Korobey nikova et al. (2019) postulate that by 2025, the digital
economy will account from 8% to 10% in GDP.
o Russia also manifests high potentials in e-government, cyber-security, financial
technology and the agriculture sector.
a. Cyber-security Russia:
displays a huge potential in terms of the cybersecurity industry that places it among the world
leaders. According to the International Telecommunication Union (ITU) Global Cybersecurity
Index, Russia placed 10th, nevertheless, Russia still supports the development of its
cybersecurity industry to fight the increase in cybercrime speculations.
b. Financial technology Russia:
is among the five leading and most sophisticated fin-tech countries in the world, as the
penetration of fin-tech technologies of cities with over 1m inhabitants reached 42% in Russia,
compared to 32% in the USA. Furthermore, the cashless retail payments in Russia about 40%,
actively used by more than 50% of the population.
c. Agriculture sector:
The inclusion of digital technologies in the agriculture sector has boosted its growth, as
agriculture exports rose from $8, 3 billion in 2007 to reach $20, 7 billion in 2017, a growth
rate of nearly 60% in a 10-year time. As large farms utilize satellites to control farm machinery
and identify pests and diseases, soil monitors and water management. The existence of:
1. A platform that facilitates the acquirement of farm equipment and monitors the
farmer’s need.
2. Sophisticated mobile applications that help in the farm’s planning and monitor the
harvest and production tools

South Africa
July 5, 2019 marks the first South African digital economy summit addressed by President Cyril
Ramaphosa. The South-African president placed the first block toward the beginning of the
South-African digital transformation (GOV. ZA, 2019).
 Challenges face South Africa in Digital Transformation:
a. Lack of confidence and required digital skills.
o The traditional educational system of South Africa, which is based on memorization,
with nearly no aspect to encourage innovation and creativity, hinders the digitalization
process extensively.
o Moreover, the absence of digital technologies in schools, especially in rural areas, in
addition to, the absence of the minimum digital skills required for school teachers, not
only prevents the nation from developing but increase the inequality gap further.
o Poverty and low income prevailing in South Africa create a resisting tendency for
them to try anything new and restricts their innovative skills and risk-taking
tendencies.
b. Accessibility issues Lack adequate digital infrastructure and the low levels of internet
penetration that reach 28% in 2017, due to the high prices of internet services and low
coverage areas (TechSalon, 2018, p. 2).
o The fixed broadband was below 3% in South Africa, which is extremely low.
o The high cost of infrastructure and the low government investments in developing it
represents a great challenge for South Africa.
c. Lack of coordination in policy and regulatory framework
o Unfortunately, the policy and regulatory framework in South Africa is highly
neglectable, as limited and insufficient monitoring is applied on programs and initiatives
that support its implementation.
o Moreover, the government does not have a specified and detailed agenda or specialized
departments that carry on such actions.
o Furthermore, the existing policy environment gap especially in cybersecurity and
data privacy massively hinders confidence and trust in digital adoption of different
economic sectors (World Bank, 2018b, p. 8).
o Other challenges face South Africa faces is:
➔ The narrow digital customer base
➔ Modest R&D spending.
➔ High levels of unemployment that reached 25%, with youth unemployment
reaching 50 % which hindered economic growth since 2012.
➔ Inadequate electricity supply and overall weak business confidence restricts private
sector investment and FDIs inside the country
➔ In addition to more intertwining and complex challenges
 South Africa’s potentials and Digital transformation impact on economic growth:
o The use of digital technologies in South Africa can generate $12 billion, uplifting GDP
by nearly 3%. This lies in the ability of South Africa to cooperate and coordinate among
different 18 business levels to develop digital-based innovations that spur on the economy
wheel and lead to economic growth.
o Entrepreneurship mentality in South Africa is evolving, strong startup communities
started to emerge, with the recent rise of government support and initiatives to
programs that benefit digitally-enabled startups as:
➔ The R&D tax incentives: that aims to deduce the cost of R&D from the companies’
taxes.
➔ Launching the SA SME fund in March 2019: that aims to invest R1,4 Billion into
SMEs.
➔ Other initiatives address the high-cost internet services as to provide Wi-Fi hotspots and
free Wi-Fi by different governmental and non-governmental agencies.
o Development of Intellectual property right act (IPR ACT) to provide protection to the
investors, companies and boost the R&D involvement and protection (World Bank,
2018b, pp. 7-8).
o Despite all of these efforts, the large hinder that stands as a block in front of the
digitalization process in South Africa is the weak regulatory and monitoring
framework, as all these initiatives, though it is still recent, have not shown any
development or evolvement in the digital adoption or growth due to the weak and
unclear policies or ineffective implementation.