Concept and essence of digital

economy. Foreign experience of the

digital economy

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 Digital economy terminology, different approaches,
Goal 2 problems and solutions

Goal 3 Development history of digital economy, foreign experience.

Plans

Goal 4 Digitization is the basis of sustainable economic growth

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 Digital economy

What is Digitization?

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The essence of digital economyin socio-
economic processes
 Outline

1. Digitalization
2

2. Digital
3
Economy

3. Prospects and Challenges

4. Way Forward

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 Evolution of Global Internet Traffic

The internet and connected devices have become a central part of

most individuals’ and firms’ everyday life across the world.

| 2022 |

!
By 2022, global IP traffic is projected to
exceed 150 thousand GB per second
150,700
+ GB per second
More and more people coming online for the
first time

+
Increase in mobile and fixed broadband
subscriptions

| 2017 |

+
Expansion of the Internet of Things (IoT)
46,000
| 2007 | GB per
| 2002 | second
100
2,000
GB per GB per second
second 11
UNCTAD
 Measuring Digital Economy

 Digital transformation today affects all spheres of life. However, defining the digital economy is not a
straightforward task.

“Measuring the digital economy and related value creation and capture is fraught with difficulties. Firstly,
there is no widely accepted definition of the digital economy. Secondly, reliable statistics on its key
components and dimensions, especially in developing countries, are lacking.” (UNCTAD, 2019)

“There is currently no internationally agreed definition of the Digital Economy overall, and this has been
identified as one important barrier to meaningful and comparable measurement.” (OECD, 2020)

 Comprehensive tools are needed to assess the level of transformation into the digital economy and the
factors affecting it.
 A combination of three factors is key to the data-driven digital economy;
• Availability of ICT infrastructure and access,
• High level of ICT usage, and
• Capability to use ICTs effectively

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 Definition of Digital Economy

“The Digital Economy incorporates all economic activities reliant on, or significantly enhanced by the use of
digital inputs, including digital technologies, digital infrastructure, digital services and data.
It refers to all producers and consumers, including government, that are utilizing these digital inputs in their
economic activities.” (OECD, 2020)

DIGITALIZATIO
N
• Conversion of • Economic
information into • Application of activities using
digital form digital digital inputs
technologies
DIGITAL
DIGITIZATION
ECONOMY

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Supply & Demand Sides of Digital Economy

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 Size of Global Digital Economy

| DIGITAL |USA & China| | Global employment in the

ECONOMY | ICT sector |
40%
4.5- of World Total 39 million in
Value Added in
15.5% ICT Sector 2015
of World GDP
34 million in
2010
| Digitally deliverable service exports, 2018 |
| ICT sector in total employment |
$2.9 50% 2% in 2015
Trillion Global Services Exports

1.8% in 2010

Source: UNCTAD (2019) 19

 Digital Economy in OIC Countries

 Muslims represent an important consumer base of around 2 billion people

 Data on Contribution of Information and Communication Technology (ICT) to the national economy doe
not exist for the majority of OIC Countries!
 Available statistics on share of ICT in GDP show a great degree of variation among member countries.
Malaysia (18.3%, 2018); Nigeria (13.9%, 2019); Morocco (5-6%, 20..?); UAE (4.3%, 2017); Egypt (4%,
2018/19); Indonesia(3.76%, 20…?);Qatar (2.7%, 2017)
 Share of ICT goods in total goods exports is another important indicator to gauge the economic
importance of digitalization. Bahrain (0.4%); Benin (0.1%); Brunei (0.2%); Egypt (2.4%); Gambia (0.1%);
Indonesia (2.9%); Jordan (2.0%); Malaysia (33.1%);United Arab Emirates (7.1%)

 Islamic Digital Economy Muslim consumers value to the global digital economy is estimated to be worth
US$277 billion (DinarStandadrd)
 Most of it is e-commerce spending by the consumers
 Turkey, Malaysia, Egypt and Indonesia are the top countries w.r.t. Muslim digital commerce spending

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 Developments in ICT Sector-I

Mobile-cellular telephone 108.0

100 subscriptions
Individuals using the Internet
Fixed-telephone subscriptions
Active mobile-broadband 83.0
80 subscriptions
Per 100 inhabitants

60
53.6

40

20 14.9
12.1
0
200 200 200 200 200 200 200 200 200 201 201 201 201 201 201 201 201 201 201
1 2 3 4 5 6 7 8
Note: * Estimate 9 0 1 2 3 4 5 6 7 8 9*
Source: ITU World Telecommunication /ICT Indicators database 21
 Developments in ICT Sector-III
United Arab United Arab 240
201 Emirates (2)

Active Mobile-broadband Subscriptions, 2019

Emirates (3)
Mobile Cellular Telephone Subscriptions, 2019 174 Brunei 132
Turkmenistan (17) 163 Darussalam 128
(18) 127

(per 100 inhabitants)

156
(per 100 inhabitants)

Côte d'Ivoire (28) 145 Qatar (21) 125

100 54
Somalia (197) 49 Syria (187) 12
48 6
Mozambique (200) 48 Niger (198) 4
41 3
Somalia (201) 2
Niger (207)
(World Ranking)
41 (World Ranking)

Individuals Using the Internet, 2019 (per 100 inhabitants)

99.7
99.7
99.5
99.2
95.7
Digital Divide
Large differences
(World Ranking)

40.8
among OIC
8.5
6.5
5.3
3.9
2.0

countries

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Source: Calculations based on ITU
 Internet Users

| 2019 | Internet Users, 2010 Internet Users, 2019

(Share in Total) (Share in Total)
3.94
12%
billion 19%
active internet users 24%
38%

50%

57%

51.3%
of the global Developed Non-OIC Developing
population OIC

 More and more people in the developing world access to the internet
over time.
 This process is somewhat faster in OIC countries than in the other
developing countries.
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 Increase in Internet Users in OIC Countries
| 2019 |
Number of Internet Users (millions), 2010
765 129,062, vs. 2019
972
102,654,
million 677 84,404,7
66,176,8
12 58,043,5 61,718,4
active internet users
44 46,315,3 57,505,2
39,628,7 65
in OIC Countries
26,408,2 44 15 32,917,8
06 17,876,4 96 28,800,6
18,227,8 11,728,2
95 68 19 11 54
38
530
Indonesia Nigeria Iran Egypt Turkey
million
new internet users
in 2010-2019

Internet Users per 100 Inhabitants, 2010 From to

vs. 2019 15 users 41 users

95.7
92.4

in 2010 in 2019
81.9
70.0
56.6

55.7
54.7

54.1

50.3

49.2
41.0

40.8
Additional
35.8

31.6

25.8
26 users
15.9

15.0
6.5
Oman Saudi Arabia Iran Kazakhstan Djibouti OIC per 100 inhabitants
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 Mobile and Broadband Download Speed (Mbps)
| September 2020 |
Mobile
36 Mbps
• Only 10 out of 39*
121
OIC countries above
China 113
the global average.
Global Average 109 • Some member
Mobile Download Qatar 93
countries (Sudan,
Speed 80 Palestine,
Norway 79 Afghanistan) have a
76 mobile download
Canada 76 speed below 10
76 Mbps.
Australia 72
0 20 40 60 80 100 120 140

• Only 4 out of 52* OIC

| September 2020 | Fixed Broadband countries above the
227 global average (UAE,
86 Mbps Hong Kong
193
211 Kuwait, Malaysia, and
Qatar).
Global Average Switzerland 179 • Half of OIC countries
Fixed Broadband 175 have download speed
Download Speed France 173 below 20 Mbps.
162 • In Turkmenistan,
Monaco 162 Yemen, and Algeria,
162 the download speed
United States 161 is below 5 Mbps.
0 50 100 150 200 250 25
Source:
 Risks & Challenges

 Although digitalization has the potential to support development, the outcomes are not likely to
benefit all stakeholders equally.
 Even if individuals, firms and countries do not − or only partially − take part in the digital economy,
they can still be adversely affected indirectly.
• Workers with limited digital skills
• Local firms competing with digitalized domestic and foreign ones
• Various jobs lost due to automation
• Cyber security (cyber-attacks, viruses, and fraud) & privacy issues
• …

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 Major Obstacles

 Limited awareness of e-commerce relevance among policymakers and lawmakers, consumers and
businesses.
 Limited Internet access in rural/remote areas and costly access to fixed and mobile-broadband Internet.
 Overreliance on cash-based transactions, plus low access to and limited experience with online
payments and the use of credit cards.
 Inadequate facilities for physical delivery of online purchases.
 Weak legal and regulatory frameworks, including protection of consumers online.
 Inappropriate education for the digital economy.
 Lack of business development skills and adequate e-commerce skills for MSMEs.
 Unsuitable financial mechanisms for start-up enterprises to engage in e-commerce.
 Persistent barriers for women and youth to engage in e-commerce, preventing the leveling of playing
fields through increased inclusivity.
 Lack of statistical data on electronic commerce.

Source: UNCTAD (2019) 27

 Focus Areas for Digital Future
Innovation &
Empowering
Infrastructure Technology Jobs & Growth
Society
Adoption

Digital R&D in
Investment in
Information ICT Investments
Broadband Literacy Industries

Focus on Mobile Narrowing the Supporting Jobs in the ICT

Broadband Digital Divide Business R&D Industries

Higher Internet People’s use of the ICT Use by

E-Commerce
Speed Internet Businesses

Prices for
Mobile Money
Connectivity

Household Access
to Computers & E-Government
Internet
Source: Adopted from OECD (2018, 2020) 28