As the global digital economy continues to grow, five pillars are crucial for its success: strategy, policy, energy, human capital, and digital infrastructure. The world needs a unified approach to harness data’s value.
In 2024, the global digital economy constituted about 15 percent of global GDP in nominal terms. With data being the most expensive commodity in the world, the capability to process and transact data becomes vital to the prosperity of nations. The digital economy represents all economic activities reliant on or significantly enhanced by digital technologies, including digital infrastructure, digital services, and data.
The digital economy refers to economic activities that are conducted online, using digital technologies.
It encompasses e-commerce, digital payments, online banking, and other financial transactions.
According to a report by the World Bank, the global digital economy is projected to reach $23 trillion by 2025.
The growth of digital economy is driven by increasing internet penetration, mobile device adoption, and advancements in technology.
As a result, businesses are shifting their focus towards digital platforms to expand their customer base and increase revenue.
A strategic plan is essential for building a sustainable digital economy. Without an overarching strategy defining the digital economy’s goals and objectives, the journey will be random and insecure for all stakeholders. The U.S., as the world’s largest digital economy, has reached its status due to the sheer size of its technology and investment base. However, it lacks a strategic plan at the macro level to harness key targets and decipher measurable milestones.
Smaller nations are becoming fierce competitors by learning from the lessons learned by leading nations, planning for shortcuts, and strategizing to optimize results. A coherent digital economy strategy is crucial for maintaining consistent growth over the long term.
Effective policies are paramount to the success of digital economies. Without well-planned policies, even short-term gains may be volatile. Government policy functions as a nation’s executive arm to encourage the development of digital economies and create a predictable business environment that fosters stability and growth.
Recent legislation around the world focuses on what not to do, such as regulating fair competition and individual user rights. However, there is a need for upgraded policies, including ‘interstate highway‘ networks, massive A.I. center development, and government support of modern software development.
Artificial intelligence (AI) has a rich history dating back to the 1950s.
The term was first coined by John McCarthy, and since then, AI has made tremendous progress.
From rule-based systems to machine learning algorithms, AI has evolved significantly.
Today, AI is used in various applications, including virtual assistants, image recognition, and natural language processing.
According to a report, the global AI market size is projected to reach $190 billion by 2025.
As technology advances, AI is expected to have a profound impact on industries such as healthcare, finance, and education.
The exponential growth of A.I. has increased the demand for building massive data centers. These data centers require significant energy to fuel their processing capabilities. The world is under pressure to meet this demand, and concerns over global energy scarcity are unprecedented.
Sustainability has been a focus in discussions about energy, with 30% of the world’s electricity now being delivered through renewable sources. However, the United States is not a leader in sustainable energy, despite significant investments in solar and wind energy.
Educating and empowering the necessary human capital is critical to developing and growing global digital economies. Possessing a skilled and capable workforce is a key success factor for any nation on the digital economy front.
Human capital refers to the skills, knowledge, and experience that individuals bring to the workforce.
It is a key driver of economic growth and development.
According to the World Bank, human capital investment can increase productivity by up to 10% and reduce poverty rates by 15%.
In developed economies, human capital accounts for up to 80% of GDP.
Effective management of human capital involves providing education, training, and opportunities for skill development.
The IDCA’s Global Digital Economy Report 2025 found that there are over 100 million new IT-related jobs needed worldwide by 2030 to keep pace with A.I. data center development. Effective professional training, such as certified training programs, plays a vital role in addressing this challenge.
The digital economy is just a term without the data centers, which process and turn a nation’s modern economic wheel. Digital infrastructure density varies significantly throughout the developed world, with developing nations lacking in digital infrastructure.
The underlying digital infrastructure and data center footprint sets the foundation for any nation’s digital economy. The United States must modernize its existing facilities and think on a grand scale to establish and maintaining leadership in A.I.
Accomplishing real digital economy progress requires thoughtful commitment. All nations must become inclusive and agile, with the five digital economy pillars of strategy, policy, energy, human capital, and digital infrastructure working together and integrated to render digital services and economic outputs.
For the U.S. and other major economies, leading the way in developing their digital economies is crucial. Global collaboration and resource-sharing are essential for addressing concerns successfully.
By understanding these five pillars, nations can work towards creating a sustainable and prosperous global digital economy that benefits all stakeholders.
- observer.com | The Five Pillars of the Global Digital Economy
