Untitled-7

WORLD

Of
A NEW DRIVE OF DEVELOPMENT
1
What Is Digital
Economy?

Unicorns, transformation and the 13
internet of things

The 4 Things It Takes to
Succeed in the Digital
Economy 16
Data Is The New

Oil Of The Digital

Economy

Special Issue: 29
Innovation and Skills in
the Digital Economy

Magazine Edition July 2020

DIGITAL CONTENTWORLD 2
0
o ECONOMYf 2
0
OVERVIEW

21what is digital economy

1Unicorns, transformation and the

internet of things
2020 Global Blockchain
Innovation & Development Digital
Economy Ecology Summit Held
in China, Guangzhou
The Digital Economy Is Advisor
Pn. Sharifah Rabeah Binti
3 23Becoming Ordinary Best To
Syed Taha
Understand It
25Digital Economy: How is Chief Editor
Mohamad Al Hafis Bin
7digitalization changing global
Mohd Sila
competitiveness and economic
Editor
27prosperity? Kevin Yong
7o Accelerating Malaysia’s digital
Designer
21economy Ibrenny Ibon

Malaysia’s digital economy now Informational
contributes one fifth to GDP Elitah Linggam

Traditional banks are struggling Publisher By
to stave off the fintech revolution COcom creative Sdn Bhd,
9What a ‘digital first’ government The Square, Jaya One,72A
Jalan S2 , Seremban 70300
29would look like
KNOWLEDGE ISSUE Negeri Sembilan

11Three Challenges Of MeasuringSpecial Issue: Innovation and Printed By
Skills in the Digital Economy CLASSIC OFFSET PRINT
31The Digital Economy
After 20 Years, It’s Harder to SDN BHD
13The 4 Things It Takes to Succeed Ignore the Digital Economy’s no. 11 Jalan Alfa Impian 2,
Dark Side Taman Perindustrian, 43000
in the Digital Economy
The Industries That Are Being Balakang, Selangor
33NEWS Disrupted the Most by Digital

16 35Data Is the New Oil of the DigitalThe digital economy is no
leveler, it’s a source of inequalty
Economy
The Indutries That Are Being
17 38Digital economy and tourism Disrupted the Most by Digital

impacts, influences and HOW?
challenges
19 41Bitcoin halving Q&A: what it’s all

about and what it means for the
cryptocurrency
How Basic Income Can Solve
One Of The Digital Economy’s
Biggest Problems



OVERVIEW

What Is Digital Economy?

Unicorns, transformation and the internet of things
By Kevin Yong

he world as we know it is continually changing, and one of the fundamental
drivers is digital transformation. At its core, digital transformation isn’t about internet
“unicorns.” It’s about using the latest technology to do what you already do – but better.

The global economy is undergoing a digital transformation as well, and it’s
happening at breakneck speed. So, what is the digital economy? It’s the economic
activity that results from billions of everyday online connections among people,
businesses, devices, data, and processes. The backbone of the digital economy is
hyperconnectivity which means growing interconnectedness of people, organisations,
and machines that results from the Internet, mobile technology and the internet of
things (IoT).
The digital economy is taking shape and undermining conventional notions
about how businesses are structured; how firms interact; and how consumers
obtain services, information, and goods. Professor Walter Brenner of the University of St. Gallen in
Switzerland states: “The aggressive use of data is transforming business models, facilitating new
products and services, creating new processes, generating greater utility, and ushering in a new
culture of management.”

Recently, TechCrunch, a digital economy news site, noted, “Uber, the world’s largest taxi
company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content.
Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation
provider, owns no real estate… Something interesting is happening.” What is it about these companies
that allows them to re-imagine the traditional boundaries and value proposition of their industry?
What can these young companies teach you about leading a digital transformation in your industry?
How will you adapt to the emerging fluidity found in traditional roles?


1

There are four fundamental areas of digital transformation central to business
success in the digital economy:

1. Future Of Work


People regularly work from different offices, their home, or a local coffee shop. While where we
work has changed, we all expect the same level of connectivity experienced in the physical office. The
emergence of this flexible, global enterprise requires organisations to manage a dynamic ecosystem
of talent and enable next-generation digital business processes that prove to be effective, even when
distributed across various places and time zones.

2. Digital supply networks

While the global middle class is expected to expand threefold by 2030, there is increasing pressure
on essential business resources, which are growing at a slower rate of 1.5 times. The answer to this
mismatch lies in how enterprises securely share data in real time to enable next-generation commerce
applications to thrive. The digitisation of everything is creating new intelligent digital networks of networks
that fundamentally change the way commerce is managed, optimised, shared, and deployed

3. Customer experience

In the digital economy, all customers – business-to-business as
well as business-to-consumer alike – want to interact with businesses
when and where they want and in a fashion that is most convenient
for them. Additionally, customers desire engagement with
brands through experiences that are seamless, omnichannel,
direct, contextual, and personalised.

4. The Internet of Things (IoT)

As sensor prices continue to drop, we are on the
cusp of an era where everything can be connected
– people, businesses, devices, and processes – to
each other. The melding of the physical and digital
world brings every asset into a digital domain where
software dominates. When an organisation can
understand its physical and digital asset inventory
at any given moment, it can operate with precision
previously unimaginable, paving the way for the
ultimate lean enterprise. This will not be a nice-to-have
differentiator, but an imperative for any digital business
within the next two years.

2

OVERVIEW The Digital Economy
Is Becoming Ordinary.
Best We Understand It

By Kevin Yong

The digital economy includes small holder farmers being able to access finance on a mobile device without
having to go to a bank.

he digital economy has been getting a lot of attention, with increasingly strong headlines offering
apocalyptic as well as breathtakingly exciting scenarios. Some warn of job losses due to automation,
some wonder at the things digital technology can do. And then there’s real scepticism about
whether this will translate into delivering to people who need it most.

With all of this discussion, however, there is seldom an explanation of what the digital
economy actually is. What makes it different from the traditional economy? Why we should care
about it? The digital economy is a term that captures the impact of digital technology on patterns
of production and consumption. This includes how goods and services are marketed, traded and paid for.
The term evolved from the 1990s, when the focus was on the impact of the internet on the economy. This
was extended to include the emergence of new types of digitally-oriented firms and the production of new
technologies.

Today the term encompasses a dizzying array of technologies and their application. This includes
artificial intelligence, the internet of things, augmented and virtual reality, cloud computing, blockchain,
robotics and autonomous vehicles. The digital economy is now recognised to include all parts of the
economy that exploit technological change that leads to markets, business models and day-to-day
operations being transformed. So it covers everything from traditional technology, media and telecoms
sectors through to new digital sectors. These include e-commerce, digital banking, and even “traditional”
sectors like agriculture or mining or manufacturing that are being affected by the application of emerging
technologies.



3

Understanding these dynamics has become non-negotiable. The digital economy will, soon, become
the ordinary economy as the uptake – and application – of digital technologies in every sector in the world
grows.I have been part of a team of researchers looking at what this means for a society like South Africa.
In particular, we have been focused on looking at what the proliferation of the digital economy means for
inclusion – making sure that everyone can access it – and economic opportunities.

Need clarity on what this
multifaceted phenomenon is:

• The Digital Core
• Digital Versus Traditional

The Digital Core

At the centre of the digital financing) to produce and then
economy is a ‘digital core’. sell crops to, say, processors or
This includes the providers directly to consumers. Today
of physical technologies smallholders can obtain
like semiconductors and financing through their
processors, the devices mobile phones from digital
they enable like computers financial services providers
and smartphones, the rather than physically visiting
software and algorithms which a bank. These digital financial
run on them, and the enabling
infrastructure these devices use services are able to assess the
like the internet and telecoms risk of lending to the farmer by
networks. building a profile using AI algorithms
in conjunction with alternative data
This is followed by ‘digital providers’. sets, such as mobile phone usage or satellite
These are the parties that use these technologies farm imagery.
to provide digital products and services like
mobile payments, e-commerce platforms or Then there are the mobile applications
machine learning solutions. Lastly, there are the that can help farmers produce better crops. They
‘digital applications’. This covers organisations can provide advice on the best time for planting,
that use the products and services of digital soil quality and dealing with pests. It means that
providers to transform the way they go about a farmer no longer has to rely on face-to-face
their business. Examples include virtual banks, advice from friends or agro-dealers. Another
digital media, and e-government services. example in the agriculture arena is the ability of
farmers to rent tractors. Known as asset-sharing
A concrete example helps paint the platforms, these enable farmers to gain access
pictures. Consider a typical agriculture value to a tractor they wouldn’t ordinarily be able to
chain: a smallholder farmer needs inputs (like afford.

4

Digital Versus
Traditional

So what makes the digital economy different to purchases in a brick-and-mortar store using
the traditional economy? cash, no-one was keeping an account of our
Firstly, digital technologies allow firms personal consumption or financial transactions
to do their business differently as well as more on a large scale. Now, ordering online and
efficiently and cost-effectively. They also open up paying electronically means that many of our
a host of new possibilities. Take navigation apps. consumption and financial transactions generate
No team of people would ever be able to provide electronic data which is recorded and held by
real time, traffic-aware navigation in the way that someone.The collation and analysis of this data
smartphone apps do.This means that products provides enormous opportunities – and risks – to
and services can be offered to more consumers, transform how a range of economic activities are
particularly those who couldn’t be served before. performed.

Secondly, these effects are giving rise The digital economy is with us. Yet the
to entirely new market structures that remove, boundaries between digital and traditional are
among other things, transaction costs in blurring as technological change permeates every
traditional markets. The best example of this is facet of of modern life. We all need to understand
the rise of digital platforms such as Amazon, Uber the nature of this change to be able to respond at
and Airbnb. These companies connect market every level: society, corporate and personal.The
participants together in a virtual world. They South Africa in the Digital Age initiative has been
reveal optimal prices and generate trust between convened by Genesis Analytics in partnership
strangers in new ways. with the Gordon Institute of Business Science
and the Pathways for Prosperity Commission at
Lastly, the digital economy is fuelled by – Oxford University. A multi-stakeholder initiative,
and generates – enormous amounts
of data. Traditionally it has developed a forward-looking digital
when we made economy strategy for the
country.

5

6

overview

Digital Economy:
How is digitalization changing
global competitiveness and
economic prosperity? BY IBRENNY IBON

Digital Economy: How
does digitalization change
Digital Economy: In several the competitiveness of
articles we have shown what individual economies?
consequences digitalization
can have for the labor markets
of developed economies, what In the future, the international
influence digital technologies competitiveness of individual economies
might have on the cross-border relocation will depend crucially on how quickly digital
of production sites and how 3D printing technologies are used in production
technology could change world trade. processes. This digital transformation in
turn depends on whether a country has the
How does digitalization necessary resources for this transformation.
change production
processes? The resources available depend
largely on the level of economic development
Almost all economists agree that achieved. As a rule, this is measured by the
digital technologies will become increasingly level of real gross domestic product (GDP)
importantforproductionprocessesinthefuture. per capita. With this indica-tor, the world can
It can therefore be assumed that production be divided into three groups of countries –
processes will become increasingly capital- exemplarily and roughly
and technology-intensive over time not only simplified:
in developed economies, but worldwide.

7

Digital Economy:
1. Western industrial economies Changing
If we look at the current situation of GDP per competitiveness and the
capita, the western industrialized countries distribution of global
have the highest per capita income. wealth

2. Asian emerging economies The international competitiveness
Many emerging Asian economies have of a country is crucial for the prosperity of
experienced strong economic growth over the its people. If an economy is competitive,
past two decades. They therefore have the domestic companies can sell their products
financial resources for digital transformation. at home and abroad. This secures jobs and
This applies not only to China, but also to generates income for employees.
other Asian economies such as South Korea,
Indonesia, Thailand and Taiwan.



3. African developing countries With improved competitiveness,
A mixed picture arises with a view of Africa: the country can produce more goods and
services and thus increase GDP – and
On the one hand, African countries GDP per inhabitant. Global prosperity is
have a young and growing population. If being redistributed: A successful digi-tal
these countries succeed in building a digital transformation increases people’s prosperity.
infrastructure and promoting the education In countries that fail to do so, GDP per
sector, strong economic growth can result. inhabitant falls.

Some of these countries may even be The digital transformation of one’s own
able to skip a technology step. Economists economy thus becomes a prerequisite
call this leapfrogging. For example, a for securing and improving a country’s
country that does not yet have a landline for prosperity. Reading recommendation: The
telephony is setting up a mobile network and effects of digitalization and international
is therefore on the same technological level division of labor are analyzed in more
as an industrialized country. detail in our megatrend report “The Bigger
Picture”, published last week. The report
examines the central interactions between 8

KNOWLEDGE

What a ‘digital first’ government
would look like

By Elitah Linggam

Malaysian’s new prime minister, In the economy of corporations, governments,
Malcolm Turnbull, has announced like most organisations, could rely on largely
what he calls a “21st century reactive service provision. Citizens would
government”. This article is part approach the government via offices, call
of The Conversation’s series centres or web pages and government
focusing on what such a government should services would be provided in response. A
look like. proactive government, however, is able to
react to citizens’ life events without being
When discussing the digital economy it’s easy prompted. This could be facilitated by the
to focus on technology, and its exponential provision of data from third parties or by
uptake. In reality, there’s been a shift from an proactively providing services based on
“economy of corporations” to an “economy of available data.
people”. While previous technologies were
largely dedicated to automating and streamlining An example would be age-based welfare
business processes, digital technologies allow payments. Instead of relying on literate
active citizen contributions. citizens who have awareness of government
services, a proactive government would offer
In the economy of people, citizens are no longer such services when they become relevant
passive consumers, but come with their own to the citizen. One step further is the vision
digital identities, maintain personal networks that of a predictive government. In this case, the
give them the ability to influence, and contribute government would offer services before a
data, opinions and even apps to the economy. life event even occurs. Such services could
be related to health care, (un)employment or
The public sector, like any sector, is not immune
to the serious implications of the digital economy. What does a ‘digital mind’
As a consequence, future governments have look like?
to keep up with the increasing digital literacy of
their citizens and adopt new ways of thinking. Future governments will have to take part in the
This demands a “digital mind” that is technology- life of their citizens, as opposed to citizens taking
agnostic, but focused on the impact of the digital part in the life of the government. This will require
economy focusing on the following emerging trends.

9

Share of digital attention Digital identities

“Share of digital attention” captures the relative The economy of people will see the emergence
time a citizen dedicates to a specific provider. of citizens who “bring their own data”. In such
Digitally minded corporations such as Google a world, a drivers license would simply be an
or Facebook have a detailed understanding attribute of a citizen and not a separate entity.
of their share of digital attention, and how Governments have grappled with their role in
this leading indicator contributes to lagging providing platforms for such digital identities,
indicators such as revenue. Most non- but it’s likely citizens will look for a single digital
digitally minded companies do not measure identity that can be used across all interactions
it. Governments can compete for this share of spanning private and public sector providers. A
attention by building mobile applications that prominent example is Estonia’s digital identity
bring citizens closer to government services. solution, which supports its citizens in daily
Proactive or predictive services can help them interactions such as public transport, voting or
channel traffic away from web pages to mobile picking up e-prescriptions.
solutions.
The ambidextrous government
Digital signals
Whatever the future will hold, the government,
Digital signals are the information that is like any corporation, needs to establish
streamed from citizens to organisations. In the innovation capabilities. This will demand new
health sector medical device sensors allow explorative, design-intensive capabilities
citizens to share digital data with trusted health in addition to the dominating ability to
experts. Instead of patients (physically) coming incrementally improve exiting services and
to health care providers, they let their data processes.
travel and enable medical advice. This trend
will most likely flow on to other sectors of the Explorative, innovation services consist of
economy leading to an increased willingness environmental scanning (what are emerging
to share digital signals with trusted providers. technologies), ideation (how could these be
Citizens would no longer look for services, utilised), incubation (testing and prototyping)
but simply share life events (e.g., my house is and implementation (rapid, agile, scalable
flooded, I lost my job, I am a first time parent) roll-out). An ambidextrous government is
and expect a government service in response. characterised by low innovation latency,
that is, the time it takes to convert emerging
opportunities into available government
services.

This skill set will require changes in existing
recruitment practices to attract people who
are driven by what is possible in the future as
opposed to by what is broken today.

10

KNOWLEDGE

By Kevin Yong

TThhrreeee CChhaaDlDllleeiigngnigigtteaeaslsl EEOOccofofnnMMoommeeaayyssuurriinngg TThheery to separate the digital economy from the
economy as a whole. Not easy, is it? The world
today is so dependent on technology that the
line between the tangible and the digital has

Tblurred almost beyond recognition.
Measuring the impact of the digital
economy might not be easy, but businesses,
regulators and market watchers still need to
know how. As the world continues to expand
into the virtual arena, businesses must
learn to evaluate the impact of their online
presence if they expect to survive and grow
in the long term.

Real Money From Digital But where should we set the boundary
Moves lines? The digital economy might refer
to any use of digitized data or internet-
powered processes. These days, that
Many of the traditional economic includes just about everything. Even
measurements, such as gross domestic cash-only shops frequently advertise
product (GDP), have failed to keep their products or services online. Any
pace with accelerated technological measurement that includes anything
development. Free services such as tangential to the digital will inevitably
search engines do not show up in GDP, become too broad.
but those capabilities are central to
modern life – and billions of dollars in Unfortunately, the opposite does not work
revenue depend on them. These efficiency any better. If we narrow the field to online
enhancements grease the wheels of stores or services alone, we neglect to
e-commerce, cutting transaction costs account for the less tangible aspects of
that had been previously accounted for. digitization that have real, measurable
impacts on the economy. The solution,
Without a structure to measure it seems, must lie somewhere between
similar technological impact, businesses
and other invested organizations can
never be sure about the state of the digital
economy and its economic impact.

11

Measuring the digital economy is challenging to discover the proper method
to measure the digital economy, we must address three specific challenges.

1. The Digital 2. Capturing Activity In 3. Predicting growth
Economy's Role In and sales
Gdp Relation To Location
What good is data if it
And Boundaries does not tell us something
More companies about the future? As
operate online today When someone more companies expand
than ever before. That their online presence,
is obvious. However, the makes a physical product, the economic impact will
average digital company's expand alongside them.
contribution to the GDP has that product exists at
fallen in recent years despite In my line of work, I have
the continued dominance of specific geographical points. seen a very clear trend: Businesses
companies like Facebook and with higher digital growth sell
Google. Digital processes are not so more products and services. That
information alone is valuable, but
The core services of social convenient. as any long-time businessperson
media companies and search knows, not all growth is created
sites are free for all users. How, Digital production equal. We must have accurate,
then, should an economy include universal standards by which to
such transactions that have such frequently crosses numerous measure online growth (and, by
a profound effect on modern life? extension, real economic impact)
Facebook's activity alone could borders. So do pieces of cars if we wish to gain the predictive
have raised the US growth rate information we need.
from 1.83% to 1.91% between and other products, but with
2003–2017. No one ever intended We should not deprioritize
for GDP to calculate the intangible digital, the specifics are far the fastest-growing sector of the
values of free transactions, but economy just because measuring
with such massive changes to the less clear. If we hope to get it might be inconvenient. Accurate
definition of value in the past 20 data on digital economics
years, that needs to change. an accurate reading on the empowers stakeholders of all
stripes to make better decisions.
Most countries already digital economy, we need data Smarter economic measurements
adjust economic measurements would also boost confidence in
for technological changes by that can score and rank digital the market, facilitating growth as
inflating or deflating by affected we gain a better understanding of
products and services. Different assets and processes and what, specifically, is growing. To
countries approach this in achieve those results, however,
different ways, though. Without a assign those digital values to we must first treat the challenges
unified standard, comparing one outlined here with the respect and
economy to another will become specific, consistent owners. urgency they deserve.
an increasingly difficult challenge.
Solving this challenge
will unlock companies'
digital power and share that
information with everyone who
has an interest. The larger the
digital space grows, the more
necessary the measurement
of individual contributions in
that space will become.

12

KNowledge

The 4 Things It Takes
to Succeed in the
Digital Economy
F or several years now digital has BY HAFIS

been an appendage to “business as usual.” But
recently, digital transformations have reached
the tipping point where digital has become
“business as usual”; the tail has become the
dog. Digital is not just part of the economy — it
is the economy.

It’s an economy of limitless opportunities  
for some and disruption and displacement THE 4 THINGS TO SUCCEED
for others. Many firms — such has Kodak, 1. Customer expectations
Blockbuster, Sears, and Blackberry — were 2. Product enhancements
unable to adapt, while others are thriving. 3. Collaborative innovations
According to MIT Sloan research, the 4. Organizational leadershipIduci
companies that are adapting to a digital world
are 26% more profitable than their industry
peers.
How are these thriving firms reinventing
themselves, their supply chains, and their
marketplaces? For an upcoming MIT
symposium on the topic, we’re focusing on four
main themes: customer expectations, product
enhancements, collaborative innovations, and
organizational forms.

13

Customer expectations A major enabler in this evolution was the
development of smart elevators and escalators
No transformation is more challenging than meeting that constantly collect sensor data and transmit
the service expectations of digitally empowered it over the internet to Schindler’s back-end
customers. Digital technologies enable companies to systems, where the data is analyzed, generating
better engage with their customers and offer superior maintenance notifications long before an actual
experiences at affordable costs. But providing breakdown. These notifications, enriched with
outstanding experiences to increasingly savvy, and expert repair advice, are then dispatched in real
fickle, customers is getting harder. time to Schindler’s service applications, where
technicians are scheduled as appropriate.
Customer expectations go beyond ease of use; they’re
now expecting proactive experiences. Dr. Dieter Haban, Beyond individual products, companies have
CIO of Daimler Trucks North America, offers Daimler been harnessing the power of platforms to
Trucks’s Detroit Virtual Technician as a good example. connect buyers and sellers (e.g., Etsy, Priceline,
Imagine that you’re on a tight schedule driving an 18 and Apple’s App Store), hosts and visitors
wheeler and your engine light comes on when you’re (e.g., Airbnb and HomeAway) and drivers with
100 miles from the nearest service station. What to riders (e.g., Uber, Lynx, and RideScout). Some
do? Continue driving and risk a time-consuming platforms, such as Uber, are giving rise to a new
breakdown, or call a service vehicle to diagnose the on-demand economy that’s redefining the nature
issue, also resulting in lengthy downtime? of work.

Detroit Virtual Technician is a telematics solution that Collaborative innovations
records critical vehicle performance data immediately
before, during, and after a fault occurs. It then sends Companies must become more innovative
the data to Daimler’s mission control center for quick to better respond to the highly competitive,
analysis of the fault codes by its technicians. The global business environment. Collaboration is
technicians can provide the driver and fleet owner indispensable for innovation, both within the
immediate feedback, including whether the truck company’s own boundaries and beyond, with
needs immediate service or whether it can continue customers, partners, startups, universities, and
on its journey. This is the kind of experience customers research communities.
will expect in the future.

Big data is one of the enablers of proactive customer Thriving companies are harnessing collaborative
experiences. Thriving companies will continue to digital networks to build ecosystems, such as
leverage data by using it to address the cracks in Amazon, PayPal, Fidelity, Aetna, Apple, and
company security, worries about data privacy, and the Microsoft. Ecosystems like these are moving
limitations of analytics that became apparent in the beyond linear supply chains to partner with
first wave of big data. providers of complementary products and
services (or sometimes even competitors).
Product enhancements According to MIT research, companies with 50%
or more of their revenues from digital ecosystems
Thriving companies are also integrating related have higher revenues and higher profit margins
products and services into sophisticated industry than their industry’s average.
solutions, while extending and restructuring industry
boundaries, essentially creating whole new industries. Collaboration and ecosystems are particularly
Michael Nilles, recently promoted to Schindler’s important in the emerging Internet of Things,
chief digital officer, offers a great example. Schindler where multiple companies across different
has expanded its business beyond its elevator and industries must make sure that their offerings
escalator products to become a mobility solutions work with each other in a number of highly
company, offering its technology in a variety of complex areas including health care, home
industries including health care, hotels, offices, malls automation, and smart cities.
and retail outlets, and sports arenas and expos.

14

Companies such as AUDI, Club Med, and While technologies advance rapidly,
mBank are competing with digital innovations organizations and skills advance slowly, and the
by empowering local teams to build solutions gap between swiftly evolving technology and the
quickly while helping them identify and leverage slower pace of human development will grow
synergies. These companies are also creating quickly in the coming decades as exponential
accessible and reusable global platform improvements in artificial intelligence, robotics,
components that give local solutions competitive networks, analytics, and digitization affect more
advantages while at the same time coaching and more of the economy and society. Inventing
local teams in designing and learning from effective organizations for the digital economy
experiments. is the grand challenge for our time, and the
companies that are already adapting are leading
Organizational leadership the way.

Companies must rethink their structures
and culture to better deal with new market
environments and business models. The
hierarchic organization that prevailed in the 20th
century’s production-oriented industrial economy
will not work in the more global and fast-changing
digital economy. The companies that are most
successfully adapting are making a cultural shift
from “Mad Men” to “Math Men,” where decision
making is increasingly based on data rather
than on the frequently wrong opinions of senior
executives. These companies are adding data
scientists to enhance organizational learning.
They’ve made some decisions faster by relying
on algorithms, and they are introducing artificial
intelligence, robotics, and other advanced
technologies as appropriate.

Thriving companies also acknowledge the
dark side of the digital economy and that more
resources and a greater strategic emphasis
on cybersecurity will be required to address
the increasing number of attacks, the growing
expertise of hackers, and the thriving black market
for stolen data and malware. Luis A. Aguilar,
former commissioner of the SEC, has warned
that boards that choose to ignore or minimize the
importance of cybersecurity oversight do so at
their own peril.

The digitization of the economy is one of the most
critical issues of our time. Digital technologies are
rapidly transforming both business practices and
societies, and they are integral to the innovation-
driven economies of the future. But there is
another dark side: technological revolutions are
highly disruptive to economies and societies. This
was the case during the Industrial Revolution,
and it is the case today.

15

NEWS

Data Is The New Oil Of
The Digital Economy By Kevin Yong

ata in the 21st Century is like Oil in the 18th Century: an immensely, untapped
valuable asset. Like oil, for those who see Data’s fundamental value and learn
to extract and use it there will be huge rewards.We’re in a digital economy where
data is more valuable than ever. It’s the key to the smooth functionality of everything
from the government to local companies. Without it, progress would halt.

1. Data Infrastructure Should 2. Good Data Beats Opinion

Become A Profit Center When your business is growing, more and more
people have opinions about which steps need to be
For many companies, their data taken. It helps to work with a ‘good data beats opinion’
infrastructure is still a cost center nowadays philosophy. Almost everything can be tested, measured
and should become a profit center by using and improved. If you can measure it, you can improve it.
the data to improve everything, day by day. Inspire people to come up with new ideas and pick up
Companies must begin treating data as an new opportunities and just test it and see what the impact
enterprisewide corporate asset while also is. A test which you’re measuring is never worthless. At
managing the data locally within business least you get new insights about if it’s working or not (and
units. why) and in the best case, you got insights and improved
This enables sharing of data about your business directly.
products and customers – which provides
opportunities to up sell, cross sell, improve Make sure you’ve real time access to the most
customer service and retention rates. By important data in your business. Only knowing your total
using internal data in combination with revenue, profit or costs is not enough. Knowing which
external data, there is a huge opportunity KPI’s influence them and other business goals is much
for every company in the world to create more important, because you learn how to improve your
new products and services across lines of business. In fact, the value lies in micro data, not in macro
business. data. Joris Toonders is the entrepreneur behind Yonego.

16

news

Digital Economy And Tourism

Impacts, Influences And

Challenges BY IBRENNY IBON


According to WTO, the Internet is
revolutionizing the distribution of tourism
information and sales. An increasing
proportion of Internet users are buying on–line
and tourism will gain a larger and larger share
of the online commerce market. E-commerce
is defined as the process of buying and
selling or exchanging products, services and
information via computer networks including
the Internet (Turban, Lee King & Chung, 2000).

However, adoption of Information
and Communication Technologies (ICT) is
The definitions of tourism only part of the story. In particular, network
innovation (such as product, access costs, dissemination of information
service and technological on electronic commerce, training, skill
innovations) remain unclear, development and human resources provide
with the exception maybe of the big challenges for smaller companies.
Internet. New technologies can The terms “digital economy,” “information
produce an essential contribution to tourism technology,” and “electronic commerce” do
development. not have standard definitions. When referring
to information technology, we will be referring
For tourism businesses, the Internet to information processing and related
offers the potential to make information and equipment, software, semiconductors, and
booking facilities available to large numbers telecommunications equipment. References
of tourists at relatively low costs. It also to electronic commerce will mean the use
provides a tool for communication between of the Internet to sell goods and services.
tourism suppliers, intermediaries, as well as
We interpret digital economy as
17 end-consumers. including both information technology
and electronic commerce. The digital
economy is not a standard classification
for economic data, so there may be some
disagreement on what it entails. A digital
economy is an economy that is based on
electronic goods and services produced by
an electronic business and traded through
electronic commerce. That is, a business
with electronic production and management
processes and that interacts with its partners
and customers and conducts transactions
through Internet and Web technologies.

However, the number of American
The concept of a digital economy Web users still rose by 40 percent. In
emerged in the last decade of the 20th most other areas of the world, Internet
century. Nicholas Negroponte (1995) used a access at least doubled. Access in Africa
metaphor of shifting from processing atoms showed a 136-percent increase; Asia
to processing bits. E-Government is already and the Pacific, 155 percent; Europe,
playing its part in this digital economy by 108 percent; the Middle East, 111
providing e-services through various ministry/ percent; and South America, 102 percent.
department to its e-Citizen. Electronic
commerce has contributed to changes in The Net is now the iconic technology
transportation and distribution services, by of our age. Everyone is able to buy and sell
relying on the increased availability of air in cyberspace. States will no longer be able
and courier services and local trucking to to control electronic commerce which can
get its product to consumers. The growth cross national borders. Dramatic decreases
of the digital economy1 is unprecedented in the price of IT related technology fueled
and has been a major contributor to recent phenomenal growth in Internet expansion
economic growth, the booming stock and use. From 1995 to 1999, computer prices
market, and the revival of productivity. declined at a rate of 26 percent annually,
rapidly making computer technology available
1.1. Internet technology to a widening percentage of the population.

When the Internet first commercialized 1.2. Development of
it was relatively mature in some applications, Electronic Commerce
such as commercial infrastructure and
software applications for business use. This In these ways, electronic commerce
was due to the fact that complementary has the potential of greatly changing the
Internet technology markets developed ideal situation of economy. However, efforts
among technically sophisticated users are beginning to be made to prepare for the
before migrating to a broad commercial user age of electronic commerce, including recent
base. The invention of the web in the early positive signs in investment in information
1990s further stretched the possibilities for technology among companies, as well as
potential applications, exacerbating the the precursory introduction of electronic
gap between the technical frontier and the commerce in some sectors. Information
potential needs of the commercial user. technology, which is the foundation of
the “digital economy,” will continue to
The technical frontier changes develop at a rapid pace, and for this reason
frequently, both in terms of maximum there will be considerable changes in
achievable engineering goals and in terms the ideal situation of economic activities.
of viable commercial activities that generate
revenue in excess of resources. When There will be widespread dissemination
the technology migrated away from these of electronic commerce, and digital information
users and into wider use, some capabilities will pervade into all aspects of the lives of the
were obviously valuable, such as e-mail. people. The rules which applied to the economy
Worldwide, approximately 304 million people of the past (the legal system, commercial
had Internet access by 2000, a nearly practices) would no longer apply in the age of
80-percent increase from the previous year. the digital economy as they are. For this reason,
In contrast, only 3 million people around the it is necessary to consider the establishment
globe had similar access in 1994. Most of the of new rules to deal with this situation.
growth occurred outside of the United States
and Canada, which for the first time totaled 18
less than half of those with online access.

news

Bitcoin halving Q&A:
what it’s all about and
what it means for the

cryptocurrency
BY AL HAFIS

Bitcoin, the first and leading cryptocurrency in terms of trading volume and market
capitalisation, went through its third “halving” on May 11 2020. This major adjustment to
how the cryptocurrency operates has only happened twice before and happens every four
years. But what does this actually mean and what impact will it have?

Q: how does bitcoin work?

Bitcoin is a digital currency that makes
use of blockchain technology to store
and record all transactions. First
proposed in a white paper published
online in 2008 by a mysterious person
(or group of people) called Satoshi
Nakamoto. The unique features of
bitcoin compared to fiat currencies like
dollars or pounds are that there is no
central authority or bank. Each member
of the network has equal power. This
decentralised network is completely
transparent and all transactions can
be read on the blockchain. At the same
time it offers privacy in terms of who
owns the cryptocurrency.

19

Bitcoins are created (or mined) by so-called miners Meanwhile, the reduction of revenue for miners
who contribute computing power to securing the may squeeze out miners who are least efficient
network, as well as processing transactions on and therefore the computing power connected to
the network by solving complex mathematical the Bitcoin network may fall significantly.
puzzles through computational power. These
miners are rewarded for their work processing The previous two halvings led to the most dramatic
the transactions on the blockchain with bitcoins. bull runs in Bitcoin’s history, although initially there
But to combat inflation, Nakamoto wrote into the was a brief sell-off. Marcus Swanepoel, co-founder
code that the total number of bitcoins that will ever and CEO of Luno, a cryptocurrency wallet which
exist will be 21 million. Right now there are 18.38 lets you store and carry out bitcoin transactions,
million. believes that bitcoin may achieve a growth of
270% between this and the fourth halving in 2024.
The first ever block recorded on the bitcoin
blockchain was on January 3 2009 where Q: How is coronavirus affecting things?
Nakamoto received 50 bitcoins. In the white paper,
Nakamoto specified that after every 210,000 Although bitcoin has gained more than 20% since
blocks the reward for miners will half. So the first the beginning of the year, where this halving may
halving took place on November 28 2012 where differ from its predecessors is the volatile and
the miner’s reward was reduced from 50 bitcoins uncertain economic environment that it has taken
to 25 bitcoins. The second halving was on July 9 place in. The International Monetry Fund predicted
2016 and the miner’s reward was reduced from 25 a 3% shrinking of global growth in its April forecast
bitcoins to 12.5 bitcoins. And the third, most recent and this is expected to fall further. In the UK, the
halving on May 11 2020 means bitcoin miners now Bank of England has projected a decrease of 30%
receive 6.25 bitcoins. in the country’s GDP during the first half of 2020.

Q: Why does bitcoin halve? Some argue that bitcoin’s scarcity makes it a
potential hedge against fiat currencies that are
Nakamoto has never explained explicitly the vulnerable to devaluation in times of economic
reasons behind the halving. Some speculate the crisis. But others believe the halving won’t
halving system was designed to distribute coins necessarily boost its price as people knew the
more quickly at the beginning to incentive people halving was going to happen so it should be
to join the network and mine new blocks. Block already priced into the market activity.
rewards are programmed to halve at regular
intervals because the value of each coin rewarded The only certainty is that the growth of new
is deemed likely to increase as the network bitcoins has halved. It remains to be seen what
expanded. However, this may lead to users holding impact this will have on the price and interest of
bitcoin as a speculative asset rather than using it this cryptocurrency.
as a medium of exchange.

Q: What impact does halving have on bitcoin?

The obvious impact is that the amount of newly
mined bitcoins per day will fall from about 1,800 to
900 bitcoins and the daily revenue of miners will
reduce by half. This decrease in the rate of bitcoin
creation tightens supply and some argue will lead
to a bullish market and an increase in the price of
bitcoin.

20

news

2020 Global Blockchain Innovation &
Development Conference And
International Digital Economy
Ecology Summit Held

By Kevin Yong

rom August 13th to August 15th, 2020 Global

Blockchain Innovation & Development

Conference and International Digital

Economy Ecology Summit were successfully

held in Ganzhou, Jiangxi Province. This global

event promotes the international exchange of

applications in the blockchain field by gathering

resources in the blockchain industry with the

“online live broadcast+offline interaction” method. The

purpose of the conference is to show the development of 2020 Global Blockchain
Jiangxi blockchain, gather talents, technology and other Innovation & Development
innovative resources for further exchanges. Building a
global blockchain brand in Jiangxi is of great significance Conference

to promote the Industry development and integration of

The theme of the 2020 Global Blockchain Innovation

& Development Conference is “Universal Values Connecting

the World”. The theme of the International Digital Economy

Ecology Summit is “Promoting Digital Transformation of Old

Revolutionary Areas through Technology”. They bring together

national industry representatives, well-known experts and well-

known enterprises in the blockchain of the “The Belt and Road

Initiative”. This time, they also set up a sub-meeting venue in

Beijing, and held it together by video conference with the main

venue in Ganzhou.

Ganzhou Chain officially
launched

21

The 2020 Global Blockchain Innovation & government departments in China. It issued the
Development Conference officially released the first rules and guidelines for compliance blockchain
blockchain application service platforms such as in China-Guidelines for Compliance Blockchain.
Ganzhou Chain, Navel Orange Chain, Furniture The first blockchain service hall in China was built
Chain and Long March Chain. At the same time, the here. It has carried out innovative application of
White Paper on Blockchain Layout of Fortune 500 various blockchain around industrial manufacturing,
Enterprises (2020) and the Special Public Welfare agricultural products, finance, e-commerce, identity
Fund for Blockchain Innovation and Development of authentication and other fields, and achieved good
China International Science Exchange Foundation driving effect.
were also released. Five innovative platforms,
including Jiangxi Blockchain Industry Alliance, As the infrastructure of the local blockchain
China Blockchain Think Tank, Tsinghua Alumni
Association Postdoctoral Alumni Branch IT Industry development, Ganzhou Chain adheres to
Professional Committee Technology Base,
Ganzhou Blockchain Research Institute and the principles of practicality, openness, compliance
BSN Jiangxi Node, were opened. At the
International Digital Economy Ecology and iteration, and integrates on the basis of the
Summit, the Global Social Media
Influencer Blockchain Platform，the existing blockchain platform in Ganzhou. It
Global 5G Social Media Influencer
Festival (Ganzhou), China’s 5G Video includes blockchain operation management
Clips Live Industry Base (Ganzhou),
China Red MCN Institution, platform, blockchain basic technology
the Global One-One-Chain
Ecosystem and the “100 Family platform, blockchain data service platform,
Names & Family Tree Chain”
Platform were started. blockchain security traceability platform,

blockchain digital financial platform,

blockchain social e-commerce platform

and blockchain social governance

platform. It is a reliable and

interconnected data network that

provides rich blockchain services

and applications for the society.

The release of Ganzhou Chain

makes Ganzhou the first

In recent comprehensive service

years, Ganzhou has platform of city-level

established the first blockchain in China.

sandbox park of It opened a new

blockchain financial starting point for

industry led by the development

22

news

Accelerating Malaysia’s Digital

Economy

IBY IBRENNY IBON
The Government’s focus on increasing
the adoption of cashless payments in Malaysia
n the advent of digitalisation, we resonates with Grab’s vision of leveraging
have seen a momentous rise in digital on technology to benefit the masses.
economy an economy based on digital `A progressive, cashless economy would
computing technologies. In view of not only benefit consumers but also help
this, there is increased digitalisation in micro-entrepreneurs and SMEs grow their
business without the cost, burden and safety
the way daily transactions are conducted. concerns that come with managing cash.

To facilitate and support the growth of It has also been reported that electronic-
digital economy, cashless payment options based payments will be able to save Malaysia
are becoming commonplace today, such as up to 1% of the country’s GDP (an estimated
the e-wallet which is playing a major role in RM13bil) due to the cost of cash-based
taking the marketplace towards a digital future. transactions. “We launched GrabPay over
a year ago with the vision to be the rakyat’s
GrabPay, homegrown Grab’s e-wallet, e-wallet. Since then, we have continuously
aims to spur Malaysia’s digital economy in introduced programmes and campaigns to
2020 by further driving cashless adoption in encourage the adoption of digital payments
Malaysia in support of the Finance Ministry’s among consumers and merchants nationwide.
e-Tunai Rakyat 2020 initiative. This comes
as the company rewards Malaysians “Our strategy behind this has always been
with additional savings of up to RM3,000 to adopt a hyperlocal approach and collaborate
with its campaign “first come first serve”. with like-minded partners, like Maybank and
PayNet, who together with us foresaw the need
The adoption of electronic-based for Malaysia to embrace a digital economy.
payments has increased significantly over Through our efforts, we have carefully curated
the past year. Bank Negara statistics show our partners and introduced even more
that transaction value for e-money between features that resonate the most with Malaysian
JanuaryandOctober2019surgedtoRM13.9bil, users,” GrabPay Malaysia, Singapore and the
with a transaction volume of 1.72 billion, Philippines Managing Director, Ooi Huey Tyng.
surpassing RM11 billion for the entire 2018.



23

Malaysia’s every day, In the second half of 2019, GrabPay
users were able to save a total of up to
everything e-wallet RM5.5mil just by using GrabPay to pay for
their everyday needs like transport, shopping
and deliveries for their food and daily needs.
With Grab’s growing ecosystem of
services and network of partners, GrabPay With the “first come first serve”
provides a seamless and convenient promotion, users who sign up for the
payment option for everyday needs, from e-Tunai Rakyat 2020 redemption
rides and on-demand food and deliveries to via GrabPay will get discounts and
making both online and offline transactions vouchers of up to RM3,000 based on a
and even mobile prepaid top-ups. rewards system consisting of three tiers.
Further strengthening the seamless adoption
of e-wallets across Malaysia, GrabPay This will help users to fully benefit
partnered with PayNet, making it the first from the Government’s initiative while
e-wallet in the country to adopt DuitNow stretching the value of the ringgit received.
QR, Malaysia’s National QR Standard.
Through this, users can now conveniently The campaign features a variety of
make payments from any participating partners consisting of household favourite
banks or e-wallets’ mobile apps, brands such as Hotlink, Mydin, Photobook,
and merchants only need to display The Coffee Bean & Tea Leaf, Baskin Robbins,
one QR Code to accept payments. Secret Recipe, Sushi King and many more.

“first come first serve”


As an app with a robust ecosystem
of services that addresses the daily
needs of Malaysians, GrabPay is offering
greater value to users who redeem their
RM30 apportionment from the Finance
Ministry through their GrabPay e-wallet.

24

news

Malaysia’s digital economy now

contributes one fifth to GDP
MBY IBRENNY IBON
The country’s digital economy
is estimated by YCP Solidiance
to be worth over RM 270 billion,

which equates to roughly 18%
of Malaysia’s gross domestic
product (GDP). This makes
Malaysia more digitally
mature than many other

alaysia’s digital economy countries in the Asia Pacific

is making large strides in region, and also a digital

its maturity, according to step ahead of several

a new study by strategy Western economies.

consulting firm YCP

Solidiance. However, with Accelerated by the

the future in mind, there is current Covid-19 crisis and

no room for complacency, resulting lockdown, which

and organisations of all sizes has abruptly lifted the need for

and shapes are advised to digital shopping, working and

accelerate their digitalisation connection, the share of GDP

plans. coming from the digital segment is

forecasted to reach 20% by the end

of this year.



Malaysia’s progress builds for a large part on the government’s digital strategy first launched

over two decades ago. Since the inception of the Multimedia Super Corridor (MSC) in 1996, the

Government of Malaysia has been persistently promoting the nation’s digital agenda as evidenced

through multiple public initiatives such as the National Strategic ICT Roadmap & Digital Malaysia

(2008-2012), National eCommerce Strategic Roadmap (2017), Industry4WRD (2018) and the latest

National Fiberisation and Connectivity Plan (2019-2023).

25

According to the report
from YCP Solidiance, the large
majority of Malaysian companies
now use digital as a means to
enhance decision making, improve
productivity, streamline and
automate processes, enhance
customer experience or identify
commercial opportunities, among
others.
Most organisations use
technology as an enabler for
operational enhancements,
including using IT systems (HR,
procurement, finance), using digital
payments and adopting cloud-
based working. The use of tooling
to improve products and services
to external stakeholders follows –
this includes generally front-end
tools for customer engagement
such as enhancing company or
brand awareness online with digital
marketing, search engine optimised

Growing maturity Growing digital
capabilities
With the future only becoming more
Despite the upward trajectory,
YCP Solidiance (part of the Nextcontinent digital, companies will need to ramp up
network) points out that across the board their digital maturity. For many however,
there still is a long way to go for Malaysia this represents a daunting task. Across
on its digital journey. Using a proprietary all corners of the globe, reports surface
digital maturity model, the consulting firm of failed IT transformations or systems
estimates that six out of 10 companies still that are not being put to use. Leveraging
are at the basic digitalisation stage, which
spans the digitisation of current work rtheir experience in the field, the eport’s
processes from what used to be manual to
digitally-enabled. authors – led by YCP Solidiance partner
At the other end of the spectrum, U-Yun Wong – put forward a number of best
less than one in five companies can call practices for execution.
themselves digitally advanced, matching Malaysian companies should not
the likes of the globe’s frontrunners overlook the role of human capital. Having
including Amazon, Google or Microsoft. the right digital competencies in place has
Companies at this stage have a digital been found to be the largest barrier to
strategy in place which is fully integrated implementation, follow by organizational
with its business pillars and functions, buy-in two factors that revolve around
supported by a culture that embraces people.
digitisation.
26

NEWS

Traditional banks are struggling
to stave off the fintech revolution

By Elitah Linggam

Eroding advantages

Traditional banks are haunted by Traditional banks have a few advantages that
financial technology – fintech – they believe will protect them from the fintech
firms. Challengers such as mobile- threat: branch coverage, the trust they enjoy
first banks Chime in the US, Monzo from customers and government regulation.
in the UK and Germany’s N26 have But these advantages are eroding rapidly.
been around for a number of years
now, but big global and regional According to international consultancy firm
banks are still struggling to deal McKinsey, in the past decade, the top 25
with the competition. While fintechs experience a US banks managed to grow deposits while
goldrush of investment – US$111 billion in 2018, reducing their branch footprint by 15%.
up from US$51 billion in 2017 – banking CEOs Clearly, having a physical branch in every
find themselves under increasing pressure from neighbourhood is no longer necessary
shareholders alarmed at the slow rate of change to drive customer deposits, as well as
taking place. engagement.

In our conversations with senior managers of Following the global financial crisis and
banks, we spot several blind spots which are often bank bailouts, trust in the banking system
found among incumbents who get hit the hardest was irrevocably shaken. Arguably, tech
by disruption. Two stand out in particular: an over- companies such as Amazon, Google, and
reliance on existing competitive advantages and an Apple enjoy more trust from the global
inherent misunderstanding of what disruption really consumer than banks. With billions of devices
means for them. and services from these companies already
holding banking data and payment access
27 in the form of apps and mobile wallet cards,
customers seem to have already moved their
financial transactions.

Regulation used to make it very difficult to set
up and run a bank. But the new European
Payment Services Directive (PSD2) could
soon bring down this barrier to entry. PSD2 is
a set of policies that gives significant choice
and protection to customers on how they
want to fulfil their banking needs, as well as
allowing them to put all their banking data in
one place.

Regulation used to make it very difficult to set In the case of banks, the most important
up and run a bank. But the new European aspect of the shift is the move from product-
Payment Services Directive (PSD2) could focused to platform-based competition.
soon bring down this barrier to entry. PSD2 is Bankers feel good after making a profitable
a set of policies that gives significant choice sale, or clinching a deal. Platforms are not
and protection to customers on how they about making profit from individual sales but
want to fulfil their banking needs, as well as how an expanding user base creates value
allowing them to put all their banking data in for the entire network – a concept foreign
one place. to most banks. For platforms like Amazon
or Facebook, customers are not just people
Meanwhile, regulation technology (“regtech”) who pay for products or services, they are
tools are also maturing. These are making the company’s most valuable asset – the
core compliance, risk management and reason why Facebook paid US$19 billion for
transaction monitoring processes easier for WhatsApp.
new entrants. So it is only a matter of time
before the regulation barrier protecting banks It would be a mistake for banks to view the
falls away completely across the globe. Apple Card as yet another card. The card,
aimed at Apple’s 1.4 billion active devices
Misunderstanding disruption and varied customer base, is just the tip of
the iceberg. Facebook’s Libra, which has
The other blind spot for legacy banks is their 2.4 billion users at its disposal, is not just a
tendency to have a narrow and misguided far-fetched dream which will take years to be
understanding of disruptive business models. accepted. It will bite incumbents sooner than
This usually begins with treating a new they realise.
species of competitors as traditional ones. For
example Cathy Bessant, Bank of America’s The quicker banks come to realise that they
CTO, commented on Apple’s announcement have a limited understanding of the fintech
of a new credit card: “My reaction when I saw challenge, the more likely they will counter
the announcement was, first competitively, it successfully. Rather than trying to survive
all of the features that are in that card are by closing down branches, launching mobile
offerings we have today.” apps and hanging on to the promise of
regulatory barriers, they should try to learn
The propensity to see only the product or from the mistakes Kodak, Blockbuster, Nokia
service and not the entire business model is and others made.
common among incumbents across a range
of industries. Kodak, Blockbuster and Nokia
were only three of the hundreds of disrupted
incumbents which were able to see only
the product (and associated features) that
threatened them and not how the business
models of their competitors allowed the
creation of entirely new ecosystems that
they were poorly equipped to survive in. By
stooping down to competing on a feature by
feature basis, incumbents lose the chance to
redefine an industry that they once dominated.

28

ISSUE

Special Issue: Innovation and
Skills in the Digital Economy

BY IBRENNY IBON

Special Issue Background
and Focus

The increasing use of advanced
digital technologies is transforming
innovation activities and production
(Alcacer et al., 2016). Consequently,
skills requirements are changing
within and across organizations, industries, Digital technologies and increasing
and countries, making existing ones flexibility impact upon labour markets
redundant or obsolete (Autor, 2015; Autor, and employment practices (e.g. globally
Dorn & Hanson, 2015; Zysman and Kenney dispersed skilled freelance workers), their
2018). management and coordination. For instance,
New digital paradigms include a vast in the last decade Western countries
array of enabling technologies, such as the have faced shortages in particular STEM
Internet of Things, Additive Manufacturing, Big (science, technology, engineering and math)
Data, Artificial Intelligence, Cloud Computing, occupations, which has resulted in a global
and Augmented and Virtual Reality sourcing of talent (Lewin et al. 2009). The
(Rindfleisch et al., 2017). relation is not only in one direction: skills and
Whilst there is substantial research of labour practices influence firms’ adoption and
the relation between digital innovation and use of digital technologies. Recently online
skills from prior research on ICT adoption marketplaces and crowdsourcing (Maskell
(e.g., Autor et al., 1998), the impact of new 2014) for business services have proliferated.
digital paradigms on, innovation, production

and skill dynamics is yet to be fully observed

(Consoli et al., 2016).

29

These marketplaces can intermediate between employers and freelancers and have
enabled on-demand contract employment between project initiators (employers) and freelancers
(employees) on a global scale (Massini et al., 2016). These seem to create new dynamics among
STEM and knowledge workers, while firms are developing new strategies to recruit and manage
talent.
Examples of questions that papers could address, combining different aspects – innovation,
firm and industry organisation, skills and labour markets – levels of analysis, and methods, are:

4. How do companies make use of online
1. Does the adoption of digital platforms in the STEM fields for R&D or innovation
technologies lead to a recomposition of skills projects? What are the challenges of managing STEM
and labour markets and to changes in firm researchers when organizations make firm research
behaviour and organisation? How does the boundaries more porous using strategies such as
composition of management and labour contracting for R&D or product development?
in firms and labour markets influence the
rate of adoption and deployment of digital 5. To what extent does the adoption of new
technologies? manufacturing technologies (digital manufacturing -
additive manufacturing, continuous manufacturing,
2. What are the implications on skills collective manufacturing, cloud computing and
of the adoption of digital technologies? Do cloud manufacturing) lead to the reorganization of
intelligent tools and platforms enhance skills innovation networks and processes (Alcacer et al.,
or replace them? Do they replace existing 2016; Dosi et al., 2013)?
work or transform and create new work
(Kenney and Zysman, 2019)? What is the 6. How does the implementation of digital
impact of computerization on labor markets technologies affect the location and types of labour in
and new skill needs? global value chains and their configuration? Do firms
change coordination mechanisms, develop different
3. What are the reasons firms hire organizational configurations and new capabilities, in
STEM workers offshore versus train them response to increasing digitalization?
internally? Are there consequences of
domestic STEM skills’ shortage for corporate 7. How do organizations and managerial
strategies? What practices change due to
are the roles of collaborative initiatives and
digital labour embeddedness in networks?
platforms for
accessing global 8. What is the role of country-
talent on demand? specific innovation policies
For what activities for setting in a globally
are they effective? dispersed learning economy
For which ones (Lundvall, 2016)?

30

ISSUE

The Digital Economy Is No
Leveler, It’s A Source Of Inequalty

By Elitah Linggam

Creative license

W hen we think about income and wealth The expansion of the digital economy has gone
inequalities we are tempted to lay hand-in-hand with the growth of the creative
blame on the old way of doing things. industries. The UK’s pioneering development
In Capital in the Twenty-First Century, Thomas of policy on the creative industries in the late
Piketty picks out inherited money as a driver of 1990s was predicated partly on the desire to
unsustainable disparities between the global rich exploit the intellectual property generated by
and poor. Oxfam recently pinpointed the high- burgeoning digital technology. That applied
profit finance and pharmaceutical industries as particularly to those single operators and small
engines of inequality that distribute wealth to businesses that proliferated in the cultural and
the wealthy. creative sectors.

This view is consistent with those who place Similar policies have been used in countries at
their faith in the digital economy as some kind varying levels of development in the early years
of solution. It is held up as an alternative to of the 21st century. Look at the UN’s enthusiastic
traditional forms of economic activity, and one promotion of the creative economy, and its
which can generate sustainable growth and suggestion that these kind of structural reforms
narrow inequality. Lower barriers of entry into could work in both the developed world and
its markets (“anyone can start a business on in emerging markets. This explains why much
the internet!”) is said to widen opportunities and research on developmental economics focuses
lead to a more equitable distribution of wealth. on narrowing the so-called digital divide in order
to give more equal access to a global economic
system which promises prosperity for all

It is for this reason that many politicians and
academics continue to advocate the aggressive
expansion of the digital economy, especially
into areas which have not witnessed much of
this type of economic activity. Sadly, it’s not
quite as simple as that.

31

But what if the problem is the digital economy However, our changing habits have not cut out
itself rather than our incapacity to fully exploit the middle-man. We buy most of our music
the opportunities it seemingly presents? The from intermediaries like Apple. Even record
first chapter of Michael Lewis’s book Flash Boys labels, seemingly superfluous to the online
opens with a story about construction workers on music industry, continue to flourish.
a project to lay a tunnel for fibre-optic cables as
straight as they possibly could, even if this involved In other words, while the poorer middle-men
digging through mountains or river beds. The – record store assistants, or taxi drivers –
reason: to connect financial exchanges in New have been ruthlessly squeezed, wealthier
York and Chicago by the shortest possible route intermediaries continue to prosper. Even the
and give the operators a crucial few milliseconds supposedly lower barriers to entry in these
advantage when processing transactions. industries have not prevented monopolies
emerging in online markets in a way that is not
A huge amount of money is required to carry out as prominent in markets offline
such projects, and to buy the supercomputers
that can manipulate the data and run the trading A role for universities
programs. It starts to look like a rigged game and
it is difficult to see how a digital economy in which It would be easy to finish this piece with a long
financial speculation is so prominent can reduce list of proposed solutions to these inequities.
inequality. But what is really needed is the necessary
intellectual work of persuading wider society
Stuck in the middle with you that the digital economy does indeed pose
problems. This is not helped by the sense
There are undoubtedly other sectors of the that higher education, one of the best placed
digital economy where lower barriers of sectors to lead this debate, is not always up to
entry do encourage smaller operators. The this task.
early development of search engines and
social networking were characterised by Many of these solutions involve digital
experimentation by single operators or small technology, with big data being the latest whose
groups of people, sometimes students, at home application promises to address various social
or at university. This pioneering image of isolated and economic woes. How welcome it would
entrepreneurs developing great companies from be if funding bodies could also increase the
scratch goes hand-in-hand with radical sounding number of schemes which ask why the rapid
rhetoric about taking on vested interests. growth of the digital economy over the past two
decades has failed both to reduce inequality
In this worldview, cutting out the middle man, and save us from the most severe financial
a superfluous type of employee who will not
move with the times, is seen as a demonstrably 32
good thing. Thus, taxi drivers who complain
about having their business taken away by Uber
are often described as inflexible and prone to
over-charging. But the middle-man has not
disappeared in the digital economy; they have
just got richer

Think of the music industry. Online stores have
resulted in the loss of many jobs as a result of
physical record stores closing down.

ISSUE

The Digital Economy’s Environmetal
Footprint Is threatening the plane

By Elitah Linggam

Modern society has given significant China is the world’s largest producer of rare
attention to the promises of the digital earth minerals, accounting for close to 70 per
economy over the past decade. But it cent of global annual production. The large-
little attention to its negative environmental scale production of rare earth elements in China
footprint. has raised grave concerns about the release
of heavy metals and radioactive materials into
Our smartphones rely on rare earth metals, water bodies, soil and air near mine sites.
and cloud computing, data centres, artificial
intelligence and cryptocurrencies consume large Research on the life-cycle assessments of rare
amounts of electricity, often sourced from coal- earth minerals has found the production of these
fired power plants. metals is far from environmentally sustainable,
consuming large amounts of energy and
These are crucial blind spots we must address if generating radioactive emissions.
we hope to capture the full potential of the digital
economy. Without urgent system-wide actions, It’s sometimes said that the cloud (and the
the digital economy and green economy will be digital universe) begins with coal because digital
incompatible with each other and could lead to traffic requires a vast and distributed physical
more greenhouse gas emissions, accelerate infrastructure that consumes electricity.
climate change and pose great threats to
humanity. Coal is one of the world’s largest sources of
electricity and a key contributor to climate
The digital economy lacks a universal definition, change. China and the United States are the
but it entails the economic activities that result top producers of coal
from billions of everyday online connections
among people, businesses, devices, data and Energy hogs
processes, from online banking to car sharing to
social media.

It’s often referred to as the knowledge economy,
information society or the internet economy.
It relies on data as its fuel and it is already
benefiting society in many ways, such as with
medical diagnoses

Coal is still king for the intenet

Rare earth elements form the backbone of our
modern digital technologies, from tablets and
smartphones to televisions and electric cars.

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When it comes to AI, recent research found that Thinking differently
training a large AI model feeding large amounts
of data into the computer system and asking The digital economy is accelerating faster than
for predictions can emit more than 284 tonnes the actions being taken in the green economy
of carbon dioxide equivalent nearly five times movement to counter negative environmental
the lifetime emissions of the average American impacts. To move forward fast, we must first
car. The results of this work show that there is a start thinking differently
growing problem with AI’s digital footprint.
The world and its intractable challenges
Another area of concern is Bitcoin and other are not linear everything connects to everything
cryptocurrencies, which rely on blockchain, else. We must raise awareness about these
a digital ledger with no central authority that major blind spots, embrace systems leadership
continually records transactions among multiple (leaning across boundaries), boost circular
computers. The amount of energy required to economy ideas(decoupling economic activity
produce one dollar’s worth of Bitcoin is more from the consumption of finite resources),
than twice that required to mine the same value leverage an eco-economics approach (an
of copper, gold or platinum. A 2014 study found environmentally sustainable economy) and
Bitcoin consumed as much energy as Ireland. encourage police makers to explore the
interrelationships between government wide,
Blockchain technologies such as Bitcoin are system wide and societal results.
energy inefficient and unless their potential
applications are developed sustainably they will We must also consider collective problem-solving
pose a serious threat to the environment. by bringing together diverse perspectives from
both the Global North and the Global South.
We should take an inventory of the global and
local damages caused by electronic devices,
platforms and data systems, and frame issues
about the digital economy and its environmental
impact in broad societal terms.

Perhaps, the way to move the current discussion
forward is to ask: What needs to be done to set
the world on a sustainable human trajectory?
We must not only ask what the digital economy
can do for us, but what we can collectively do for
both the digital economy and the environment

34

ISSUE

The
Idutries
That Are
Being
Disrupted
the Most by
Digital

We’re at a critical time for the digital economy. Digital is

no longer the shiny front end of the organization – it’s integrated
into every aspect of today’s companies. As digital technologies
continue to transform the economy, many leaders are struggling
to set a digital strategy, shift organizational structures, and remove
the barriers that are keeping them from maximizing the potential
impact of new digital technologies.

Every year, Russell Reynolds Associates surveys more than 2,000
C-level executives on the impact, structure, barriers, and enablers
of digital technologies across 15 industries. The barometer below
shows the percentage of executives surveyed who responded
that their business would be moderately or massively disrupted by
digital in the next 12 months, broken down by industry.
3355

Unsurprisingly, the most disrupted organizations The second challenge is finding the right person. It
were B2C, with media being the most disrupted was with this in mind that Russell Reynolds profiled
and telecoms and consumer financial services executives tasked with digitally transforming long-
close behind. established firms, who are often chosen to overcome
organizational inertia and drive enterprise-wide
90% of these organizations profess to having a digital transformation and innovation. The results
digital strategy in place. But the sheer pace of are a unique combination of psychometric attributes
change has created a skills gap, which is stopping that broadly fall into five categories. The first two are
many of these organizations from moving unsurprising: these leaders are significantly more
more quickly. Just over half of the respondents innovative and disruptive, being 56% more inclined
answered “yes” to the question “Do you have the to cut through bureaucracy and 29% higher in their
right people to define your digital strategy?” It willingness to challenge traditional approaches.
might be hard for people in HR to hear, but only These attributes alone are not what make these
20% of those who responded said that their HR leaders able to excel in their roles. These executives
function was enabling them to transform, ranking also score highly in their social adeptness, bold
them even lower than fi The most disrupted leadership, and determination. Stand-out attributes
industries typically suffer from a perfect storm of include being 29% more likely to take initiative and
two forces. First, low barriers to entry into these test limits, and 21% more able to adapt to different
sectors lead to more agile competition. Secondly, audiences. It is this combination that makes them
they have large legacy business models which able to drive transformation.
often generate the majority of their revenue.
These organizations, therefore, have embedded In the most progressive organizations, the CDO role
cultural and organizational challenges when it is being absorbed, as standalone digital teams are
comes to changing at the pace required. integrated into the core business, leaving hybrid
general managers in charge. CDOs beget the need
At the other end of the spectrum, the industries for Chief Data Officers and Chief Analytics Officers.
that are least disrupted often have perceived Moreover, new roles, such as the Chief Growth Officer
higher barriers to entry, and a smaller part of and Chief Customer Officer are emerging. Tasked
their business that can be digitized. They are explicitly with driving growth, these roles combine
less affected, but not immune. Advances like strategy, corporate development, investment, and
3D printing and EdX, the joint venture between operations, as companies seek to find meaningful
MIT and Harvard, mean that even industrial new revenues streams.
production and education are seeing disruption,
and are also having their own incumbents lead 2. Culture
the disruption.
You can’t talk about digital without also mentioning
So what can business leaders be doing to meet its lifeblood — data. The link between the impact of
the coming changes head-on? There are three data-driven organizations and culture may not be
levers organizations can pull to keep pace: immediately apparent, but through interviews with
catalytic roles; culture; and commitment. senior leaders, we have seen that data quickly shifts
the power structure in an organization. Decisions that
1. Catalytic roles had previously been deferred to those with years of
New employees can act as catalysts, speeding experience and “a feel for what the customer wants”
up transformation. They are often brought in are now being challenged with data. And whoever
to disrupt traditional thinking and business has the data has the power to make strategic
models. Bringing in a Chief Digital Officer (CDO) decisions. Organizations that foster a culture of
is often the first step for many organizations. making data-based decisions will be in a stronger
But there are two inherent challenges with position to weather the changes ahead.
bringing in a catalyst. First, the role must be
positioned correctly, at the appropriate level in 3366
the organization, with sufficient scope, influence
and sponsorship to make change happen.

3. Commitment

Digital should be built into the core strategy,
systems, and processes of an organization. We
see this in the recruitment of digital directors at the
board level, which has risen steadily over recent
years. Now, 23% of the largest 300 companies in
the world have at least one Digital Director. Again,
you can’t become a more digital company without
the right people leading the charge.
For the leaders who are anticipating massive digital
disruption in their industries, these three levers are
the key to realizing the potential that lies ahead.
Hire the right people to bring about change. Create
a culture that makes data-based decisions. And
fully commit to becoming a more digitally adept
organization, which starts at the board level. The
organizations that don’t do these three things will no
doubt be left behind.

1ACRONYM

3C

BY AL HAFIS

3377

ISSUE

After 20 Years, It’s Harder to
Ignore the Digital Economy’s
Dark Side

In 1995, I published The Digital The book was pretty breathless
Economy, a book that became about the opportunities of the
one of the first best-sellers digital revolution, but it equally
about the internet in business. warned of some huge dangers
To mark its 20th anniversary, ahead — and this dark side has
my publisher asked me to write indeed emerged over the last two
a dozen mini-chapters for a decades. Back then, I wrote:
new edition. As I revisited it,
I was struck by how far we’ve
come since 1995 and by how
many concepts in the book have
withstood the test of time. “The
digital economy” term itself has
become part of the vernacular.

38

The Age of Networked Intelligence is also an age of peril. Technology is also the foundation of new species
For individuals, organizations, and societies that fall of businesses that are capable of wiping out entire
behind, punishment is swift. It is not just old business industries. Spectacular digital conglomerates such as
rules but also governments, social institutions, and Apple, Google, Amazon, and others are taking over a
relationships among people that are being transformed. dozen industries, partly because they do a better job
The new media is changing the ways we do business, work, with a fraction of the employees. Service Aggregators
learn, play, and even think. Far more than the old western such as Uber, Lyft, and Airbnb hold the power to wipe
frontier, the digital frontier is a place of recklessness, out jobs in industries ranging from taxis to hotels. Data
confusion, uncertainty, calamity, and danger. frackers such as Facebook are acquiring vast treasure
Some signs point to a new economy in which wealth troves of data that position them to dominate multiple
is even further concentrated, basic rights like privacy industries.
are vanishing, and a spiral of violence and repression Factoring in the hangover from the financial collapse
undermine basic security and freedoms. Pervasive of 2008, we’re witnessing youth unemployment levels
evidence exists that indicates the basic social fabric is across the western world from 15–50%. This situation
beginning to disintegrate. Old laws, structures, norms, is not only immoral; it is creating a massive powder keg.
and approaches are proving to be completely inadequate Rather than a Schumpeterian “creative destruction,”
for life in the new economy. While they are crumbling we’re seeing structural elimination of entire labor
or being smashed, it is not completely clear what should markets.
replace them. Everywhere people are beginning to ask, “The destruction of privacy in an unprecedented
“Will this smaller world our children inherit be a better and irrevocable manner.” I believed this topic to be
one? so important that I devoted an entire chapter to it. I
While the digital revolution has brought us many wrote: “Most of us believe we have the right to decide
wonders, in hindsight my somewhat discouraging what personal information we divulge, to whom, and
conclusion is that the “promise” of a more fair, equal, for what purpose. Left unchecked, the internet could
just, and sustainable world has been unfulfilled. It has render such thinking irrelevant.”
become clear that the original democratic architecture Safeguarding privacy is now a major concern on
of the internet has been bent to the will of economies people’s minds. So-called “data minimization,” or
and societies in which power is anything but distributed. limiting what information we give away, is no longer
If anything, the power has become more concentrated, feasible. Everywhere we go and in everything we do, we
and the main benefits of the digital economy have been leave a trail of digital crumbs. Today, what happens in
skewed. Vegas, stays…on YouTube.
Let’s look at a few concerns I raised in 1995 and assess Rather than restricting what we input, every country
what has actually happened in the years since. needs better norms and laws protecting our privacy.
“Dislocations in labor markets, with old industries and For example, we should own the data we create. And if
jobs disappearing.” we give it to social media companies, it should only be
In the book, I warned that technology might actually used for the purpose for which it was collected — not
destroy more jobs than it was creating. I asked, “How will sold to others without our permission.
we manage the transition to new types of work and a new The danger of growing social inequality. Two decades
knowledge base for the economy?” ago, the book warned of a “severe bipolarization of
Now, for the first time in modern history, economic growth wealth” that could foster a two-tiered society where the
in OECD countries is not generating a commensurate benefits of the digital age are asymmetrical and where
number of new jobs. Young workers are taking the wealth creation does not lead to prosperity for all.
biggest hit. Arguably, structural unemployment will be Today, income inequality is one of the hottest topics
the biggest public policy issue for decades. on the planet. It was listed as the number one global
It appears that the biggest culprit is digital technologies risk by the World Economic Forum’s 2014 meeting in
themselves. We’ve already seen knowledge work such as Davos, Switzerland. It is the subject of Capital in the
accounting and legal services being shipped offshore to Twenty-First Century, the New York Times best-seller
cheaper employees. Soon the work will stay here but be by French economist Thomas Piketty. While many
done by computers. For example, IBM’s Watson computer people disagree with his socialist conclusions, Piketty’s
diagnoses cancers with much higher levels of speed and scholarship has been pretty much unassailable,
accuracy than skilled physicians do. The same software showing that growing social inequality is endemic to
combined with robotics, 3D printing, and myriad other capitalism, even in the digital age. More people today
innovations will continue to eliminate jobs throughout are questioning whether the digital revolution might
the workforce. actually accelerate inequality.

39

DIGITAL ECONOMY To restore legitimacy and trust, we need to do
what The Digital Economy advised two decades
“Many governments seem slow to comprehend ago: build a second era of democracy based on
the shift.” integrity and accountability, with stronger, more
In 1995, I wrote, “Bureaucracies by definition open institutions, active citizenship, and a culture
resist change, thinking that heads-down is the of public discourse and participation.
route to survival. Can government become Going Forward
electronic, transforming the way government Technological utopians are being proven wrong by
services are delivered?” the facts: technology does not create prosperity, good
Have the operations of governments changed democracy, and justice — humans do. To ensure that
fundamentally in the past two decades? Sure, the digital economy fulfills its promise, we’ll need a
there are improvements, but most governments new social contract that guarantees opportunities for
have spent time making existing models of full employment, protects our privacy, and enables
government digital — paving the cow path — prosperity not just for the few but for everyone.
instead of rethinking the system in a digital age.
(The same applies to many legacy businesses that 1
are struggling with their digital transformations
but lack market forces to compel change.) The
economic crisis of 2008 has made it more urgent
for governments to think seriously about both
how they can use open data and social media to
alter the deep structures of government and how
we orchestrate capability to create public value.
“What will happen to democracy?”
These questions are still relevant today: “Will the
electronic town hall become an electronic mob?
Will cyberdemocracy become hyperdemocracy?
Or can we craft a new age in which networked
intelligence can be applied for the good of the
people?”
The problem is hardly too much citizen
engagement through digital media, as I worried;
the opposite is occurring. Industrial-age
governments have clung to the “you vote, I rule”
model, where politicians broadcast their views
to passive citizens. This is leading to a crisis
of legitimacy among democratic institutions
(of which the U.S. Congress is Exhibit A). This
matters. Seymour Martin Lipset, the American
political sociologist, wrote that legitimacy is
“the capacity of a political system to engender
and maintain the belief that existing political
institutions are the most appropriate and proper
ones for the society.”
The ongoing abuse of trust by office holders is
not simply a series of isolated incidents; it is the
manifestation of a deep and widespread rot. And
people have had it. During the past 20 years,
voter turnout has dropped in most western
democracies, particularly among young people,
who are looking for alternative ways to bring
about social change.

BY AL HAFIS

40

HOW ?

How Basic Income Can Solve One

Of The Digital Economy’s Biggest

By Elitah Linggam Problems

We are being afflicted or training. This is vividly exemplified by Silicon
with a new disease Valley entrepreneur Martin Ford’s contrasting of
of which some the radiologist’s vulnerability to automation with
readers may not that of a housekeeper, whose decision-making
yet have heard the This is compounded by the concern that this
name, but of which new type of economy does not provide enough
they will hear a great compensating positions for the jobs automated
deal in the years to out of existence. As an illustration of how
come – namely, technological unemployment. the most innovative digital companies can
This means unemployment due to our discovery generate huge wealth on the back of the toil of
of means of economising the use of
labour outrunning the pace at which relatively small numbers of people,
we can find new uses for labour. look at how Google’s market value
of US$377 billion is supported by
These words by John Maynard
Keynes in 1930 remind us that just 53,600 global employees.
contemporary anxiety over jobs Contrast this with General Motors’
being taken from us by robots is not market value of US$60 billion and
so far removed from fears of a greater 216,000 employees.
vintage. Indeed, the more these
fears are periodically recycled and This divergence would not be
perennially assuaged, the less significant in an economy where
potent they appear to those who the business of each company was
are sensitive to the long arc of completely separate. Now, though,
human history. Nonetheless, this the tech giants’ operations have
has been one of the major themes seeped into other spheres of business,
of discussion by world leaders at such that Google’s driverless cars
Davos. makes the company a direct competitor of
General Motors.
The exponential growth of digital
technology since the 1990s has Martin Wolf, the Financial Times’ chief
brought us to the “fourth industrial economics commentator, argues that these
revolution”. Advancements have tectonic shifts should open up a space for a
reached the point where highly skilled jobs are rethinking of our attitudes towards work and
as susceptible to replacement by automation leisure. Rather than lamenting what automation
as ones which do not require much education robs us of, why not use it to generate greater
processes are less easily replicated opportunities for leisure and education, as well
as liberate us from our constant anxiety that we
will not be able to support our families in this
unstable environment?

41

An age-old idea The failure of this plan to get off the ground
An obvious way to do this is by way of a was accompanied by a series of negative
basic income – redistribute wealth and give income tax pilot schemes in a number of US
all citizens a flat, unconditional income. The cities with less than stellar results. Despite
idea is grounded in decades-old ideas and this, Conservative thinkers like David Frum
experiments. The Democratic candidate in argue that introducing a basic income would
the 1972 US election, George McGovern, for cut bureaucracy by eradicating the thicket of
example, proposed a “Demogrant” of US$1,000 anti-poverty programmes currently in place. A
a year for every American. number of new schemes – most recently in the
Dutch city of Utrecht – might give us a better
Robert Reich, the labour secretary in Bill indication than their 1970s forebears of how
Clinton’s first presidential term has also these experiments might work in our highly
advocated a combination of minimum income, automated economies.
earnings insurance and a US$60,000 nest egg
for each citizen to cushion against the violent Something that the head of the World
vicissitudes of the modern global networked Economic Forum, Klaus Schwab, has been
economy. And, as Wolf advocated, Swiss keen to emphasise is the increasing tendency
campaigners for a basic income framed their for benefits of the digital revolution to accrue
arguments around the notion of improving to the many not the few. “As automation
citizens’ work-life balance. substitutes for labour across the entire
economy, the net displacement of workers by
It might surprise the reader to discover that machines might exacerbate the gap between
ideas for a basic income come from figures returns to capital and returns to labour,” he
on the right too, including the libertarian said.
economist Friedrich Hayek. They were manifest
in proposals for a negative income tax, first Keynes prediction in 1930 that within a hundred
advocated by Milton Friedman in 1962, and years people in the richest nations would be
which almost came to fruition during the working only 15 hours a week might not come
Richard Nixon presidency in the form of the to pass. But given the potential of automation to
Family Assistance Plan. confound economists’ employment projections,
those gathering at Davos would be remiss
to not consider a basic income as a credible
policy response to contemporary anxieties

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COVID-19 Comics

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