The Digital Economy or What Next in 2020 - Case Study Example

The Digital Economy: What Next in 2020? Introduction The emerging digital economy has brought about significant changes in how people work, live, communicate and transact business. The continuous technological innovations particularly in information and communication technologies are bound to bring about a digital revolution that will inevitably change different spheres of the economy and life in general. By 2020 a lot is expected to change. This essay seeks to critically examine three socio-economic aspects that are bound to change between now and 2020 due to advancements in the digital economy. The three aspects that will be examined in this paper include; the labour market, the environment and people’s lifestyle. Moreover, this paper will highlight the positive and negative impacts of the changes highlighted in the three areas. The findings of this essay will be based on a critical review of relevant literatures such a books, peer reviewed journals, online articles and newspapers. The Labour Market The use of new information and communication technologies (ICT) has resulted in significant changes in the labour market over the last decade. The increasing use of the internet and its wide range of applications have fundamentally changed how organizations are structured and how labour is recruited, its productivity and compensation (Sui & Rajeski 2002).. In the 21st century, many organizations are conducting employee recruitment online, a human resource practice that initially contributed to lower unemployment in economies that were characterized by the intensive use of ICT (Scholz 2012). In the new digital economy, jobseekers apply for jobs online speeding up the process of matching labour demand and supply by reducing the time it takes for organizations to recruit labour (Campbell 2002). Another effect of the increased use of the internet is that it has significantly changed how employees work in the 21st century. Over the last decade, work-related travel has increasingly been substituted by information technologies creating a virtual workplace. Facilitated by the internet, more people are telecommuting or working from remote locations or from home therefore reducing the need to physically travel to the workplace (Mathews & Williams 2005 Campbell 2002). It has been estimated that approximately one out of every five workers globally telecommute frequently and that an estimated 10 percent work from home, a trend which is projected to continue (Reaney 2012). The increased adoption of ICT has allowed businesses and organizations to outsource critical functions such as customer support to employees in distant geographical locations through call centers (Scholz 2012). There are three feasible scenarios for how the labour market will look like by 2020. The increased digitization of labour in the new digital economy may spur increased wealth creation due to increased labour productivity. This may result in lower unemployment rates globally due to technological advances. Another scenario is that the digitization and automation of labour may render manual labour skills obsolete and result in massive global unemployment as more and more people are laid off work (Campbell 2002). This will be characterized by lean and efficient businesses which will aim to cut costs by restructuring themselves and using ICT applications to streamline their business processes. Another feasible scenario for the global labour market is a growing gap between the incomes of employees in underdeveloped economies and developed economies as the latter increasingly benefit from technological advancement and gain leverage over the former (Campbell 2002). As a result, many economies will witness the influx of foreign employees who will earn higher incomes due to their ICT skills proficiency (Scholz 2012). Of the three scenarios depicted, the first is the most likely to be the case in 2020. While there are concerns over the replacement of human beings with technology in the labour market, the increased adoption of ICT has the potential to unlock and create wealth by opening up the global market and providing products and services efficiently at a lower cost by enabling entrepreneurs in different parts of the world to use ICT innovatively (Kehal & V.Singh 2005). The increased use of the internet will foster job creation in the private sector by unlocking the potential The Environment The increased use of the internet and ICT applications in the digital economy has also had a significant impact on the environment in the past decade. The impact has been both positive and negative for the environment. For example, the increased adoption of e-commerce or online trading has had positive environmental impact by making the production and delivery of goods to consumers more efficient and reduced the need for media such as posters, magazines and catalogues (Sui & Rajeski 2002). In addition, the internet has transformed homes into shopping malls as consumers can shop for goods and services without physically visiting shopping malls and make orders online. This and telecommuting reduces carbon emissions due to transport and also minimizes the consumption of scarce fossil fuels (Miller & Wilsdon 2001). However, the digital economy has also had adverse environmental consequences. As an illustration, participation in e-commerce requires both businesses and their consumers to purchase computers, mobile phones and other devices with internet capabilities. These devices become rapidly outdated as they are replaced with newer and faster versions and the result is an ever increasing stock of non-biodegradable electronic waste (e-waste) which poses an environmental challenge in disposal and recycling. There are three hypothetical scenarios for how the digital economy will impact the environment by 2020. The growth of e-commerce would make production and delivery of goods more efficient which may reduce the need for large shopping malls, banks and other physical facilities and contribute to a lower carbon footprint by minimizing carbon emissions due to construction, transport and energy use (Sui & Rajeski 2002). Another scenario is that as industries continue to innovate technologically, they may demand even more resources such as tin, copper and plastic and glass to manufacture laptops, mobile phones and televisions thereby increasing carbon emissions and accelerating global warming. This problem may be compounded by the growing mass of e-waste which will be costly to dispose as it cannot be efficiently recycled. Alternatively, another scenario is that pollution and carbon emissions would increase as the digital economy encourages a consumerist culture which would not only necessitate the consumption of more energy and resources but also result in more waste. Of the three hypothetical scenarios, the second and the third are most likely to be the situation in 2020. The unprecedented growth of e-commerce is expected to stimulate even more consumption which would offset the positive environmental impact of the digital economy. Evidence has shown that even the most technologically advanced cities do not have significantly lower pollution levels as compared to others indicating a move towards a consumerist culture which is expected to have a significant carbon footprint (Miller and Wilsdon 2001). Increased production and consumption are expected to contribute to environmental degradation unless environmental policies are put in place to regulate growth and mitigate the impact of these activities. Health and Lifestyle The digital economy has had a profound impact on people’s health and lifestyle choices over the last decade. The proliferation of the internet and the growth of e-commerce have provided opportunities for marketers to use the internet as an advertising platform to target consumers with an increasing variety of products and services which affect their consumption patterns. For example, fast food, soft drink, fashion and entertainment marketers have seamlessly integrated their advertising campaigns into websites popularly frequented by the youth (Nestle 2002). Food and soft drink marketers have increasingly marketed food and beverages high in fat and sugar to consumers resulting in a global epidemic of obesity and increasing the risk of developing lifestyle related complications such as cardiac arrest and diabetes (Story & French 2004). The internet has also changed how people communicate as the evolution of social networks has seen many people increasingly prefer internet chatting, text messaging and e-mailing to physical contact (Kehal & V.Singh 2005). As a result, people can instantly communicate with others anywhere on the globe and share or access information through their mobile phones. One of the scenarios for lifestyle changes due to the digital economy is that by 2020, the world will be faced by a global epidemic of obesity, diabetes and the increased risk of complications such as hypertension as more people respond to fast food advertisements and deviate from healthy eating habits. Alternatively, the increased access to information about health as social networks and other online communities may stimulate lifestyle changes and result in a reversal of consumer trends towards making healthy lifestyle choices. Another scenario is that by 2020, technological advancement will make it no longer necessary to commute to work (as earlier discussed) allowing people to work from home and network thereby improving the work-life balance. Of these three hypothetical scenarios, the first is the most likely for 2020. As the internet continues to penetrate more societies and multinational organizations access more markets, consumption patterns will be negatively affected as more consumers demand for fast food out of a need to identify with other developed societies and due to the convenience that it promises (Nestle 2002). References Ayres, R.U. & Williams, E. (2004). The Digital Economy: Where do we stand? Technological Forecasting and Social Change 71(4): 315-339. Campbell, D. (2002). Can the digital divide be contained? International Labour Review 140(2): 119-141. Kehal, H. & Singh,V. (2005). Digital Economy: Impacts, Influences and Challenges, Hershey, Pennsylvania: Idea Group Publishing. Matthews, H. and Williams, E. (2005).”Telework Adoption and Energy Use in Building and Transport Sectors in the United States and Japan. Journal of Infrastructure Systems 11(1): 21-30. Miller, P. and J. Wilsdon. (2001). Digital futures: An agenda for sustainable digital economy. Corporate Environmental Strategy 8 (3): 275- 280. Nestle, M (2002). Food Politics: How the Food Industry Influences Nutrition and Health. Los Angeles: University of California Press. Reaney, P. (2012). ‘About one in five workers worldwide telecommute: poll’. Reuters, Jan 24. Retrieved on November 18, 2012 from < http://www.reuters.com/article/2012/01/24/us- telecommuting-idUSTRE80N1IL20120124> Scholz, T. (2012). Digital Labor: The Internet as Playground and Factory. New York: Routledge. Story, M. & French, S. (2004). Food Advertising and Marketing Directed at Children and Adolescents in the US. International Journal of Behavioral Nutrition and Physical Activity1(1): 1-17. Sui, D. & Rajeski, D. (2002). “Environmental Impacts of the Emerging Digital Economy: The E- for-Environment E-commerce?” Environmental Management 29(2): 155-163. Read More