Economic activity involving digital skills or capital — the digital economy — currently represents 22.5 per cent of the total world economy, according to an analysis by Accenture Strategy and Oxford Economics.
That analysis suggests that “… the smarter use of digital skills, technologies and other assets could boost productivity and generate $US2 trillion of additional economic output by 2020.”
Indeed digital investments act as a growth multiplier, say Mark Knickrehm, Bruno Berthon and Paul Daugherty, the authors of “Digital disruption: The growth multiplier”.
“Take the United States, where adjustments in investments in digital skills, digital technologies and digital accelerators in line with our calculations could see the nation increase its gross domestic product by 2.1 per cent — which equates to $US421 billion in 2020.”
The digital economy is described as “The share of total economic output derived from a number of broad ‘digital’ inputs. These digital inputs include digital skills, digital equipment (hardware, software and communications equipment) and the intermediate digital goods and services used in production.”
In the study, Accenture says, the digital approach of 11 national economies was evaluated across 12 industries. “Typically, measures of the digital or Internet economy have focused largely on technology infrastructure, IT and communications sector investment, eCommerce, and broadband penetration rates. But this does not account for the whole scope of digital. Using a groundbreaking model that assesses how digital is adding value throughout the entire economy — by tracing the use of digital skills, equipment and intermediate goods and services in the production of all goods and services — we have been able to derive a more comprehensive and rounded view of what constitutes a digital economy.”
Across those economies, digital has the potential to increase its share of activity by three per cent by 2020 in most cases. “Today, the United States leads the ranking, with a digital economy valued at around $US5.9 trillion, which equates to 33 percent of gross domestic product. Forty-three per cent of employment in the United States’ workforce is digital. If we measure the accumulated investment in software, hardware and communications equipment, digital capital stock represents 28 per cent of total stock.”
Australia sits toward the top of the field when it comes to both the digital potential of the economy by 2020 and also the optimised CAGR.
A little knowledge
Knowing is not the same as acting, according to the report’s authors. “Even when organisations understand the size of their digital economy and the opportunities from their digital efforts, they often lack the ability to influence or change their digital outcomes on the global stage.”
Instead, Accenture identifies three levels is says can be deployed to enhance overall digital intensity and act as a growth multiplier:
- Digital skills;
- Digital technologies;
- Digital accelerators.
“Although adjusting these levers is challenging, it could be highly rewarding.”
In Australia, for instance, digital optimisation could add $US34 billion to the economy in 2020. At the top end, China is potentially the biggest winner with over half a trillion in extra value possible.