5000 - The Digital Economy - Lecture 2 Flashcards
Three basic decisions made by all economies
What to produce
How to produce it
Who will consume it
Four main types of economic systems
Traditional
Command
Mixed
Market
What type of economic system does most of the West adhere to?
Mixed System - Some private, some public
What is the definition of an economy?
A system of making and trading things of value, divided into goods and services through ab assumed medium of exchange like the finance system
What is the definition of the digital economy?
All the economic processes and activities that
are based on digital technologies. It acts differently from the internet economy which is based on internet connectivity
Don Tapscott 12 Characteristics of the digital economy
- Knowledge
- Digitization
- Virtualization
- Molecularization
- Internet Working
- Disintermediation
- Convergence
- Innovation
- Prosumption
- Immediacy
- Globalization
- Discordance
Examples of sectors in the Digital Economy
- Data Centres
- Websites
- E-sales - ITunes
- E-Banking
- E-Learning
- Working from home
- e-payments
- Automation and AI
Pros of the Digital Economy
- More info and choice
- Saves time
- Reduced costs for business
- Greater Personalisation
- Lower barriers to entry
- Greater Flexibility in work
- Benefits for developing world
Cons of the Digital Economy
- Tech giants gain monopoly powers
- Less Community
- Addictive nature of tech
- Privacy concerns
- Bypassing of labour laws
- Disrupts traditional economy and jobs
- Potential environmental cost
The Sharing Economy Definition
The sharing economy is a socio-economic system built around the sharing of resources. Involves a way of purchasing goods and services that differs from traditional business model of companies
A company owns the customer-supply interface and mechanism. E.g Uber owns no cars but is the biggest taxi provider, AirBNB is the biggest accommodation provider but owns no property
Examples of the Sharing Economy
- Peer-to-Peer Lending
- Crowdfunding
- Renting
- Ridesharing
- Reselling and trading
Economic Sectorization example
Sectorization is based on economic objectives, functions and behaviour of entities
An example is the private, public and voluntary sector
Private Sector
Run by individuals and companies for profit
Public Sector
Run by the government completely or in part
Voluntary Sector
Charities and other non-profit organizations
Primary Sector
Revolves around the extraction of raw materials or natural resources from the land. So Farmers, Oil Companies, Mining Companies etc
Secondary Sector
Revolves around manufacturing, this involves taking from the primary sector and making new products. So, food production, building and so on
Tertiary Sector
Revolves around providing a service . So, banks, internet providers, cinemas etc
Quaternary Sector
Revolves around providing information services such as computing and IT
The Service Sector
The largest sector in the UK, contributing to over 80% of our GDP. Services include retail, banks, hotels, real estate, media, electric and so on
The Retail Sector
The sale of goods to the public for use of consumption rather than resale. Made up of shops, department stores, supermarkets, markets, internet retailers and so on
The Grocery Sector
A sub section of the retail sector. Dominated by the likes of ASDA, Tesco and so on. Estimated to be worth around 190 billion pounds in trade
The Finance Sector
Divided into Banking, Accountancy and Finance, Financial Planning, Insurance, Investments and Pensions and Real estate. Involves companies such as PriceWaterhouseCoopers (PWC) and others. Worth about 132 billion. And London is the financial hub of Europe
Digital Economy Terminology - Don Tapscott
- Knowledge
- Digitalization
- Virtualization
- Molecularization
- Integration / Internet Working
- Disintermediation
- Convergence
- Innovation
- Presumption
- Immediacy
- Globalization
- Discordance
