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Mastering IELTS Writing Task 2: Sample Essays on the Impact of Digital Economy

Analyzing the topic: impact of digital economy.

The digital economy refers to economic activities that result from billions of everyday online connections among people, businesses, devices, data, and processes. It’s a topic that has gained significant traction in recent years and is likely to appear more frequently in IELTS Writing Task 2 questions due to its relevance and global impact.

Based on our research of past IELTS exams and current trends, we’ve identified a question that closely resembles what you might encounter in your test:

Some people believe that the digital economy has had a positive impact on traditional businesses, while others argue that it has led to the decline of many industries. Discuss both views and give your own opinion.

Let’s break down this question and provide sample essays for different band scores.

Question Analysis

This question requires you to:

• Discuss the positive impacts of the digital economy on traditional businesses
• Discuss how the digital economy has led to the decline of some industries
• Give your own opinion on the overall impact

Remember to address all parts of the question and provide specific examples to support your arguments.

Sample Essays

Band 8-9 essay.

The digital revolution has undeniably transformed the business landscape, sparking debates about its impact on traditional industries. While some argue that the digital economy has rejuvenated conventional businesses, others contend that it has precipitated the decline of many sectors. In my opinion, while the digital economy has indeed disrupted certain industries, its overall impact has been largely positive, fostering innovation and creating new opportunities.

Proponents of the digital economy argue that it has breathed new life into traditional businesses. Many brick-and-mortar stores have successfully expanded their reach by establishing online presences, allowing them to tap into global markets and increase their customer base . For instance, small local boutiques can now sell their unique products worldwide through e-commerce platforms, significantly boosting their revenue. Moreover, digital tools have streamlined operations, enhancing efficiency and reducing costs for many businesses. Advanced analytics and customer relationship management systems enable companies to better understand and serve their clientele, leading to improved products and services.

On the other hand, critics argue that the rise of the digital economy has led to the decline of numerous industries. The most oft-cited example is the impact on traditional retail, with many physical stores struggling to compete with online giants like Amazon . Similarly, the newspaper and magazine industry has faced significant challenges as readers increasingly turn to digital sources for news and entertainment. These shifts have resulted in job losses and the closure of many long-standing businesses, particularly in smaller communities.

In my view, while it is true that some industries have faced difficulties, the overall impact of the digital economy has been positive. The digital transformation has spurred innovation across sectors, creating entirely new industries and job opportunities. For example, the rise of the gig economy, facilitated by digital platforms, has provided flexible work options for millions. Furthermore, the digital economy has democratized access to information and resources, enabling small businesses and entrepreneurs to compete on a more level playing field with larger corporations.

In conclusion, while the digital economy has undoubtedly posed challenges for some traditional industries, its benefits in terms of innovation, efficiency, and opportunity creation far outweigh the drawbacks. As we move forward, it is crucial for businesses and policymakers to work together to ensure that the benefits of the digital economy are distributed equitably and that support is provided for those negatively impacted by these changes.

(Word count: 377)

Band 6-7 Essay

The digital economy has changed the way businesses operate in recent years. Some people think it has helped traditional businesses, while others believe it has caused many industries to decline. I will discuss both views and give my opinion.

On the positive side, the digital economy has given traditional businesses new opportunities. Many small shops can now sell their products online, reaching customers all over the world . This has helped them increase their sales and grow their businesses. Digital tools have also made it easier for companies to manage their operations and communicate with customers. For example, social media allows businesses to advertise cheaply and connect with their customers directly.

However, there are also negative effects of the digital economy on some industries. Many physical stores have closed because they can’t compete with online shopping websites . Bookstores and music shops, for instance, have been hit hard by digital alternatives. Some people have lost their jobs because of these changes, which is a serious problem.

In my opinion, while the digital economy has caused problems for some businesses, overall it has been good for the economy. It has created many new jobs in technology and online services. It has also made it easier for people to start their own businesses with less money. I think the benefits of the digital economy are greater than its drawbacks.

To conclude, the digital economy has both positive and negative impacts on traditional businesses. While some industries have struggled, many others have found new opportunities to grow and succeed. As technology continues to advance, it’s important for businesses to adapt to these changes to stay competitive.

(Word count: 270)

Band 5-6 Essay

The digital economy is changing how businesses work. Some people think it’s good for old businesses, but others say it’s making many businesses close. I will talk about both ideas and give my opinion.

The good thing about the digital economy is that it helps some old businesses. Small shops can now sell things on the internet to people far away . This helps them make more money. Also, businesses can use computers to work better and talk to customers easily.

But the digital economy also has bad effects. Many shops have closed because people buy things online instead . For example, many bookstores have closed because people read e-books now. Some people lose their jobs because of this, which is bad.

I think the digital economy is mostly good, even though it causes some problems. It makes new jobs in computer work. It also helps people start new businesses easily. I believe the good things are more than the bad things.

In conclusion, the digital economy changes businesses in good and bad ways. Some businesses have problems, but others find new ways to do well. I think it’s important for businesses to learn how to use new technology to be successful.

(Word count: 185)

Scoring Explanation

This essay demonstrates excellent writing skills and a sophisticated approach to the topic:

• Task Achievement: Fully addresses all parts of the task with well-developed ideas and relevant examples.
• Coherence and Cohesion: Ideas are logically organized with clear progression throughout. Uses a range of cohesive devices effectively.
• Lexical Resource: Uses a wide range of vocabulary with very natural and sophisticated control of lexical features.
• Grammatical Range and Accuracy: Uses a wide range of structures with flexibility and accuracy.

This essay shows a competent handling of the task:

• Task Achievement: Addresses all parts of the task, though some aspects are more fully covered than others.
• Coherence and Cohesion: Information and ideas are arranged coherently, and there is a clear overall progression.
• Lexical Resource: Uses an adequate range of vocabulary for the task, with some attempts at less common vocabulary.
• Grammatical Range and Accuracy: Uses a mix of simple and complex sentence forms with generally good control.

This essay demonstrates a modest attempt at addressing the task:

• Task Achievement: Addresses the task only partially, with limited development of ideas.
• Coherence and Cohesion: Presents information with some organization, but there may be a lack of overall progression.
• Lexical Resource: Uses a limited range of vocabulary, but this is minimally adequate for the task.
• Grammatical Range and Accuracy: Uses only a limited range of structures with some errors that may impede communication.

Key Vocabulary to Remember

Digital economy (noun) /ˈdɪdʒɪtl ɪˈkɒnəmi/: Economic activity resulting from online connections.

Disrupt (verb) /dɪsˈrʌpt/: To cause disorder or turmoil in.

E-commerce (noun) /ˈiːkɒmɜːs/: Commercial transactions conducted electronically on the internet.

Innovation (noun) /ˌɪnəˈveɪʃn/: The introduction of new ideas, methods, or things.

Democratize (verb) /dɪˈmɒkrətaɪz/: To make something accessible to everyone.

Gig economy (noun) /ɡɪɡ ɪˈkɒnəmi/: A labor market characterized by short-term contracts or freelance work.

Streamline (verb) /ˈstriːmlaɪn/: To make an organization or system more efficient and effective.

Brick-and-mortar (adjective) /brɪk ænd ˈmɔːtə(r)/: Relating to a physical store, not an online business.

Adaptation (noun) /ˌædæpˈteɪʃn/: The process of changing to suit different conditions.

Transformation (noun) /ˌtrænsfəˈmeɪʃn/: A marked change in form, nature, or appearance.

The impact of the digital economy is a crucial topic in today’s IELTS Writing Task 2 exams. By understanding the various perspectives on this issue and practicing with sample essays like those provided, you can improve your ability to write a well-structured, coherent response.

For further practice, consider writing essays on related topics such as:

• The effect of the digital economy on employment patterns
• The role of governments in regulating the digital economy
• The impact of digital currencies on traditional financial systems

Remember to focus on developing your ideas fully, using a range of vocabulary and grammatical structures, and maintaining a clear and logical structure in your essay. We encourage you to practice writing your own essay on this topic and share it in the comments section below for feedback and discussion with other learners.

To further enhance your understanding of the digital economy’s impact, you might find these related articles helpful:

• How the Digital Economy is Transforming Traditional Industries
• The Impact of Digital Currencies on the Global Economy
• How the Digital Economy is Affecting Job Security

Good luck with your IELTS preparation!

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Essay on Impact of the digital economy on my life

Essay – impact of the digital economy on my life.

Impact of the digital economy on my life Essay: The world where we live is constantly changing and one of the main drivers of the transformation is the digital economy. Digital economy refers to the economic activity that involves the use of the latest technology. In other words, digital transformation refers to the use of digital technology that is needed in transforming the business or the services. The digital economy has impacted the lives of many people including mine. This has been possible due to the influential role played by the policymakers in ensuring that the country is well progressing towards digitisation.

To socialise with my friends I have also been taking help from the digital economy. I spend a lot of time on social media to stay connected with my friends.  Digital economy and ICT have also kept me entertained  As a movie freak, I can use ICT to keep me updated about the movies on Amazon Prime and Netflix.  Furthermore, I can shop for my groceries and apparel within the comfort of my home with the help of a shopping app. The digital economy has also facilitated the ease of money transactions with the help of PhonePay, GooglePay and Paytm.

To conclude, it can be said that the digital economy has got both negative and positive impacts on my life. It has made, my life easier by enabling me to have access to educational websites. I no longer have to visit the library to do my research work. I can easily acquire information with the help of the internet and stay connected with my friends and family with the use of social media. . In addition, online paying and shopping have become much easier because of the impact of the digital economy.

Ans: It leads to cyberbullying.

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Essay on Living in a Digital World

Students are often asked to write an essay on Living in a Digital World in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Living in a Digital World

Introduction to the digital world.

We live in a digital world, where technology impacts every aspect of our lives. From communication to education, shopping to entertainment, digital technology plays a crucial role.

Communication in the Digital World

Digital technology has transformed communication. We can now connect with people worldwide instantly, thanks to social media, emails, and video conferencing.

Education in the Digital World

Digital learning has made education more accessible. With online classes, students can learn from anywhere, anytime.

Shopping and Entertainment

Online shopping and digital entertainment have become a part of our daily lives, providing convenience and variety.

250 Words Essay on Living in a Digital World

The advent of the digital world.

The digital world we inhabit today is a creation of rapid technological advancements, fundamentally altering the way we live, work, and communicate. This transformation has been so profound that it has ushered in an era coined as the ‘Information Age’.

Impact on Communication

The digital world has revolutionized communication. Social media platforms and instant messaging apps have made it possible to interact with anyone, anywhere, at any time. This instantaneity, while fostering global connectivity, also challenges traditional notions of privacy and personal space.

Learning in the Digital World

Education has been democratized by the digital world. The internet offers a plethora of resources, enabling anyone with a connection to learn virtually anything. However, the digital divide still persists, highlighting the need for equal access to digital resources.

Work in the Digital Era

The digital world has reshaped the professional landscape as well. Remote work, digital nomadism, and gig economy are now viable career paths, thanks to digital technologies. Yet, these bring new challenges, such as job insecurity and work-life balance issues.

Living in a digital world is a double-edged sword. While it offers unprecedented opportunities, it also presents unique challenges. As digital citizens, it’s crucial to navigate this landscape mindfully, leveraging its advantages while mitigating its drawbacks.

500 Words Essay on Living in a Digital World

Introduction, the digital landscape.

The digital landscape is dominated by the internet, mobile technology, and artificial intelligence. The internet has become a global platform for communication, information exchange, and commerce. Mobile technology has made the internet accessible anywhere and at any time, leading to an always-on culture. Artificial intelligence is automating tasks, making decisions, and even creating content, fundamentally changing the nature of work and leisure.

The digital world has revolutionized communication. Social media platforms like Facebook, Twitter, and Instagram have transformed the way we interact with each other. They have made it possible to maintain relationships across vast distances, share moments instantly, and collaborate in real-time. However, this has also led to new challenges, such as online harassment, privacy concerns, and the spread of misinformation.

Impact on Education

Impact on entertainment and business.

The entertainment industry has been reshaped by the digital world. Streaming platforms like Netflix, Spotify, and YouTube have made it possible to consume entertainment on demand. Similarly, in the business world, digital technologies have disrupted traditional business models, leading to the rise of e-commerce, remote work, and digital marketing. However, these developments have also raised issues related to job displacement and data security.

Living in a digital world presents both opportunities and challenges. It has the potential to enhance communication, democratize education, revolutionize entertainment, and transform business. However, it also poses significant risks, such as privacy violations, misinformation, educational inequality, job displacement, and data breaches. Navigating this digital world requires a nuanced understanding of these dynamics and a commitment to addressing the associated challenges. As we continue to shape and be shaped by the digital world, it is crucial to ensure that it serves the interests of all, not just a privileged few.

Apart from these, you can look at all the essays by clicking here .

Happy studying!

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Essay on Digital Economy

Introduction.

With the rapid growth of digital transformation in recent years, many organizations have flourished across various industries, often against powerful incumbents by leveraging compelling and complex connections with consumers. The organizations have gained a competitive advantage by running multiple paths to engage with their consumers. Amazon is among the most successful organizations emerging in the transformed business landscape. Amazon has experienced a continuous transformation digitally since its launch in 1994 to an international company (Althafairi  et al.,  2019). The organization has gained a tremendous competitive advantage by using the technology effectively. First, the company is customer-centric, whereby the organization has been ranked the number one for various consumer satisfaction indexes.

Besides, the entire business structure of the organization is driven by digital technology in expanding its business offerings and enhancing the main business functions. In addition, the company provides a workplace culture that drives innovation and change. The company has grown from a book store to being the leading online store currently. The company continues to break into and create new markets successfully, which is only possible by being responsive and having its workers willing to move with the transformation. As novel technologies have continued to be developed, the organization has always stayed at the front end of the wave (Lisdorf, 2021). For instance, the organization uses drones for delivery and data analytics to make decisions on cutting costs through economies of scale and other efficiencies. This paper discusses the implications of the digital economy on Amazon.

The digital economy is a hyper-connected economy that comprises growing inter-connected individuals, companies, and machines through the web and using digital means such as robotics and big data analytics (Barefoot  et al.,  2018). It involves a transformation in the economy due to the general use of developing digital technologies. The change results in a digital business based on e-business and e-commerce aimed at e-goods. The main building blocks of the digital economy include the internets, which enables organizations to offer goods for sale and allow consumers to browse the products they need. E-mail which allows cheap and instantaneous communications across the globe; digital automation, which is the processing power of computers that helps organizations make decisions based on the output, digital payments, which include credit cards, bitcoin, and bank transfer; and social media where people use it to share recommendation about business. Organizations embracing the digital economy use internet websites, social media reviews, e-sales, e-payments, and automation in their operations (Abdrakhmanova  et al.,  2021). However, the traditional economy is based on physical shops and cash payments. Some of the digital economy examples include Airbnb, which allows tourists to make reservations online, and Netflix, which will enable consumers to buy television series and films through the internet without any physical good.

Developments in the digital economy have led to positive and negative effects on organizations operating in the e-sector. The positive implications of digital economy development include more meaningful information enabled by the internet to help consumers have detailed information to make better choices. For instance, a consumer can use the internet to assess a specific product offered by different organizations and compare the prices. Besides, digital technology has helped save costs since the business does not require many employees hence saving on labor costs (Cassar  et al.,  2010). The organization also benefits by cutting out the aspect of the retail chain since it can send the purchased goods directly to the consumer rather than through shops. In addition, the digital economy helps create important data that gives significant insights to the company. For instance, an organization may use data analytics to analyze the trends in the economy and plan appropriately for the future. Also, the digital economy helps organizations reach a wide range of target consumers since it is not limited by location. With the use of the internet, a consumer can purchase products in different world locations. The goods are then shipped to the customers. Thus, the digital economy has helped organizations gain a wide customer base, which makes the company make more profits, hence more growth. The negative implications of the digital economy on organizations in the e-sector involve cyber-attacks (Hojeghan & Esfangareh, 2011). Since the organizations use information technology systems, they are prone to attacks such as disrupting the organizations’ approach, which may lead to loss of consumers or lack of trust from the consumers when they get manipulative messages from the attackers. Also, it breaches an organization’s privacy since it is challenging to have privacy in the digital world, and the organization’s data can be stolen or sold.

Business Model of Amazon

Amazon is an American international e-commerce organization launched by Jeffrey Bezos in 1994. When it faces competition, its brand remains unparalleled and hence remains in the lead (Investopedia, 2019). The business model of Amazon identifies the following critical success factor. The first factor is maintaining a solid brand name and location, then offering its consumers value and strong shopping knowledge, which then followed by considerable sales capacity and finally realizing economies of scope and scale. Amazon’s business model is set if business models rather than a single agency (Sadq  et al.,  2018). The business model of e-commerce organizations, in general, comprises eight key components, which include value proposition, market opportunity, revenue model, competitive environment, competitive advantage, market strategy, organizational development, and management team (Wadhwa  et al.,  2020). . The business model of amazon comprises the value proposition, revenue model, customer segments, essential resources, competitors, partners, cost structure, and customer relationship.

Value proposition

Value proposition involves specifying how the products and services of the organization are combined and extended to meet the needs of consumers. The company targets middle-class and upper-class individuals who have experience in technology and those that do not have time to buy products from physical outlets (Wadhwa  et al.,  2020). Thus, the company has positioned itself as a local and global e-commerce giant where consumers can purchase anything and get it delivered at any remote location. The company has obtained many information technologies and e-commerce start-ups intending to offer high value to their consumers using the digital technology of the acquired companies at a low cost (Wadhwa  et al.,  2020). . The company used big data analytics to record consumer data and analyze consumer behavior which helps the organization provide consumers products, related products or bundle the items together as an offer depending on consumer preferences demonstrated through purchases.

Revenue Model

The revenue model involves ways the organization uses to generate a higher return on investment and profits. The revenue model of e-commerce includes promotion, subscription, sales, fees, and affiliate revenue models. The organization sells goods directly that consumers visit since they assume they will obtain affordable products readily available for purchase and shipping. This helps the company to get direct sales. The company also receives revenue by offering other retailers a platform to sell products to their consumers. The company gets a commission from the sale prices of the retailer’s products. Besides, Amazon retains a subscription-based business model via its Amazon Prime serves, where consumers pay an annual fee to secure free two-day or same-day shipping on eligible items and access streaming media such as digital music and movies (Wadhwa  et al.,  2020). Also, the organization makes revenue from Amazon Kindle, an e-reading package whereby the consumers can purchase, surf, and copy files, publications, and broadsheets (Wadhwa  et al.,  2020). Amazon’s advertising platform is another source of revenue for the company since it offers a marketing platform for sponsored ads and videos. The company owns more than 1000 patents, which is another source of revenue for the company.

Customer segments

Amazon consumer segments can be separated into three categories: suppliers, consumers, and inventors. The suppliers are the organizations that utilize the e-commerce stage of Amazon to sell their products to Amazon’s broad consumers. Inventors involve every public involved with Amazon web services which are Amazon cloud computing platforms (Pereira, 2020). They include customers and partners of all sizes in each industry. The buyers are the people across the globe seeking to purchase products and services via Amazon’s channels. Amazon keeps data of its consumers to track consumer behavior through characteristics such as consumer interests, engagements, and personal information.

Amazon Competitors

The competitive environment in the business model entails the competing firms working in the same market space, possible competitors in the market, manufactured goods alternatives available, and the bargaining power of the consumers and sellers. The organization has many competitors who challenge it to continue providing better services to its consumers to remain at the top. Some of the competitors include online stores, approximately more than 24 million currently (Ritala  et al.,  2014). Another competitor is Walmart which has a significant presence online and is ranked as the second most popular store in the United States. Besides, china-based online retailer Alibaba is another competitor of Amazon, specializing in whole selling. Other competitors include Otto, Jingdong, eBay, Flipkart, Rakuten, and Newegg (Pereira, 2020).

Amazon Key Resources

The organization’s primary resource is the technological infrastructure, which is essential for ensuring the whole chain of the business is operating without disruptions and losses. Others include physical spaces such as warehouses and automation (Pereira, 2020). Human resource is another significant resource that ensures efficient communication with the partners.

Amazon Key Partners

Amazon has always assimilated, financed, and amalgamated with industries that align with their current and future growth while re-investing incomes from their sales into long-standing growth in novel marketplaces and ground-breaking exploration (University of Toronto, 2013). The significant partners of the online store include sellers who are the essential associates of the trademark because they are the producers of Amazon’s leading basis of returns. The company has more than 7.9 million sellers globally who generate approximately half of the firm’s returns (Pereira, 2020). Other partners are affiliates who are bloggers that promote traffic for the platform and earn commission through referrals that lead to a sale and therefore help in boosting sales, developers who are system integrators and software vendors, content creators who independently use Amazon Kindle to publish their works, and subsidiaries which involve organizations that offer storing places, and structures to products and goods established by Amazon.

Amazon Cost structure

The costs incurred by the company involve the maintenance of the information technology systems, a good customer service center, promotion of its products, ensuring the security of its websites, and payment of rents and lease on their physical stores and delivery stations (Pereira, 2020).

Amazon Channels

The company’s leading and the most significant channel is the Amazon website and other channels, including Amazon App, Amazon Prime, and affiliate program. Since the company is internet-based, it utilizes digital marketing, which involves e-marketing and advertisements (Pereira, 2020).

Amazon Customer Relationship

Amazon has, over time, maintaining a strong and enduring connection with the consumers (Pereira, 2020). This is because the company’s main objective is to be consumer-centric, and it does this by maintaining different communication approaches that are easy to use by their consumers, such as telephone calls and online chats. The company’s greatest strength is ensuring complete customer satisfaction and excellent customer service (University of Toronto, 2013).

Amazon Key Activities

The key activities of the institution revolve around the establishment, preservation, and growth of its extensive network. Thus, the company capitalizes on website and application creation and administration and the whole logistics and supply department and information security (Pereira, 2020).

Challenges and Opportunities

Amazon has been facing various challenges in its operations, including regulations in some countries. For instance, the Indian government restricted all overseas corporations from using e-commerce to vend their goods openly to Indian customers. This made it difficult for Amazon to reach consumers in India without involving intermediaries. This, in return, increases the labor costs, which reduces the company’s profits. Another challenge Amazon faces include limited infrastructure to allow easy reach of goods to consumers. Some countries have poor infrastructure, making Amazon take more time before delivering products to its consumers. This wastes many resources which are essential to the company. Besides, the consumers who lack patience give bad reviews about the company, which affects the brand’s image. To deal with this, the company ensures constant communication with consumers in case of a challenge in delivering the consumer goods to let the consumers know that the goods may be delivered late. A good customer relationship through constant communication helps the consumers develop trust and loyalty to the organization. Another challenge the company faces is competition from its rivals through the pricing of products or substitute products (Chhabra, 2021). The company faces this challenge by offering its products at low and competitive prices to keep up with the competition. The company uses dynamic pricing, which involves changing the prices of different products more than 2million times each day. It also uses psychological pricing to keep its costs competitive and attract more customers by providing huge discounts on best-selling and popular products. This makes customers find Amazon prices to be the lowest all-time and purchase from the company. Besides, the company ensures competitive and low prices through competition monitoring and repricing, which involves placing a tab on the prices of every product offered by its competitors and considers repricing its products to attract more consumers to its platform. Despite the challenges, the companies have diverse opportunities in the digital economy. The company has the chance of expanding its operations in other countries, such as the developing states. Also, the company can establish more physical stores to compete with the brick-and-mortar operations, which may be more robust because they engage customers more (Akram, 2015).

Amazon is an international e-commerce company based in America and was started in 1994. Amazon has successfully remained competitive in the digital economy due to its continued investment in new technologies. The digital economy involves using digital technology to connect organizations and people. Some of the digital economy organizations include Netflix, Amazon, and Airbnb. Developments in the digital economy have impacted the e-commerce sector significantly. It has provided consumers with the availability of more information to make informed decisions before purchasing products online. For instance, consumers can visit different online companies offering the product they need and compare prices before buying. Besides, it has provided the businesses with the ability to reach a vast population of their target customers. However, the companies in the digital economy face various challenges such as privacy concerns whereby their information and consumer information is can be accessed by cyber attackers. Amazon has a business model which includes multiple components such as value proposition, revenue model, cost structure, key partners, customer segments, customer relationship, competitors, and critical resources. The revenue model entails the different sources of revenue for the company, including direct sales to its consumers, commissions from retailers using their platform, and Amazon Prime. The company faces challenges which include government restrictions from selling directly to citizens, which the company has faced successfully by developing physical stores in those countries. Other challenges include stiff competition from other companies in the e-space and poor infrastructure, which easily hinders the delivery of products to consumers. The opportunities include the company can open stores in other countries such as the developing nations.

Abdrakhmanova, G. I., Vishnevsky, K. O., Gokhberg, L. M., Demidkina, O. V., Demyanova, A. V., Kovaleva, G. G., … & Shugal, N. B. (2021). Digital economy.

Akram, S. (2015).  Amazon’s Business Model and its Evolutions . Academia.edu. https://www.academia.edu/37917507/Amazon_s_Business_Model_and_its_Evolutions

Althafairi, B., Alhoumaida, N., Saxena, M., & Almsri, Z. (2019). Case study-AMAZON.  Journal of the Community Development in Asia (JCDA) ,  2 (2).

Barefoot, K., Curtis, D., Jolliff, W., Nicholson, J. R., & Omohundro, R. (2018). Defining and measuring the digital economy.  US Department of Commerce Bureau of Economic Analysis, Washington, DC ,  15 .

Cassar, C., Heath, D., & Micallef, L. (2010). What is digital economy? Unicorns, transformation and the internet of things.  Deloitte Article .

Chhabra, T. (2021, July 28).  Amazon business model: How does amazon make money?  Feedough. Retrieved March 26, 2022, from https://www.feedough.com/amazon-business-model/

Hojeghan, S. B., & Esfangareh, A. N. (2011). Digital economy and tourism impacts, influences and challenges.  Procedia-Social and Behavioral Sciences ,  19 , 308-316.

Investopedia. (2019).  Amazon’s vs. Alibaba’s Business Models: What’s the Difference?  Investopedia. https://www.investopedia.com/articles/investing/061215/difference-between-amazon-and-alibabas-business-models.asp

Lisdorf, A. (2021). Amazon. In  Cloud Computing Basics  (pp. 75-84). Apress, Berkeley, CA.

Pereira, D. (2020, May 1).  Amazon Business Model . Business Model Analyst. https://businessmodelanalyst.com/amazon-business-model/

Ritala, P., Golnam, A., & Wegmann, A. (2014). Coopetition-based business models: The case of Amazon. com.  Industrial marketing management ,  43 (2), 236-249.

Sadq, Z. M., Sabir, H. N., & Saeed, V. S. H. (2018). Analyzing the Amazon success strategies.  Journal of process management and new technologies ,  6 (4).

University of Toronto. (2013).  Amazon Business Model Case Study . http://www.amgimanagement.com/founder/ProjectSummaries/APS1012_2013_spring_03_Amazon%20business%20model%20case%20study.pdf

Wadhwa, B., Vashisht, A., & Phutela, N. (2020). Business model of amazon India-A case study.  South Asian Journal of Marketing & Management Research ,  10 (1), 32-40.

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Digital economy is one collective term for all economic transactions that occur on the internet. It is also known as the Web Economy or the Internet Economy. With the advent of technology and the process of globalization, the digital and traditional economies are merging into one. Let us learn more about this concept of digital economy.

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What is digital economy.

Digital economy is defined as an economy that focuses on digital technologies, i.e. it is based on digital and computing technologies. It essentially covers all business , economic , social, cultural etc. activities that are supported by the web and other digital communication technologies.

The term was first coined in a book “The Digital Economy: Promise and Peril in the Age of Networked Intelligence” by author Don Tapscott in 1995.

There are three main components of this economy, namely,

• e-business infrastructure

In the last 15 years, we have seen the tremendous growth of digital platforms and their influence on our lives. Now consumers are influenced by things they see on social media (Facebook, Twitter, Instagram) and other such popular websites (youtube etc).

So this economy is a way to exploit this opportunity. Now it is integrated into every aspect of the user’s life – healthcare , education, banking, entertainment etc.

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Merits of Digital Economy

Digital economy has given rise to many new trends and start-up ideas. Almost all of the biggest companies in the world (Google, Apple, Microsoft, Amazon) are from the digital world. Let us look at some important merits of the digital economy.

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1. Promotes Use of the Internet

If you think about it, most of your daily work can today be done on the internet. The massive growth of technology and the internet that began in the USA is now a worldwide network. So there is a dramatic rise in the investment on all things related – hardware, technological research, software, services, digital communication etc. And so this economy has ensured that the internet is here to stay and so are web-based businesses.

2. Rise in E-Commerce

The businesses that adapted and adopted the internet and embraced online business in the last decade have flourished. The digital economy has pushed the e-commerce sector into overdrive. Not just direct selling but buying, distribution, marketing, creating, selling have all become easier due to the digital economy.

3. Digital Goods and Services

Gone are the days of Movie DVD and Music CD’s or records. Now, these goods are available to us digitally. There is no need for any tangible products anymore. Same is true for services like banking , insurance etc. There is no need to visit your bank if you can do every transaction online. So certain goods and services have been completely digitized in this digital economy.

4. Transparency

Most transactions and their payment in the digital economy happen online. Cash transactions are becoming rare. This helps reduce the black money and corruption in the market and make the economy more transparent. In fact, during the demonetization, the government made a push for online transactions to promote the web economy.

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Demerits of Digital Economy

1] loss in employment.

The more we depend on technology, the less we depend on human resources. The advancement of the digital economy may lead to the loss of many jobs. As the processes get more automated, the requirement for human resources reduces. Take the example of online banking itself.

2] Lack of Experts

Digital economy requires complex processes and technologies. To build the platforms and their upkeep require experts and trained professionals. These are not readily available, especially in rural and semi-rural areas.

3] Heavy Investment

Digital economy requires a strong infrastructure, high functioning Internet, strong mobile networks and telecommunication. All of this is a time consuming and investment heavy process. In a developing country like ours, development of the infrastructure and network is a very slow, tedious and costly process.

Solved Example on Digital Economy

Q. Define Digital Economy.

A. Digital economy is defined as an economy that focuses on digital technologies, i.e. it is based on digital and computing technologies. It essentially covers all business, economic, social, cultural etc. activities that are supported by the web and other digital communication technologies.

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ORIGINAL RESEARCH article

The impact of digital economy on the economic growth and the development strategies in the post-covid-19 era: evidence from countries along the “belt and road”.

• 1 Department of Agricultural and Forestry Economics and Management, School of Economics and Management, Beijing Forestry University, Beijing, China
• 2 Department of International Trade, School of Economics and Management, Beijing Forestry University, Beijing, China
• 3 Department of International Business, Business College, Beijing Union University, Beijing, China
• 4 Beijing Shenzhou Chiji Fund Management Co., Ltd., Beijing, China
• 5 School of Mathematics and Physics, Faculty of Science, The University of Queensland, Brisbane, QLD, Australia

The digital economy is considered as an effective measure to mitigate the negative economic impact of the Corona Virus Disease 2019 (COVID-19) epidemic. However, few studies evaluated the role of digital economy on the economic growth of countries along the “Belt and Road” and the impact of COVID-19 on their digital industries. This study constructed a comprehensive evaluation index system and applied a panel data regression model to empirically analyze the impact of digital economy on the economic growth of countries along the “Belt and Road” before COVID-19. Then, a Global Trade Analysis Project (GTAP) model was used to examine the impact of COVID-19 on their digital industries and trade pattern. Our results show that although there is an obvious regional imbalance in the digital economy development in countries along the “Belt and Road”, the digital economy has a significantly positive effect on their economic growth. The main impact mechanism is through promoting industrial structure upgrading, the total employment and restructuring of employment. Furthermore, COVID-19 has generally boosted the demand for the digital industries, and the impact from the demand side is much larger than that from the supply side. Specifically, the digital industries in Armenia, Israel, Latvia and Estonia have shown great growth potential during the epidemic. On the contrast, COVID-19 has brought adverse impacts to the digital industries in Ukraine, Egypt, Turkey, and the Philippines. The development strategies are proposed to bridge the “digital divide” of countries along the “Belt and Road,” and to strengthen the driving effect of the digital economy on industrial upgrading, employment and trade in the post-COVID-19 era.

Introduction

Digital technologies, typically represented by the Internet, big data, 5G, artificial intelligence, accelerate the deep integration with industries, bringing the world into the era of digital economy ( 1 ). Since the “Belt and Road” initiative was proposed, the digital economy has also gradually become a crucial cooperation area for the countries ( 2 ). During the 4th World Internet Conference in 2017, the “Belt and Road” Digital Economy International Cooperation Initiative was launched, which aimed to build an interconnected “digital silk road” and to create a “community of interests and destiny” ( 3 ). The digital economy can further optimize the industrial structure and increase jobs through information and communications technologies (ICT), Internet and other intelligent means, greatly improving the economic development in countries along the “Belt and Road.” In particular, the digital economy has played an active role in mitigating economic losses and promoting economic recovery during the fight against Corona Virus Disease 2019 (COVID-19). Specifically, COVID-19 brought serious shocks to the world economy by directly affecting production, disrupting the supply chain and having an adverse impact on firms and financial markets ( 4 – 7 ). Additionally, the stringency measures implemented by policymakers to minimize social mobility also decrease macroeconomic activity ( 8 ). On the contrast, the digital economy, with its advantages of high technology and integration with other industries, has become a new opportunity for digital transformation of industries. Compared with the real economy, digital technologies, industries and services play an important role as stabilizers, lubricants and boosters ( 9 ). Thus, they are considered as important measures to combat the crisis and engines to drive economic growth. However, the digital economy development in countries along the “Belt and Road” still varies greatly, resulting in their inequitable access to digital development opportunities. Therefore, with the trend of digital transformation in the post-COVID-19 era, it is necessary to assess the digital economy development in countries along the “Belt and Road,” reveal its impact mechanism on economic growth and clarify the impact of COVID-19 on digital economy-related industries. This can provide a policy reference for further strengthening the digital economy cooperation of countries along the “Belt and Road” in the post-COVID-19 era and narrowing the “digital divide” with developed countries.

Considering that the global economic governance is entering the post-COVID-19 era along with the digital transformation, this paper attempts to study the mechanism of the impact of digital economy on economic development and explores the development strategies in the post-COVID-19 era. With the rise of emerging technologies such as big data, cloud computing, and the Internet of Things, ICT is gradually considered as the “engine” for economic development ( 10 – 12 ). However, from the existing studies, there is no consistent conclusion about the impact of the digital economy on the national economy. Some scholars argued that the development of the digital economy could improve the efficiency of factors such as capital and labor, thus contributing to economic growth ( 13 , 14 ). In addition, the digital economy, as an emerging development model, represents a change in the way of economic growth, which will have a positive impact on the employment and industrial structure, thus affecting the economic development ( 14 ). However, other scholars argued that the cost of ICT development and use is expensive due to the lack of infrastructure, especially for less developed countries ( 15 ). Therefore, there is a wide divergence of conclusions related to the digital economy on economic development, and research on the impact mechanism of the digital economy on economic development is very limited. After the outbreak of COVID-19, the role of the digital economy on economic recovery has further attracted the attention of scholars. It has been documented that COVID-19 prompted a rapid shift of consumer demand online, creating opportunities for emerging digital industries ( 16 , 17 ). These online services can reduce the movement of people, reduce the risk of epidemic transmission, and also contribute to stable economic growth. However, current research is still dominated by qualitative analysis, and quantitative assessment of the impact of COVID-19 on the digital economy is less available.

Based on the existing literature, we find that the relationship between the digital economy and the economic development remains ambiguous, and the impact mechanism needs to be further investigated. In addition, few studies have assessed how much COVID-19 has impacted the digital economy across countries along the “Belt and Road.” Therefore, it is not clear how the digital economy of these countries should develop in the future. To this end, this paper made the following contributions to address the current research gap: First, this paper establishes a comprehensive index system to reflect the differences in digital economy infrastructure, openness, innovation environment and competitiveness among countries along the “Belt and Road.” Second, a panel data regression model and a mediating effects model are used to reveal the impact mechanism of the digital economy on the economic growth through the adjustment of industrial structure and improvement of employment before COVID-19. This can provide historical experience and evidence for the use of the digital economy to promote high-quality economic growth in countries along the “Belt and Road.” Finally, the Global Trade Analysis Project (GTAP) model is used to examine the opportunities or challenges brought by the supply-side and demand-side impacts of COVID-19 to the digital industries. This will provide policy insights to better utilize the digital economy development opportunities to mitigate economic losses and promote the transformation of digital industries in the post-COVID-19 era.

The remainder of this paper is organized as follows. Section Literature Review conducts a review of literature related to the impact of digital economy. Section Measurement of Digital Economy Development measures the digital economy development in countries along the “Belt and Road.” Section Digital Economy's Impact Before COVID-19 examines the mechanism of the impact of the digital economy on the economic growth of countries along the “Belt and Road” before COVID-19. Section COVID-19's impact on digital economy discusses the impact of COVID-19 on the digital economy and trade patterns. The final section is Conclusions and Policy Implications.

Literature Review

In recent years, the digital economy has become a new economic form after the agricultural and industrial economies ( 14 ). The concept of the digital economy was first proposed by Tapscott ( 18 ), who indicated that the age of networked intelligence is not only about the networking of technology, but about the networking of humans through technology. The integration of digital and network technologies has made the digital economy prominent in economic and social activities; thus its connotation has become richer. Mesenbourg ( 19 ) defined the digital economy in terms of three components: e-business infrastructure, e-business and e-commerce. Other scholars considered the digital economy as a dynamic process instead of static efficiency ( 20 ). In recent years, the digital economy was defined as a wider than modest digitizing segment, and its general meanings integrate all the digitally-oriented economic activities ( 21 , 22 ). For instance, the Organization for Economic Co-operation and Development (OECD) described the concept of the digital economy as “the digital transformation of economic and social development” and considered all traditional industries in the process of digitization and networking as part of the digital economy ( 23 ). The G20 Digital Economy Development and Cooperation Initiative further defined the digital economy as “a broad range of economic activities that include using digitized information and knowledge as the key factor of production, modern information networks as an important activity space, and the effective use of ICT as an important driver of productivity growth and economic structural optimization” ( 24 ). Therefore, the ambiguous definition of digital economy leads to its inconsistent measurement index system.

Previous studies have shown that the digital economy is considered the main driver of economic growth in both developed and developing countries ( 25 , 26 ). The digital economy mainly based on ICT helps to increase capital and labor productivity and to obtain goods and services at lower prices ( 13 ). For example, Seo et al. ( 27 ) developed a cumulative growth model to examine the positive relationship between ICT investment and economic growth in 29 countries and found that countries with relatively low levels of productivity could take advantage of the knowledge spillover effects of ICT to close the gap with developed countries. Vu ( 10 ) also found that ICT can increase the output by facilitating technology innovation, improving the quality of decision-making, and reducing production costs. With the rapid development of digital technologies such as ICT, more and more scholars have focused on the role of the digital economy on consumer surplus ( 28 ), e-commerce supply chain ( 29 ), and smart cities ( 30 ). Especially after the outbreak of COVID-19, the role of the digital economy on economic recovery has attracted the attention of scholars. Some scholars suggested that the digital economy played a hugely positive role in pandemic prevention and control, value-added distribution in global value chains, and economic development ( 31 ). During the COVID-19 pandemic, digital services received a large portion of the resources reallocated from traditional industries, which became a strong driver for accelerated growth ( 32 ). In addition, Jiang ( 33 ) found that digital technologies not only empowered pandemic response strategies in the short term but also served as the technological foundation for Internet-based industry and consumption in the long term. However, other scholars have suggested that the digital economy may be detrimental to economic growth, especially in the absence of economic transition ( 34 , 35 ). Although COVID-19 served as an accelerator in advancing the adoption of various technologies, this process had been contested and the outcomes remained uncertain ( 36 ).

It can be seen that in the post-COVID-19 era, developing the digital economy can be both a “booster” for the regional economy and a threat to other sectors. Based on the existing literature, this paper identified some research gaps in the current literature. First, the definition of the digital economy has not yet been reached a consensus, and its index system is inadequate. While the existing literature focuses on analyzing the impact of ICT on economic development in terms of the number of Internet users, fixed broadband Internet users, and mobile subscribers. These indicators cannot fully reflect the broader connotations of the digital economy. Moreover, studies have mostly explored the role of digitalization on economic development and provided ambiguous conclusions. However, few studies have focused on the impact mechanism of the digital economy on the economic growth of the countries along the “Belt and Road.” The digital economy is gradually becoming an important area of cooperation for countries along the “Belt and Road.” Analyzing the impact mechanism of the digital economy on their economic growth can provide a reference for the economic recovery and growth in the post-COVID-19 era. More importantly, although some scholars have realized that the epidemic has brought new opportunities and challenges to the digital economy, fewer studies have quantitatively assessed the impact of COVID-19 on the digital economy of countries along the “Belt and Road.”

Measurement of Digital Economy Development

In order to assess the impact of digital economy development on the economic growth of countries along the “Belt and Road” before COVID-19, this paper needs to measure the digital economy development of these countries. First, we build a comprehensive evaluation index system based on the concept and characteristics of digital economy from three dimensions: digital economy infrastructure, digital economy openness, and innovation environment and competitiveness required for digital technology development. Then the factor analysis and principal component analysis are used to calculate the weights and comprehensive scores of digital economy indicators from 2009 to 2019. Furthermore, the differences in digital economy development in countries along the “Belt and Road” before COVID-19 are analyzed.

This study refers to Belt and Road Portal ( https://www.yidaiyilu.gov.cn/index.htm ), and divides the countries along the “Belt and Road” into seven plates according to their geographical locations, including China, 5 countries in Central Asia, 2 countries in North Asia, 8 countries in South Asia, 11 countries in Southeast Asia, 19 countries in Central and Eastern Europe, and 19 countries in West Asia and the Middle East (see Appendix Table 1 ). This study selects 31 countries along the “Belt and Road,” owning to the data availability and sample representativeness.

Selection of Evaluation Indicators

Before establishing the digital economy development index system, we need to define the concept of digital economy. According to the existing literature, the digital economy in the narrow scope refers to the information technology (IT) or ICT sector producing foundational digital goods and services ( 37 ), and the digital economy in a broad scope integrates all the digitally oriented economic activities, which takes the digitization of ICT as a pivotal production factor, uses modern information and communication infrastructure as a carrier, and provides products or services with digital technologies ( 21 , 38 ). Therefore, the index system of digital economy development is constructed on the broad concept and the necessary conditions required for its development. Referring to the studies of Ershova et al. ( 39 ), Kuzovkova et al. ( 40 ), Ashmarina et al. ( 41 ), Szeles and Simionescu ( 42 ) and considering the availability of data, this paper selects indicators from three dimensions: digital economy infrastructure, digital economy openness, and digital technology innovation environment and competitiveness. This index system can reflect the development of ICT technology and industry, as well as the factor endowment conditions and innovation environment required for the development of digital economy. Among them, digital economy infrastructure mainly reflects the foundation and applications of digital technology; innovation environment and competitiveness reflect the R&D capacity and environment in the field of digital economy; digital economy openness reflects the international competitiveness of products produced by digital industry. Each dimension is composed of specific indicators (see Table 1 ).

Table 1 . Comprehensive evaluation index system of digital economic development.

(1) The first category of indicators mainly reflects a country's digital economy infrastructure and applications, including secure Internet servers (per million people) (X2), fixed broadband subscriptions (per 100 people) (X7), fixed telephone subscriptions (per 100 people) (X8), Mobile cellular subscriptions (per 100 people) (X10), and Individuals using the Internet (percentage of population) (X9).

(2) The second category of indicators measures the development of a country's ICT industry and its international market share, and also reflects the degree of outward orientation of the digital economy. It includes two indicators: high-tech exports (percentage of the manufactured goods exports) (X3) and ICT product exports (percentage of total product exports) (X4).

(3) The third category of indicators reflects the innovation environment and competitiveness of a country's digital technology, including enrollment in higher education institutions (percentage of total population) (X1), R&D expenditures (percentage of GDP) (X5), venture capital availability(X11), and availability of the latest technologies (X6). The production factors in the digital economy are not only capital and labor, but R&D investment embodied in digital information and specialized technical talents who master digital knowledge. Therefore, this paper considers higher education enrollment and R&D expenditures as factors reflecting the human capital and innovation competitiveness required for the development of the digital economy. Venture capital availability and latest technology availability reflect the suitability for innovation and the transformation of new technological achievements. The higher the availability of venture capital, the more conducive to the innovative activities in the digital economy. Availability of latest technologies reflects a country's innovation transformation rate and the business environment. Without a favorable business environment, it is not necessary to expect “digital dividends” and realize all the opportunities offered by digital technologies.

Calculation Results of Digital Economy

We use the index system in Section Selection of evaluation indicators to measure the digital economy development of countries along the “Belt and Road.” Each indicator value is multiplied by the corresponding weight and summed up to obtain a country's comprehensive score of digital economy. First, the data related to digital economy indicators are standardized, then Pearson correlation test, Kaiser-Meyer-Olkin (KMO) and Bartlett's sphericity test are performed to determine whether the data are suitable for factor analysis. Second, factor analysis is performed on the data of each indicator using the maximum variance rotation method to extract the top three principal components whose cumulative contribution of variance exceeded 70%. Finally, the factor loading matrix is calculated using principal component analysis to obtain the scores of the three principal factors. The variance contribution rate corresponding to each principal factor is used as the weight to obtain the comprehensive digital economy score of each country. Countries with scores of 70 and above are considered to have a high level of digital economy development; scores of 30–70 are at a medium level; scores below 30 indicate that the development of digital economy is lagging behind.

Indicator Correlation Test

The digital economy-related indicators must be standardized and given reasonable weights, and then the selected indicators are multiplied by the corresponding weights and added up, through which the digital economic development scores of countries along the “Belt and Road” can be calculated. This study uses factor analysis to determine the intrinsic correlations and weights of 11 indicators and applies SPSS22.0 software to conduct a Pearson correlation test, as well as KMO and Bartlett's sphericity test on the 11 indicators to determine whether the data selected in this study is suitable for factor analysis. According to the results of the Pearson correlation test, the 11 selected indicators are significantly correlated, meeting the requirements of factor analysis. In addition, the KMO statistic value is 0.704, which is >0.7. Moreover, Bartlett's sphericity test shows that the hypothesis of independence of each variable is not true ( P = 0.000), indicating that factor analysis method should be used to weight the indicators.

Principal Component Analysis

The existing studies mainly used principal component analysis and entropy weighting method to measure each dimensional index, and then synthesized a comprehensive index of digital economic development. The entropy weighting method is an assignment method to objectively determine the weights based on the magnitude of variation of the indexes. However, in the evaluation index system, there may be a correlation among the indicators. Therefore, the traditional entropy weighting method has the problem of duplication of assignments, which leads to biased evaluation results. The principal component analysis method is able to screen out the main independent composite factors from many variables, which retains the original information while making them uncorrelated with each other. It is currently widely used in the construction of composite indicators for ICT and digital economy ( 12 ).

First, factor analysis is performed on the 11 indicators using the maximum variance rotation method to obtain three principal components with eigenvalues >1 and reflecting more than 70% of the data information (the cumulative contribution of variance is 70.08%). Secondly, the factor loading matrix is calculated using the principal component method. The initial unrotated factor loading matrix A i is shown in Table 2 .

Table 2 . Initial unrotated factor loading matrix.

This study uses SPSS 22.0 software to establish the principal component rotated loading matrix Ui, which has a mathematical relationship with the factor loading matrix A i and the eigenvalue λ i :

λ i represents the eigenvalue corresponding to the i-th principal factor, reflecting the contribution of this principal factor to the total variance. The formula of Y 1 , Y 2 and Y 3 for the three principal components are obtained by multiplying U i with the standard value ( Zx i ) of the 11 variables:

Finally, the proportion of the corresponding eigenvalues to the three principal components to the total eigenvalues is taken as the weight to calculate the comprehensive scores, which is shown as follows:

In this study, the comprehensive scores of each country in 2009–2019 are standardized and converted into values in the 0–100 interval. The standardization formula is presented as follows:

In the above formula, X i represents the original comprehensive score of country i; X max and X min represent the maximum and minimum scores of all countries, respectively. The calculation results are shown in Table 3 .

Table 3 . Comprehensive scores of digital economic development indicators of countries along the “Belt and Road” from 2009 to 2019.

Analysis of Digital Economy Indicators

As shown in Table 3 , the development of digital economy in countries along the “Belt and Road” showed an upward trend from 2009 to 2019. Most of the top 10 countries in the list are located in East Asia, Southeast Asia and Central and Eastern Europe, but not in South Asia and Central Asia. This suggests that there is an obvious regional imbalance in the digital economy development in countries along the “Belt and Road.” Although the comprehensive score of China's digital economy ranked sixth in the list, the score increased rapidly in 2009–2019. This indicates that in recent years, China has paid more attention to the digital economy, deepening the popularization and application of information technology. Therefore, the international competitiveness of digital economy industry has been gradually improved. According to the degree of digital economy development, the countries along the “Belt and Road” can be divided into the following three categories:

(1) Singapore, Israel and Malaysia were ranked in the top three countries along the “Belt and Road” in terms of comprehensive scores of digital economic development, with scores above 70 in 2019. Among them, Singapore ranked first, primarily because of its high scores on the three main components: the availability of the latest technology, the penetration of fixed broadband and the proportion of Internet users. This shows that Singapore has well-established information infrastructure, advanced information and communication technologies and high popularity and openness of digital economy.

(2) Estonia, Czech Republic, China, Vietnam, etc. had comprehensive scores of 30 to 70 in 2019. This indicates that the development of digital economy in these countries needs to be further strengthened. These countries had good performance in the fixed telephone penetration and mobile phone penetration, but other indicators were weak. Therefore, these countries still need to improve the digital economy infrastructure, and introduce favorable digital infrastructure policies to promote scientific and technological innovation, providing strong guarantees for the realization of high-quality development of digital economy.

(3) Armenia, Ukraine, Mongolia, India, Egypt, Moldova, Kyrgyzstan, and Pakistan were relatively backward in digital economy, with comprehensive scores <30 in 2019. Most of these countries are located in West Asia, Central Asia and South Asia. The infrastructure, professional talents, ICT capabilities and digital technology innovation environment required for the development of digital economy are seriously lacking in these countries. This indicates that there is a serious “digital divide” among the countries along the “Belt and Road.” Therefore, the countries that are lagging behind in the digital economy need to strengthen cooperation with others along the “Belt and Road” to make up for the shortcomings in the infrastructure and technological innovation capabilities.

Digital Economy's Impact Before COVID-19

Based on the comprehensive scores of digital economy measured in Section Measurement of digital economy development, we use a panel data regression model and a mediating effects model to empirically test whether the digital economy played a significant role in promoting the economic growth of countries along the “Belt and Road” in the decade before COVID-19, and if so, what is the mechanism of this positive effect. This will help to further clarify the importance of digital economy development in the economic growth of countries along the “Belt and Road” and its impact path. It can also provide historical experience and evidence for taking the digital economy as an important stabilizer and booster for effective coordination of pandemic control and economic development in the post-COVID-19 era, thus promoting high-quality economic growth in countries along the “Belt and Road.”

Data Sources and Statistical Description

This study uses the panel data of 31 countries along the “Belt and Road” from 2009 to 2019. The meaning and statistical description of the variables are shown in Table 4 , including the dependent variable, the core independent variable, the mediating variables and the control variables. All variables are obtained from the World Bank database, except for the digital economy development scores, which are calculated from the previous section.

Table 4 . Meaning of variables and statistical description.

(1) The dependent variable. In this study, the logarithm of GDP per capita of the countries along the “Belt and Road” is taken as the dependent variable. The maximum value of the logarithm of GDP per capita of the countries along the “Belt and Road” is 10.99, the minimum value is 6.78, and the standard deviation is 1.04, indicating that the economic development level of these countries varies greatly. Among them, GDP per capita of Singapore, Israel, Cyprus, Slovenia, and the Czech Republic is higher than other countries, while that of India, Vietnam, Pakistan and Kyrgyzstan is below the mean value.

(2) The core independent variable. In this study, the digital economy development scores of countries along the “Belt and Road” are taken as the core independent variable. The average digital economy development score of these countries is 32.64; the maximum value is 100; the minimum value is 0; the standard deviation is 17.98, indicating that the digital economy development level of countries along the “Belt and Road” also varies greatly.

(3) Mediating variables. In order to investigate the impact of digital economy on the economic growth of countries along the “Belt and Road” through the effect of industrial structure, the total employment and employment structure, the proportion of value-added of service industry to the total value-added, unemployment rate and the proportion of service industry employment to the total employment are selected as mediating variables in this study.

(4) Control variables. Drawing on Habibi and Zabardast ( 43 ) and Myovella et al. ( 44 ), the following control variables are selected in this study: gross fixed capital formation as a share of GDP, annual inflation rate as measured by the consumer price index, total imports and exports as a share of GDP, net foreign direct investment inflows as a share of GDP, and government consumption expenditure as a share of GDP. These control variables simultaneously affect GDP per capita of countries along the “Belt and Road,” and must be controlled in the regression model to mitigate the bias caused by omitted variables.

Model Setting

The impact of digital economy development on GDP per capita of countries along the “Belt and Road” is empirically examined by establishing a panel regression model:

where gdppc it is GDP per capita of country i in period t, included in the regression equation in logarithmic form; digeco it is the digital economy development score of country i in period t; capital it is the gross fixed capital as a share of GDP of country i in period t; inflation it is the annual inflation rate measured by the consumer price index of country i in period t; open it is the trade openness of country i in period t, measured by the total imports and exports as a share of GDP; FDI it is the share of net FDI inflows in GDP of country i in period t; govern it is the share of government consumption expenditure in GDP of country i in period t; u i is an individual fixed effect; v t is a time fixed effect; ε it is a random error term.

It is necessary to choose the appropriate regression model when processing panel data. Three forms of panel data regression models are usually chosen: pooled regression model (Pool), fixed effects regression model (FE), and random effects regression model (RE). The first step is to validate the model using the pooled regression model and use the F-test to determine whether the estimation method of pooled regression is used. The regression results show that none of the regression coefficients are significant, and the F-test results of the model reject the original hypothesis of using the pooled regression model at the 1% significance level, indicating that a variable intercept regression model should be built considering individual time characteristics. Further, the Hausman test is used to determine whether a fixed-effects model or a random-effects model is used for optimal estimation. The p -value rejects the original hypothesis that the random disturbance term is not related to the independent variables at the 1% significance level ( p = 0.0000), indicating that the estimation results of establishing a fixed-effects model are optimal and most robust.

It is worth noting that the use of ordinary linear least square (OLS) estimation may have endogeneity problems, resulting in biased coefficient estimates of digital economy scores. The two-stage least squares (2SLS) and generalized method of moments (GMM) are designed to solve endogenous problems caused by omitted variables and reverse causality effects ( 45 , 46 ). Some scholars suggested a reverse causal relationship between ICT and economic growth ( 44 ), and thus 2SLS and GMM techniques have been generally applied to assess the relationship between ICT and economic development ( 47 , 48 ).

This study also investigates the impact mechanism of the development of digital economy on the economic growth of countries along the “Belt and Road” by selecting three mediating variables: the share of value-added of service industry in the total value-added, the unemployment rate and the share of employment in the service industry in the total employment. Among them, equations (2) and (3) are the mediating effects of the industrial structure; equations (4) and (5) are the mediating effects of the total employment; equations (6) and (7) are the mediating effects of the employment structure.

Empirical Results and Analysis

The results show that the digital economy as an independent variable significantly contributes to the growth of GDP per capita in countries along the “Belt and Road” regardless of the inclusion of control variables ( Table 5 ). Columns (1) and (2) report the OLS estimation results. The results in column (1) show that the regression coefficient of the digital economy is positive at 1% significance level without the inclusion of control variables, indicating that every 1-unit increase in the level of digital economy development will increase the GDP of the sample countries by 0.78%. This indicates that the development of new technologies related to the digital economy, such as the Internet and mobile communication, has a significant contribution to the economic growth of the countries along the “Belt and Road” from 2009 to 2019. The results in column (2) show that the regression coefficient of the digital economy is 0.00791 at the 1% significance level after controlling for variables such as the gross fixed capital, annual inflation rate, the total imports and exports as a share of GDP, net inflows of FDI, and the government final consumption expenditure, which means that each unit increase in the development level of the digital economy will increase the GDP of the sample countries by 0.79%. This indicates that the digital economy development has a significant contribution to the economic growth of the countries along the “Belt and Road.” The estimated results of 2SLS and dynamic differential GMM are shown in columns (3) and (4). The sign of the coefficients of the core independent variables does not change and the coefficients do not change significantly. For every 1 unit increase in the level of digital economy development, the GDP of the sample countries grows by 0.36–1.51%, indicating that the estimation results are still robust. For the GMM model, the Hansen test (Prob>chi2 = 0.627) and Arellano-Bond test for AR(2) (Pr>z = 0.444) indicate that the instruments are valid and there is no second-order autocorrelation in the difference of the random perturbation term.

Table 5 . Impact of digital economy on GDP per capita of countries along the “Belt and Road.”

Our finding is consistent with the results of most studies. For example, it was found that the contribution of the ICT-based digital economy to GDP growth mostly ranged from 0.1 to 1.0 percentage points and tended to increase after 1995 ( 49 ). Obviously, our results are in the same direction but different in magnitude from other studies, which may be due to regional heterogeneity. Although digitalization can play a great role in economic growth, its impact may depend on the level of development of a country ( 50 ). Myovella et al. ( 44 ), for example, studied the relationship between digitization and economic growth in Sub-Saharan Africa and OECD using the GMM estimation method. They found that the contribution of the Internet to economic growth in both Sub-Saharan Africa and OECD was positive. However, due to the underdeveloped Internet infrastructure, the impact on Sub-Saharan Africa is smaller compared to OECD countries. This paper is focused on the countries along the “Belt and Road,” where the infrastructure is not well-established. However, with the promotion of the “Digital Silk Road,” job opportunities have been increased and the economic structure has been optimized, thus promoting the economic development of the countries.

It is worth noting that the regression coefficients of lnopen and FDI are negative. This indicates that the increase in import and export trade and net foreign direct investment inflows as a share of GDP in the countries along the “Belt and Road” does not contribute to GDP per capita. The increase of trade openness suppressed economic growth because the degree of openness in most countries did not match the level of economic development. According to descriptive statistics, the average level of trade openness of countries along the “Belt and Road” is low. In the early stage of opening up, most of the countries export labor-intensive and resource-intensive products to generate foreign exchange due to the lack of capital. This reliance on the low-end value chain may lead to a surge in exports in the short term, but it will lead to impoverished growth, which in the long run will have a dampening effect on economic development. In the future, as openness increases to a certain extent, the export structure will change, and domestic industrial upgrading will improve the quality of economic development and promote a more balanced development of trade, thus promoting the economic growth of countries along the “Belt and Road.” In addition, the share of net foreign direct investment inflows in GDP of some countries along the “Belt and Road” showed a decreasing trend from 2009 to 2019, indicating that the contribution of FDI to the economy of these countries decreased. This is mainly due to the low level of actual utilization of foreign investment in the countries along the “Belt and Road,” which leads to the failure of simultaneous economic growth. Although the increase in economic growth rate brought by FDI has a positive effect on the welfare of the invested countries, FDI may still reduce the welfare if the profits are transferred to foreign investors. Foreign investment increases welfare only when productivity gains are sufficient to compensate for the loss of profits. Our findings are also consistent with studies such as Li and Liu ( 51 ), Herzer and Klasen ( 52 ), and Ali and Abdullah ( 53 ).

Then, this study investigates the impact mechanism of the digital economy on the economic growth of countries along the “Belt and Road” by building mediating effects models. In Table 6 , columns (1) and (2) report the results of the industrial structure effect mechanism. Column (1) shows that the digital economy can significantly promote the optimization and upgrading of industrial structure. The results show that 1-unit increase in the development level of the digital economy increases the value-added share of the service industry by 0.31%. Column (2) reports the impact of the digital economy on GDP per capita after adding the value-added share of the service industry to the base model. We find that the digital economy development can significantly increase the value-added share of the service industry, thus boosting the economic growth of countries along the “Belt and Road.” This is primarily because unlike the traditional agricultural and industrial production modes, the digital economy relies on the integration of modern information technology and network technology. This impact shows industrial heterogeneity, with the degree of impact gradually increasing from primary to tertiary industries. The difference in the rate of output increase in the digitalization process of different industries will bring about changes in the industrial structure. Therefore, the strong application ability of the tertiary industry to the digital economy can effectively promote the upgrading of industrial structure. Columns (3) and (4) report the results of mediating effect of total employment, while columns (5) and (6) report the results of employment structure effect. The results show that for every 1-unit increase in the level of development of the digital economy, the total unemployment rate significantly decreases by 1.15% and the share of employment in the service sector significantly increases by 0.11%. The digital economy can also contribute to the growth of GDP per capita in the countries along the “Belt and Road” by reducing the unemployment rate and improving the employment structure. This is primarily because the use of the Internet is becoming an important channel for job creation in most developing countries along the “Belt and Road.” The integration of ICT industries with traditional industries can lead to the expansion of economic scale, especially the growth of online consumption, and thus the effect of consumption-oriented jobs is gradually expanding. In addition, digital technology changes can also bring about restructuring of employment. Specifically, the development of digital economy can lead to the creation of more non-farm jobs, providing more employment opportunities and even increasing labor returns, which also increases the share of employment in the service industry.

Table 6 . Test of mediating effects.

COVID-19's Impact on Digital Economy

From the regression results in Section Digital economy's impact before COVID-19, it can be concluded that before COVID-19, the digital economy had a significant positive impact on the economic growth of countries along the “Belt and Road” by promoting industrial structure upgrading, the total employment and restructuring of employment. Although the outbreak of COVID-19 shocked the economies along the “Belt and Road” from both the supply and demand sides ( 54 , 55 ), home isolation measures promoted the development of new businesses such as e-commerce, telemedicine, and online offices, increasing demand for the digital economy ( 56 ). Therefore, we use the GTAP model to analyze the impact of COVID-19 on the output and trade patterns of digital industries of countries along the “Belt and Road,” and to identify the regional heterogeneity of the potential of digital industries during the epidemic. This will help to seize the opportunities for digital economy to mitigate the economic losses, and propose differentiated development strategies to realize economic recovery and growth in the post-COVID-19 era.

It is worth noting that the two major forms of the digital economy are digital industrialization and industrial digitization. Digital industrialization means the development of ICT industries, including electronic information manufacturing, telecommunications, software and information technology services, and the Internet industry ( 57 ). Industrial digitization deeply integrates advanced digital technologies with traditional industries. This accelerates the transformation and upgrading of traditional industries, and improves their production efficiency ( 58 ). Considering the applicability of the model and data availability, this study focused on the impact of the COVID-19 epidemic on the digital industry, including the sector of computers, communication and other electronic equipment manufacturing, and information transmission services.

Methods and Simulation Scenarios

Due to the short duration of the epidemic and the lack of empirical data, it is hard to use econometric models based on ex-post analysis. Therefore, we use the GTAP model which is based on ex-ante analysis. The model transmits external shocks through a global multi-regional MRIO table, which is widely used in policy simulations. For example, Zeshan ( 59 ) uses the GTAP-VA model to simulate the impact of COVID-19 on global value chains and evaluate the production losses in different sectors of the world economy.

The GTAP model is a general equilibrium model developed by Purdue University and applied to global trade analysis. The GTAP model takes the production, consumption and government expenditure as sub-models, and connects the sub-models into a multi-country, multi-sector general equilibrium model through the relationship of commodity trade between countries or regions. When simulations are performed in the GTAP model, the data are based on inter-international input-output tables and external shocks are transmitted through the input-output tables. Moreover, the GTAP model can simultaneously evaluate the impact of policies on indicators such as output, imports and exports, and gross domestic product in each country sector, and is therefore widely used in policy analysis.

This study used the GTAP model and the most recent GTAP database: Version 10, including 65 industries and 141 countries or regions worldwide. In view of the completeness and availability of the shock variable, the 141 countries or regions in the GTAP 10 database were divided into 24 countries along the “Belt and Road” (including China, Malaysia, Indonesia, and the Philippines etc.), other countries along the “Belt and Road,” developed countries (including the United States, the United Kingdom, Japan, South Korea, and 16 countries in the European Union other than countries along the “Belt and Road”), and other countries or regions. The specific country and regional classifications are shown in Appendix Table 2 . In addition, this study divided the 65 industries in GTAP 10 into 5 sectors, namely, agriculture, energy, manufacturing, service, and digital industry. The specific industry classifications are shown in Appendix Table 3 .

Shock Variables and Simulation Scenarios

The COVID-19 epidemic affected the economic system of each region mainly from the supply side and demand side in this study. The supply-side shock variable was labor; the demand-side shock variables were consumption, investment, and preference for digital industries such as computers and communications. The specific impact paths are as follows.

First, the COVID-19 epidemic affected the labor supply. The rising number of people infected or killed by COVID-19 led to a reduction in labor supply. In addition, the epidemic prevention measures taken by some countries to restrict the movement of people ( 60 ), as well as the business decisions made by firms to lay off workers ( 61 ), reduced labor force participation rates ( 62 ), leading to a temporary shortage of labor supply and a decrease in the country's total output.

Second, the COVID-19 epidemic caused a decrease in total consumption. During the outbreak, enterprises in some countries shut down their production due to the lock-down policies and the isolation measures, causing an increase in unemployment and a decrease in individual income ( 63 ). This issue led to lower household consumption and increased precautionary savings ( 64 , 65 ). It was also made it more difficult for residents to consume due to travel restrictions.

Third, the COVID-19 epidemic led to a decline in investment. Faced with the downward pressure on economic performance and the increased uncertainty in the financial market ( 66 ), investors chose their investments more cautiously ( 67 ). As a result, the demand for investment decreased.

Fourth, the COVID-19 epidemic spawned the needs of the digital industry. Although the total demand declined during the epidemic, with the vigorousness of big data-based epidemic prevention, distance learning, artificial intelligence, computer, communication and other electronic equipment manufacturing, and information transmission services showed greater potential during the COVID-19 ( 68 ). Therefore, the epidemic instead increase people's preference for digital industries.

Corresponding to the above analysis, this study set up the shock variables according to the impact mechanism of COVID-19 epidemic. The magnitude of the impact of various factors on the economy, that is, the value of the shock variables, was determined by the rate of change of each variable in 2020 compared to 2019. The data of the shock variables were obtained from World Development Indicators (WDI) and International Monetary Fund (IMF). This study used the rate of change of labor force to measure the degree of change of labor force relative to the base period; the rate of change of final consumption expenditure to measure the degree of change of consumption relative to the base period; the rate of change of gross fixed capital formation to measure the degree of change of investment relative to the base period; and the rate of change of the share of consumption of computers, communications and other services to measure the change of people's preference for digital industries. The detailed description and value of each shock variable in each region are shown in Table 7 .

Table 7 . Values of supply-side and demand-side shocks in the simulated scenarios.

According to the characteristics of the COVID-19 epidemic affecting macro-economy and industries, this study set up three different scenarios in the policy simulation, denoted by S1, S2, and S3 respectively. The shock was first applied to the labor force on the supply side (S1), then to the preferences of consumption, investment, and digital industries on the demand side (S2). Finally, a superimposed shock was applied to both the supply and demand sides (S3).

Simulation Results and Discussion

Figure 1 shows the output changes of the digital industries under three simulation scenarios. Overall, the impact of the COVID-19 epidemic on the digital industries is primarily determined by the demand side, that is, the impact of the shock from demand side on the digital industries is far larger than that from the supply side.

Figure 1 . Changes in the output of the digital industries under the three simulation scenarios (unit: %). Data sources: GTAP model simulations.

From the perspective of the supply side, in the simulation of the labor shock (S1), the output of digital industries in almost all regions declined to various degrees, but the magnitude of the changes was small. This is consistent with the reality. When the COVID-19 epidemic occurred, in order to reduce the risk of gathering and infection, most countries and regions in the world adopted blockade measures to significantly reduce the frequency of people's travel ( 69 ). Labor is an important factor of production for economic activities. Therefore, labor shortage will lead to a greater impact on the output of productive sectors, especially labor-intensive sectors ( 70 ). However, the digital industries are capital-intensive and high-tech, which have much lower labor demand than the manufacturing and energy industries. And teleworking during the COVID-19 epidemic can also help the digital industries to resume work and production, mitigating the impact on the digital industries due to labor shortage. Our simulation results also confirm this conclusion. Appendix Table 4 details the changes in the output of all regions and industries in the S1 simulation. As shown in column 5 of Appendix Table 4 , the changes in output for the digital industries across all regions in the S1 simulation fluctuated between −3.01 and 0.58%. The average rate of change for the digital industries across all regions is much lower than the energy and manufacturing industries.

Comparing the results of demand-side shocks (S2) and superimposed shocks on the supply side and demand side (S3), we find that the impact of the two scenarios on the output of digital industries showed the same trend in most regions. This suggests that relative to a labor shortage crisis, shocks to consumption, investment, and preference have a greater impact on the output of the digital industries.

Specifically, the digital industries in Armenia (ARM) located in the Middle East, Israel (ISR) in West Asia, and Latvia (LVA) and Estonia (EST) in Central and Eastern Europe showed large growth during the COVID-19 epidemic. Under the superimposed supply-side and demand-side shocks (S3), the output of the digital industries in the four countries increased by 26.01%, 12.12%, 9.46%, and 7.37% respectively. Figure 2 illustrates the changes in the exports and imports of each country under the S3 simulation. The rapid growth of the output of digital industries in Armenia, Israel, Latvia, and Estonia were all attributed to a decrease in imports and an increase in exports. Under the impact of the COVID-19 epidemic, imports decreased by 8.61%, 5.18%, 4.75%, and 1.74%, respectively; exports increased by 74.93%, 26.83%, 20.01%, and 10.64%, respectively. This shows that the products of these countries' digital industries are becoming more competitive. In addition, the products produced can not only meet the increase in domestic demand, but also can realize import substitution and export expansion, together promoting the increase of the output of digital industries.

Figure 2 . Changes in digital industry exports and imports by region in S3 simulation (unit: %). Data sources: GTAP model simulations.

The reason is that Israel and Estonia have a solid foundation in the digital industries. It can be seen from Table 3 , Israel and Estonia are ranked 2nd and 4th, respectively. This indicates that the digital industries of the two countries have a high level of development among the “Belt and Road” countries. Latvia performs well in digital public services, due to the continuous improvement of local network infrastructure and the growing popularity of e-government services ( 71 ). Armenia also has a series of unique advantages in the digital industries, such as strong R&D capabilities in computer science and engineering, a highly educated workforce, strong government support for the digital industries, and the extensive operational management experience of large multinational companies ( 72 ). Based on the strong digital industry foundation, the COVID-19 epidemic led to an increase in people's preference for digital products. Therefore, the epidemic became a “booster,” which promoted the development of the digital industries ( 73 ).

It was worth noting that China's digital industries also stood out in the COVID-19 epidemic. Although the output of China's digital industries had a relatively small rate of change compared with regions such as Armenia, it had a large base. Therefore, the rapid development of China's digital industries is important for promoting the “Digital Silk Road” and the “Innovation Silk Road.” As can be seen in Figure 1 , in the S3 simulation, COVID-19 epidemic did not hinder the development of China's digital industries, but increased the output by 2.05%. In addition, the net exports of China's digital industries also increased during the COVID-19 epidemic. As shown in Figure 2 , the imports decreased by 1.26% and exports increased by 7.52%. As an emerging economy that fully utilizes computers, and information and communication technologies ( 74 ), China's digital industries have gradually become important supporting force for economic development. Therefore, during the COVID-19 epidemic, the government supervision and community management, monitoring and prevention in healthcare, as well as the life services that residents need for home study, work and life, have generated demand and output growth for the digital industries in China ( 75 – 77 ).

However, there were also some countries where the digital industries performed poorly during the COVID-19 epidemic, such as Ukraine (UKR), Egypt (EGY), Turkey (TUR), and Philippines (PHL). Under the superimposed shocks on the supply side and the demand side (scenario 3), their output of the digital industries decreased by 20.14%, 6.67%, 6.64%, and 6.37%, respectively. In addition, it can be found that the imports increased and exports decreased due to the impact of the COVID-19 epidemic in Ukraine, Egypt, Turkey and the Philippines (see Figure 2 ). Their imports increased by 47.13%, 6.70%, 3.85%, and 13.92%, respectively; exports decreased by 39.97%, 63.53%, 13.93%, and 14.64%, respectively. It was also noteworthy that Ukraine and the Philippines showed an increased preference for digital industry under the impact of the COVID-19 epidemic. Therefore, they had to increase imports and reduce exports to fill the increased domestic demand for digital products.

The negative impact of COVID-19 on Ukraine's output of digital industries is primarily due to the low coverage of information technologies among the residents and enterprises. The labor migration, technological backwardness and gradual loss of competitive position on the international market, make it difficult for the development of its digital industries to seize the opportunities. Similarly, the Philippines' digital industry infrastructure is also relatively backward, and its digital industry exports are gradually shrinking in the global and Association of Southeast Asian Nations (ASEAN) region. Additionally, Turkey's digital industries have low contributions to the economy because of its high investment costs, unstable rate of returns, and lack of skilled labor when using information technology to achieve industrial change. These have become obstacles in the path of the development of the digital industries in Turkey.

Conclusions and Policy Implications

This study constructed a comprehensive evaluation index system and used principal component analysis to measure the digital economy development level of countries along the “Belt and Road” from 2009 to 2019. Then, a panel data regression model was applied to empirically analyze the impact of digital economy on their economic growth before COVID-19. Finally, we used the GTAP model to examine the impact of COVID-19 on the digital economy and its trade pattern of countries along the “Belt and Road.” Our findings show that: (1) there exists an obvious regional imbalance in the development of digital economy in countries along the “Belt and Road.” Specifically, East Asia, Southeast Asia (especially for Singapore), and Central and Eastern Europe have relatively high levels of digital economy, while most countries in West Asia (except for Israel), Central Asia, and South Asia are still lagging behind. (2) The digital economy has a significantly positive effect on the economic growth in countries along the “Belt and Road.” It can stimulate economic growth by promoting industrial structure upgrading, the total employment and restructuring of employment. (3) COVID-19 has generally boosted the demand for digital industries in countries along the “Belt and Road,” and its impact on digital industries from the demand side is much larger than that from the supply side. Specifically, the digital industries in Armenia, Israel, Latvia and Estonia have shown great growth potential during the epidemic. However, COVID-19 has also brought negative impacts to the digital industries in Ukraine, Egypt, Turkey and the Philippines. Accordingly, this study proposes the following policy implications:

(1) Each country along the “Belt and Road” should identify its strengths and weaknesses based on the digital economy development scores, so as to formulate effective development strategies and paths. The network infrastructure in Central Asia and South Asia is backward, so it is important to alleviate and bridge the “digital divide” and assist the countries or regions with less-developed digital technologies. Due to the large development gap within regions, the more backward countries can learn from countries such as Singapore, Israel, Malaysia, and explore the appropriate development models in the light of their own status. These countries should focus on strengthening R&D support for frontier digital technologies such as artificial intelligence and 5G, enhancing specialized talent training, and improving the innovation environment for digital economy.

(2) In the post-COVID-19 era, attention needs to be paid to the driving effect of the digital economy on industrial upgrading and employment. On the one hand, economic globalization and information technology need to be combined to further promote the deep integration of the digital economy with traditional primary, secondary and tertiary industries. Countries along the “Belt and Road” need to enhance the digital management and operation of traditional industries through ICT technology, optimize the efficiency of industrial resources allocation, improve their economic efficiency and increase the value-added of industries. On the other hand, the important role of the digital economy as a stabilizer for the job market needs to be utilized well. In the post-COVID-19 era, there will be a significant increase in the demand for digital living, working and learning. This is a rare opportunity for the development of the digital economy. Therefore, countries along the “Belt and Road” should use the employment promotion mechanism of the digital economy to promote digital employment, thus improving labor efficiency and contributing to steady economic recovery and growth.

(3) In the post-COVID-19 era, countries along the “Belt and Road” should strengthen the cooperation in the digital economy, and promote the deep integration of the real economy and the digital economy, industrialization and informatization. They should improve the digital connectivity, promote the information technology, and create new growth points for cooperation through building the “Digital Silk Road.” During the COVID-19 pandemic, the demand for digital life, work and learning in countries along the “Belt and Road” has increased significantly, which is a rare opportunity for the development of the digital economy. Therefore, those countries should further improve the development strategies of digital economy, optimize and upgrade the construction of information infrastructures such as artificial intelligence, internet of things and industrial internet. In addition, a favorable environment for the development of digital firms should be created to support them to increase investment in digital technologies.

(4) Countries along the “Belt and Road” need to rely on the digital economy to develop new service trade patterns and increase the cooperation in digital trade and e-commerce. COVID-19 has led to the disruption of both human and logistic flows, forcing the digital transformation of traditional trade in goods and services. On the contrast, digital trade will become the main form of global trade driven by emerging digital technologies such as big data, cloud computing, artificial intelligence and blockchain. Therefore, countries along the “Belt and Road” need to improve their technological innovation capabilities, and expand the range of cooperation in terms of service trade, such as cross-border e-commerce, teleconferences and exhibitions, telemedicine, tele-education and unlimited payment, so as to promote the construction of a “digital trade community.”

(5) As the initiator of the “Belt and Road” initiative, China should not only promote its own digital economy development, but also focus on the long-term layout for “Digital Silk Road.” China can take advantage of its technical advantages in the cooperation of digital economy in countries along the “Belt and Road” through economic exchanges and assistance. In addition, effective measures need to be taken to encourage Chinese information enterprises to invest and export abroad and to provide high-quality information technology products to countries along the “Belt and Road.” Furthermore, China needs to help those countries that lack the conditions to build their own improve their network infrastructure, in order to achieve the goal of the “Belt and Road” connectivity construction.

Data Availability Statement

The original contributions presented in the study are included in the article/ Supplementary Material , further inquiries can be directed to the corresponding author.

Author Contributions

JZ designed the research framework, analyzed the data, and drafted the original manuscript. WZ performed calculation and analyzed the data. BC verified and solidified the argument, and edited the article. AL and YW participated in data collection. NY and YT revised the manuscript during the whole writing process. All authors contributed to the drafting of the article and read the final manuscript.

This study was supported by National Science Fund for National Natural Science Foundation of China (71873016, 72073012), Beijing Social Science Foundation (21LLGLC038), Humanities and Social Science Foundation of Ministry of Education of China (21YJC630127), and Social Science Program of Beijing Municipal Education Commission (SM202011417010).

Conflict of Interest

NY was employed by Beijing Shenzhou Chiji Fund Management Co., Ltd.

The remaining authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher's Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

Supplementary Material

The Supplementary Material for this article can be found online at: https://www.frontiersin.org/articles/10.3389/fpubh.2022.856142/full#supplementary-material

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Keywords: digital economy, economic growth, trade pattern, COVID-19, countries along the “Belt and Road”

Citation: Zhang J, Zhao W, Cheng B, Li A, Wang Y, Yang N and Tian Y (2022) The Impact of Digital Economy on the Economic Growth and the Development Strategies in the post-COVID-19 Era: Evidence From Countries Along the “Belt and Road”. Front. Public Health 10:856142. doi: 10.3389/fpubh.2022.856142

Received: 16 January 2022; Accepted: 18 March 2022; Published: 09 May 2022.

Reviewed by:

Copyright © 2022 Zhang, Zhao, Cheng, Li, Wang, Yang and Tian. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Baodong Cheng, baodongcheng@163.com ; Yuan Tian, yuan.tian@buu.edu.cn

Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.

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The Impact of Digital Technologies

Technologies can help make our world fairer, more peaceful, and more just. Digital advances can support and accelerate achievement of each of the 17 Sustainable Development Goals – from ending extreme poverty to reducing maternal and infant mortality, promoting sustainable farming and decent work, and achieving universal literacy. But technologies can also threaten privacy, erode security and fuel inequality. They have implications for human rights and human agency. Like generations before, we – governments, businesses and individuals – have a choice to make in how we harness and manage new technologies.

A DIGITAL FUTURE FOR ALL?

Digital technologies have advanced more rapidly than any innovation in our history – reaching around 50 per cent of the developing world’s population in only two decades and transforming societies. By enhancing connectivity, financial inclusion, access to trade and public services, technology can be a great equaliser.

In the health sector, for instance, AI-enabled frontier technologies are helping to save lives, diagnose diseases and extend life expectancy. In education, virtual learning environments and distance learning have opened up programmes to students who would otherwise be excluded. Public services are also becoming more accessible and accountable through blockchain-powered systems, and less bureaucratically burdensome as a result of AI assistance.Big data can also support more responsive and accurate policies and programmes.

However, those yet to be connected remain cut off from the benefits of this new era and remain further behind. Many of the people left behind are women, the elderly, persons with disabilities or from ethnic or linguistic minorities, indigenous groups and residents of poor or remote areas. The pace of connectivity is slowing, even reversing, among some constituencies. For example, globally, the proportion of women using the internet is 12 per cent lower than that of men. While this gap narrowed in most regions between 2013 and 2017, it widened in the least developed countries from 30 per cent to 33 per cent.

The use of algorithms can replicate and even amplify human and systemic bias where they function on the basis of data which is not adequately diverse. Lack of diversity in the technology sector can mean that this challenge is not adequately addressed.

THE FUTURE OF WORK

Throughout history, technological revolutions have changed the labour force: creating new forms and patterns of work, making others obsolete, and leading to wider societal changes. This current wave of change is likely to have profound impacts. For example, the International Labour Organization estimates that the shift to a greener economy could create 24 million new jobs globally by 2030 through the adoption of sustainable practices in the energy sector, the use of electric vehicles and increasing energy efficiency in existing and future buildings.

Meanwhile, reports by groups such as McKinsey suggest that 800 million people could lose their jobs to automation by 2030 , while polls reveal that the majority of all employees worry that they do not have the necessary training or skills to get a well-paid job.

There is broad agreement that managing these trends will require changes in our approach to education, for instance, by placing more emphasis on science, technology, engineering, and maths; by teaching soft skills, and resilience; and by ensuring that people can re-skill and up-skill throughout their lifetimes. Unpaid work, for example childcare and elderly care in the home, will need to be better supported, especially as with the shifting age profile of global populations, the demands on these tasks are likely to increase.

THE FUTURE OF DATA

Today, digital technologies such as data pooling and AI are used to track and diagnose issues in agriculture, health, and the environment, or to perform daily tasks such as navigating traffic or paying a bill. They can be used to defend and exercise human rights – but they can also be used to violate them, for example, by monitoring our movements, purchases, conversations and behaviours. Governments and businesses increasingly have the tools to mine and exploit data for financial and other purposes.

However, personal data would become an asset to a person, if there were a formula for better regulation of personal data ownership. Data-powered technology has the potential to empower individuals, improve human welfare, and promote universal rights, depending on the type of protections put in place.

THE FUTURE OF SOCIAL MEDIA

Social media connects almost half of the entire global population . It enables people to make their voices heard and to talk to people across the world in real time. However, it can also reinforce prejudices and sow discord, by giving hate speech and misinformation a platform, or by amplifying echo chambers.

In this way, social media algorithms can fuel the fragmentation of societies around the world. And yet they also have the potential to do the opposite.

THE FUTURE OF CYBERSPACE

How to manage these developments is the subject of much discussion – nationally and internationally – at a time when geopolitical tensions are on the rise. The UN Secretary-General has warned of a ‘great fracture’ between world powers, each with their own internet and AI strategy, as well as dominant currency, trade and financial rules and contradictory geopolitical and military views. Such a divide could establish a digital Berlin Wall. Increasingly, digital cooperation between states – and a universal cyberspace that reflects global standards for peace and security, human rights and sustainable development – is seen as crucial to ensuring a united world. A ‘global commitment for digital cooperation’ is a key recommendation by the Secretary-General’s High-level Panel on Digital Cooperation .

FOR MORE INFORMATION

The Sustainable Development Goals

The Age of Digital Interdependence: Report of the UN Secretary-General’s High-level Panel on Digital Cooperation

ILO | Global Commission on the Future of Work

Secretary General’s Address to the 74th Session of the UN General Assembly

Secretary General’s Strategy on New Technology

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Shareable quotes from experts about the impact of digital life

Technology experts and scholars have never been at a loss for concerns about the current and future impact of the internet.

Over the years of canvassings by Pew Research Center and Elon University’s Imagining the Internet Center, many experts have been anxious about the way people’s online activities can undermine truth , foment distrust , jeopardize individuals’ well-being when it comes to physical and emotional health, enable trolls to weaken democracy and community, compromise human agency as algorithms become embedded in more activities, kill privacy , make institutions less secure , open up larger social divisions as digital divides widen, and wipe out untold numbers of decent-paying jobs .

An early-2018 expert canvassing of technology experts, scholars and health specialists on the future of digital life and well-being contained references to some of those concerns. The experts who participated in that research project were also asked to share anecdotes about their own personal experiences with digital life. Below are some of their responses.

Anecdotes from experts about the personal impacts of digital life

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