AI and the Digital Economy

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The Digital Economy and the AI Revolution

Eclipsing traditional economic activities, the burgeoning digital economy serves as a thriving marriage of digital computing technology and commerce. This rapidly expanding economy heralds a new era of business, notably influenced by the increasing adoption of information and communication technologies (ICT) and the Internet of Things (IoT). This convergence transforms dual-seemingly separate realms into a vast interconnected entity.

Over the years, the evolution of the digital economy made an intelligible embedding of digital services and devices into everyday consumer products possible, rendering technology more accessible and integrated into our daily lives.  

The Dominant Digital Technology in the Global Economy

Forecasts from the World Economic Forum (WEF) suggest that digital technology’s influence on the global economy will expand exponentially. Over the next decade, digital technology is set to account for a staggering 70% of the global economy. 

The worldwide COVID-19 pandemic has significantly accelerated this digital surge, necessitating a shift to digital means like never before. Online work was bolstered as a side effect of efforts to combat the virus. 

Consequently, businesses that provide and support Internet systems have benefited from this digital reliance and increased online workforce. 

The Advent of AI into the Economy

The ongoing digital transformation of the world’s economy sets off a chain reaction. It’s revolutionising business operations and consumers’ access to goods and services. Despite the conveniences provided, the transformation has sparked much debate over varying issues, such as privacy rights, taxation, and competition.

This controversy triggered calls for the establishment of regulations on a national and international level to provide a measure of control over the rapidly growing digital economy.

Advancement of AI in the European Digital Single Market 

Following the 2008 financial crisis, the European Commission (EC) introduced the Digital Single Market (DSM) initiative. Despite high hopes for a significant transformation of the Single Market, the initiative did not achieve its full potential due to the crisis. 

The situation with Artificial Intelligence (AI) is similar, despite wide-ranged adoption throughout varying initiatives. The lack of proper coordination hindered its permeation. However, with the digital ecosystem constantly expanding, the necessity for a general regulatory framework becomes clearer and more critical. 

The Growing Importance of AI in the Digital Economy

In its simplest form, AI is a group of technologies enabling machines to mimic human cognitive capabilities. Over the past two decades, AI technologies have grown and developed phenomenally, significantly impacting the digital economy.

Technologies like Machine Learning (ML), Big Data/Analytics, Text/Voice/Speech Recognition, Natural Language Processing, Computer Vision, Expert Systems, and Robotics have all significantly contributed to the evolution of AI and, consequently, its application within the digital economy. 

How AI is Transforming Key Sectors in the Economy

AI has quickly become the driver behind key digital economy sectors, including eCommerce, the financial sector, supply chain, logistics, and manufacturing. In eCommerce, AI’s impact is seen in how automation assists businesses in tracking and critically analysing global market performance. 

Predictive software, which considers key metrics, past performance, and current sales data, empowers businesses to strategize effectively for future results.

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