What is digital economy?
International Monetary Fund says that digitalisation has penetrated many activities, and, indeed, almost the entire economy could be included in the ‘digital economy’ broadly defined. While the term ‘digital sector’ refers to a concrete perimeter of economic activities, the term ‘digital economy’ is often used to indicate that digitalisation (e.g., the use of Internet) has spread across all sectors of the economy, from agriculture to warehousing.
Deloitte network, which provides consultancy and advisory services, defines digital economy as the economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. The backbone of the digital economy is hyperconnectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the internet of things (IoT).
The UAE’s digital economy
The strategic plans of the national economy are mainly based on the digital economy, as it contributes to creating real opportunities for foreign direct investment. Digital economy in the UAE is being implemented through the adoption of the UAE Strategy for the Fourth Industrial Revolution as one of its aims is to enhance economic security by adopting digital economy and blockchain technologies in financial transactions and service.
The UAE Strategy for the Fourth Industrial Revolution
In September 2017, the UAE Government launched the UAE Strategy for the Fourth Industrial Revolution (4IR) (PDF, 25 MB) during the Government’s Annual Meetings. The UAE Strategy for the Fourth Industrial Revolution aims to strengthen the UAE's position as a global hub for the Fourth Industrial Revolution and to increase its contribution to the national economy by means of advancing innovation and future technologies. Read more about the UAE Strategy for the Fourth Industrial Revolution.
The UAE adopted Emirates Blockchain Strategy 2021 and Dubai Blockchain Strategy. The Emirates Blockchain Strategy 2021 aims to capitalise on the blockchain technology to transform 50 per cent of government transactions into the blockchain platform by 2021. The Dubai Blockchain Strategy will help Dubai to be the first city fully powered by Blockchain by 2020 and make Dubai the happiest city on earth. The strategy will be using three strategic pillars: government efficiency, industry creation, and international leadership.
The UAE also set up the Global Blockchain Council to explore, discuss current and future applications and organise transactions through the blockchain platform. The Council will facilitate transactions within the various sectors of financial and non-financial sectors as well as increase efficiency and reliability levels. The council consists of 46 members, which include government entities, international companies, leading UAE banks, free zones, and international blockchain technology firms. Read about blockchain in the UAE government.
The UAE believes that creating an environment that fosters computational thinking will help developing advanced mindsets which in turn stimulate critical thinking. In addition, it also believes that ICT companies must enhance digital literacy and other skills of the youth. This can be done by:
- creating an advanced infrastructure to support digital transformation
- promoting the agenda of creating job opportunities
- strengthening the infrastructure and supporting the long-term visions to enhance the UAE's digital economy agenda.
Enhancing the role of young people
The UAE also believes in enhancing the role of young people in achieving a digital economy as the youth are quick to adopt the latest technology. It is to be noted that the UAE is ranked first in the world in the use of information and communication technologies, government efficiency, and coverage of the mobile network in terms of percentage of population. The UAE is proud to have 100 per cent smart phone usage. Enhancing the role and skills of the youth is one of the ways in which the citizens contribute to a digital transformation.
Impact of growth of digital economy
WAM reports that the UAE has accomplished significant achievements during its transition to a digital economy since 2013. These accomplishments have helped to reinforce the competitiveness of the UAE’s national economy, according to indexes published by international organisations, including the World Economic Forum, which ranked the UAE as the leading Arab and regional e-commerce centre in 2017.
The UAE’s digital economy contributes 4.3 per cent to the GDP, with expectations that this rate will significantly increase in the coming period. 40 per cent of the UAE’s population uses government digital services more than once a week. On the retail front, eCommerce in the UAE is growing rapidly and is playing a major role in expanding sales, while traditional retail sales in the country are slowing down.
The country is expected to further reinforce its position in the digital economy, supported by factors that include developments to eCommerce, improvements to the information technology infrastructure, the increased spread of Internet services, the use of smartphones and the expansion of electronic payment systems, as well as significant government support for digital transformation.
Read how digital technology is transforming Dubai.
Updated on 20 Apr 2021