Pakistan’s place in Digital Economy Market

  • The next phase of development has begun


By Yasin Joyia


Historically, the areas that are part of the present Pakistan always have been connectors in west to east movements of armies, trade, and crafts. Now, again Pakistan is becoming a centre of a new kind of trade, from north to south and east to west in all directions, with the implementation of the China Pakistan Economic Corridor initiative. But let us examine another rapidly emerging world’s economic system called Digital Economy.

The industrialised world is making a tectonic shift to the Digital Economy, that has ripple effects on the world economy in general by creating digital ‘have’ and ‘have-not’ countries and populations, especially in the developing world.

Muscle Power Economy (Human or Animal): Many argue that rapid developments first started with domestication of animals. The domestication of work animals morphed into the farming revolution around 8000 BC. As a result, plentiful and reliable food sources became available to human settlements, which then became cities. For many thousands of years, humanity was on a very gradual upward trajectory. Progress was achingly slow and almost invisible. But just over 200 years ago, something sudden and profound arrived and bent the curve of human history.

Industrial Economy or First Machine Age: The invention of the steam engine, which was developed and improved during the second half of the 18th century, was the dawn of the modern industrial age. The steam engine allowed us to overcome the limitations of muscle power, human, and animal, and generate massive amounts of useful energy at will. This led to factories, and mass production, to railways, and mass transportation. Naturally as a result, it led to modern life, ushering in humanity’s first machine age– it was the most profound time of transformation time in our human history.

The developed world is already free from developing the basic industrial infrastructure, and can focus on moving rapidly into the digital economy. At present, the developing world is just embarking upon the industrial development phase to catch up with the developed world

Digital Economy or Second Machine Age: Computers and other digital advances are doing to mental power, the ability to use our brains to understand and shape our environments, what the steam engine did for muscle power. For now, mental power is at least as important for progress and development to empower ourselves to get thing done. Digitisation is the work of turning all kinds of information and mediatext, sounds, photos, videos, data from instruments and sensors, and so on, into the ones and zeros that are the native language of computers. Many wireless apps are using several streams of information: digitised street maps, location coordinates for cars broadcast by an app to generate live alerts about traffic jams.

For example, Google’s driverless cars have advanced so fast that they can drive in cities without causing major accidents. The digitisation of just about everything– documents, news, music, photos, videos, maps, personal updates, social networks, requests for information and responses to those requests, data from all kinds of sensors, and so on– is one of the most the most important recent phenomena that has resulted in the explosion of data called “Big Data”. As we move deeper into the second machine age, digitisation continue to accelerate, yielding some jawdropping statistics of data storage.

Machine-to-machine (M2M) communication is a catch-all term for all devices sharing data over networks like the Internet. Some new-generation apps are making use of M2M; when an app is active on a smart phone, it consistently sends information to app servers without human involvement. When you search a travel site for cheap airfares, its servers immediately send requests to their counterparts at various airlines, which write back in real-time without any human involvement. ATMs ask their banks how much money we have in our accounts before they let us withdraw cash. Digital thermometers in refrigerated trucks constantly reassure supermarkets that the produce is not getting too hot in transit.

Transitional Shift of Manufacturing or Industrial to Knowledge Based Economy: The world economy is shifting from manufacturing to a knowledgebased economy rapidly. Only Europe is estimating that the digital economy will generate approximately €415 billion annually that will likely double its growth rate in the next decade. To reap these benefits of the digital economy, the EU has created a connected Digital Single Market that requires Europe to overcome barriers related to infrastructure, broadband accessibility, copyright and data protection, by enhancing the use of online services and digital technologies.

In order to measure progress of the European digital economy, the ‘digital scoreboard’ is updated yearly. One of its essential elements is the Digital Economy and Society Index (DESI), a composite index that summarises relevant indicators on Europe’s digital performance and tracks the EU members in digital competitiveness.

The DESI is structured around five principal dimensions:

Connectivity: This measures the deployment of broadband infrastructure and its quality. Access to fast broadbandenabled services is a necessary condition for competitiveness.

Human Capital: This measures the skills needed to take advantage of the possibilities offered by a digital society. Such skills go from basic user skills that enable individuals to interact online and consume digital goods and services, to advanced skills that empower the workforce to take advantage of technology for enhanced productivity and economic growth.

Use of Internet: This accounts for the variety of activities performed by citizens already online. Such activities range from consumption of online content (videos, music, games, etc) to modern communication activities or online shopping and banking.

Integration of Digital Technology: This measures the digitisation of businesses and their exploitation of online sales channels. By adopting digital technology businesses can enhance efficiency, reduce costs and better engage customers, collaborators and business partners. Furthermore, the Internet as a sales outlet offers access to wider markets and potential for growth.

Digital Public services: This measures the digitisation of public services, focusing on e-government. Modernisation and digitisation of public services can lead to efficiency gains for the public administration, citizens and businesses alike, as well as the delivery of better services.

The developed world has already developed the basic industrial infrastructure, and can move rapidly into the digital economy. The developing world is just embarking upon the industrial development phase. Considering the five DESI measures, the world, except the developed countries, is falling significantly short in enabling its citizens in internet connectivity.


The writer is freelance columnist.