Adoption of digital technology has a direct impact on economic growth, indicating that countries that put emphasis and focus on building a digital economy will see bigger gains, according to a technology expert.
Professor Steve W.R. Burdon of the University of Technology Sydney (UTS) in Australia recently discussed the results of a new study, to be published in February next year, indicating the strong impact of digital technology on productivity and economic growth.
In his video presentation for the Asian Productivity Organization (APO), Burdon noted that Asian countries are showing faster momentum in terms of digital economic growth compared to some of the more advanced Western economies over the last five years.
Singapore heads the current digital economy rankings in the region, followed by Hong Kong, South Korea, China and Japan.
Meanwhile, Indonesia, India, Vietnam and Iran are leading the way in digital economy momentum ranking.
Notably, Indonesia, South Korea, and Malaysia have been dubbed by Burdon as exemplar countries as they show high scores in both digital economy ranking and digital economy momentum in the last few years.
In the report, the Philippines ranks 12 out of the 17 economies in digital economy ranking and 14 in digital economy momentum.
“Digital technology has a 9.3% contribution to economic growth and for our exemplar countries, 13.4%, so straight away, our research has indicated that those that put extra effort on creating a digital economy will see bigger, significant benefits,” said Burdon.
On the market sectors that governments should focus on to improve productivity in the next five years, the retail sector emerged in first place, followed by agriculture, education, and manufacturing.
On the technologies expected to have the biggest impact on productivity, mobile networks headed the list, followed by electronic payments, and cloud computing.
Additionally, Burdon said the study delved into what policies and regulations should be in governments’ strategic plans to have the highest impact on productivity improvement.
It found that giving foremost focus on research and development will produce positive effects not just on productivity, but also on the economy and on social services.
In particular, policy priorities should focus on supporting startups, venture capital, ease of starting a business, innovation hubs, ecosystems near universities, healthy competition, and on helping small and medium enterprises (SMEs) digitize, especially through financial help such as grants and taxation breaks.
Another important area for government to prioritize is technical skills, with Burdon citing India’s and Indonesia’s efforts to teach students these skills at a young age.
“Entrepreneurial skills are important for building digital economy and getting the best productivity,” he added.
Telecommunications is another major policy priority area for the government as regulations in this field heavily influence economic growth and productivity.
“There is growing evidence that countries that are accelerating their digital economy… will benefit their citizens the most,” said Burdon. “And this importance is only going to grow, and not only will it benefit countries that grow with it but it could have a disadvantage if you don’t keep up.”