GDP Cannot Explain The Digital Economy

  • ID: 3802208
  • Report
  • Region: Global
  • 23 Pages
  • Nakono
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The world’s primary measure of growth is largely irrelevant for the most important part of economy
The engine of the digital economy is the technology used to deliver finished digital services to businesses and consumers.

Comprising connected devices, broadband infrastructure, cloud software, internet-based services and many other markets, the societal benefits that this technology delivers is measured by proxy, by adding up the total spending by businesses and consumers on finished digital products and services.

Our analysis is that the digital economy could already account for 20% of the real value delivered by the global economy, which is dramatically different to the consensus view which is that the digital economy currently accounts for just 5% of global GDP.

This report provides a clear explanation and compelling examples and analysis for why the value benefits delivered by the digital economy cannot be correctly measured by using conventional economic measures such as spending by consumers or businesses. or GDP and what this implies.

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1. Executive Summary

2. Introduction
- What is the digital economy?
- Why are policy makers fixated on GDP & GDP growth?

3. GDP Explained
- How is GDP defined?
- Where did GDP come from?

4. Known Limitations of GDP
- GDP is merely a proxy for societal prosperity
- GDP excludes social factors
- GDP is calculated using a methodology defined in the 1940s
- GDP cannot measure work that is done ‘outside’ of the economy
- GDP assumes that planetary resources are infinite and the cost of pollution is zero

5. Counter argument: everything is fine

6. Using GDP To Measure The Digital Economy
- Example Industry Segments
- Recorded music
- eCommerce
- Encyclopaedia
- Photography
- Other Examples

7. Analysis: How Big Is The Problem?

8. The True Value of the Digital Economy
- Conventional estimates
- More realistic estimates

Authors:
Dr Dave Taylor
Andrew Sheehy
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