The digital economy
Christian Growitsch (),
Friso Schlitte and
No 21e, Strategy 2030 - Wealth and Life in the Next Generation from Hamburg Institute of International Economics (HWWI) and Berenberg
[Introduction] Digitisation is by no means a completely new phenomenon. By the time of the dotcom boom of the late 1990s at the latest, it was clear that the economy was facing a massive upheaval. A good decade and a half later, internet corporations are already established players in the corporate world. If the topic of digitisation is still omnipresent in 2015, making headlines in the business press under the catchphrase »Industry 4.0« day after day, there are good reasons for this. Previous experience with the digital revolution - as seen in the music industry and the media landscape, for instance - provides a foretaste of what many other industries might be about to undergo. Big data, connectivity and artificial intelligence are the buzzwords that stand for the next round of the digital revolution and underpin the concept of the digital economy. Today, it is not just the multitude of innovations that astounds but also the speed with which business and society are being turned inside out. The fast pace of change can largely be explained by the fact that markets are being created in the digital economy that operate in line with the »winner takes it all« principle. This means that speed is a key success factor for enterpreneuers and enterprises, as the prospect of global market domination is dangled. That such potential success is triggering something of a gold-rush mood comes as no great surprise. At the same time, though, both established companies and workers who fear for their jobs are becoming increasingly nervous. With this study, we hope to contribute to a better understanding of this digital upheaval and provide an insight into the prospective changes that can be expected in business and society. In section 2, we describe the underlying concepts and special features of the digital economy. We then focus on four selected topics with a view to pinpointing the economic consequences of digitisation. First, we outline the German business model (section 3) and consider whether the current structure of the German economy forms a good foundation for mastering the challenges of the digital revolution. In section 4, we use the example of 3D printing to examine the potential of digital technologies to disrupt economies. We then go on in section 5 to use the automotive sector to explore the possible consequences for one of Germany’s key industries. In section 6, we highlight the consequences of digitisation for the financial sector. Finally, in section 7 we draw up implications for economic policy and examine whether the market economy is in any position to channel the peculiarities of the digital economy in such a way that the newly created prosperity benefits all social groups and not just a digital elite.
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