Move to a Digital Economy Cannot Happen Without the Government Providing the Ecosystem

Governments around the world have been pitching for digitalization of their economies and concomitantly trying to ensure that technology plays a vital role in business and society. Towards this end countries such as India and China in the developing world and the United States and Europe in the developed world have introduced several measures such as banning cash transactions, providing incentives for adoption of eCommerce and other digital modes of business. Indeed, with all the hype and hoopla around the digital economy, one wonders whether we have truly arrived in the 21st Century.

However, digitalization demands its own set of set of rules and support from the government. For instance, if we need to do everything online, the basic requirement is that we have a stable and reliable internet connection and uninterrupted power supply. How many of us have been left stranded without power and the internet and how many times have our mobile phones failed to respond due to signal and bandwidth issues? Moreover, how many times have we been to the market only to realize that instead of accepting credit and debit cards, the storekeepers say that since there is no connection to the server, he or she cannot honor digital modes of payment?

You might wonder where the government comes into the picture in all these scenarios. Simple, the answer to this is that the government bears the primary responsibility for ensuring that the physical infrastructure and the so-called “digital backbone” is in place for the digital economy to really take off. Of course, governments are fond of saying that they are mere enablers and the private sector should ideally make use of the incentives and the policies that the government formulates to facilitate infrastructure development.

Having said that, it must also be noted that while the private sector does carry some of the “burden” of ramping up infrastructure, the moot point remains that it is, of course, the government that should push the other stakeholders in moving towards a digital economy. Indeed, who else can invest Trillions in infrastructure development or who else has the power to “order” the people to go to either a cashless economy or a semi-digital economy. Thus, the contention here is that ultimately, it is the governments that have to prod and nudge the private sector and the citizenry towards digitalization.

To conclude, a move towards a digital economy cannot happen unless the government ensures that the ecosystem is in place for the private sector and the entrepreneurs to take advantage of and realize the “returns” from the incentives and the schemes and the policies. Only then would a 21st century digital economy would actualize and for this, there is a need for 21st century governance.


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Globalization