Capturing the Digital Economy—A Proposed Measurement Framework and Its Applications: A Special Supplement to Key Indicators for Asia and the Pacific 2021

By Asian Development Bank

This publication sets out a framework for measuring the importance of the digital economy in national and global production processes. Amid the growing interest in the digitalization of socioeconomic activities, there is a lack of consensus on an established framework to estimate the digital economy. This report proposes a definition of the core digital economy and an input-output analytical framework to measure it. Applying this framework to selected economies and years, it finds that the digital economy and digitally dependent industries contribute a significant portion of gross domestic product. It examines key digital economy phenomena and trends in relation to sectoral links, temporal price changes, jobs, global value chains, the COVID-19 pandemic, and Industry 4.0.

• Language: English
• Publisher: Asian Development Bank
• Release date: Aug 1, 2021
• ISBN: 9789292690076

Book preview

CAPTURING THE DIGITAL ECONOMY

A PROPOSED MEASUREMENT FRAMEWORK AND ITS APPLICATIONS

A Special Supplement to Key Indicators for Asia and the Pacific 2021

AUGUST 2021

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

© 2021 Asian Development Bank

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Some rights reserved. Published in 2021.

ISBN 978-92-9269-006-9 (print); 978-92-9269-007-6 (electronic); 978-92-9269-008-3 (ebook)

Publication Stock No. FLS210307-3

DOI: http://dx.doi.org/10.22617/FLS210307-3

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Notes:

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Cover design by Jahm Mae Guinto.

Contents

Tables, Figures, and Boxes

Foreword

Digital technologies are transforming the way businesses operate and how societies interact. Their widespread impacts can be seen in the ease with which enterprises can access markets and exploit new ways of delivering products. Governments, private institutions, the media, and academia started to take notice when global firms began to be led by digital companies. Since about 2010, trade in digital products has risen steeply along global value chains. Demands for jobs and skills are also changing, radically so, with emerging technologies such as artificial intelligence predicted to be ubiquitous in the near term. As the COVID-19 pandemic has intensified society’s reliance on technology platforms, the so-called digital revolution is no longer a matter for future generations: it is already upon us.

History suggests that previous industrial revolutions often came with short-term dislocations as the economy adjusted to new ways of doing things. In this current period of technological change, appropriate policies are needed to manage any unintended consequences and realize the full economic and social benefits of digitalization. Navigating shifts in labor demand; bridging access to technologies, especially among small and medium-sized enterprises; strengthening the integrity of the tax system; and ensuring productivity gains in the long run—these are just some of the pivotal issues that require policy attention. Importantly, as policymakers turn to official statistics for evidence on which to base meaningful strategies and programs, meeting the demand for data will be even more challenging than it is today.

In that spirit, I welcome this special supplement to Key Indicators for Asia and the Pacific 2021. Highly relevant to current global issues, this timely report provides comprehensive statistical perspectives on the digital economy, especially for developing economies. It addresses the lack of consensus in defining the digital economy, by proposing a thorough measurement approach based on existing macroeconomic frameworks as well as standard industry and product classifications. The study draws a perimeter around the core digital economy by identifying pertinent digital sectors, while anchoring the data requirements within the capacities of statistics offices. The real and nominal contributions of core digital industries to the broader economy are quantified, including an assessment of how digitally dependent traditional industries have transformed themselves over time. The report concludes with thematic applications of the proposed measurement framework. Here, the authors explore the structural changes in jobs in the digital economy, participation in global value chains, impacts during the COVID-19 pandemic, and the future trajectory of emerging digital technologies.

This supplement is the culmination of rigorous study, analysis, and meaningful inputs from experts, researchers, and statistical partners. The publication team was led by Mahinthan Joseph Mariasingham, under the overall direction of Elaine Tan. The core research team included John Arvin Bernabe, Ma. Charmaine Crisostomo, Jahm Mae Guinto, Angeli Grace Juani, Angelo Jose Lumba, Mahinthan Joseph Mariasingham, and Clara Torelli. This report also benefitted from significant contributions by Julian Thomas Alvarez, Gienneen Antonio, Nikko Angelo Antonio, Michael John Barsabal, Donald Jay Bertulfo, Renz Marion Catapang, Samantha Joy Cinco, Geraldine Guarin, Julieta Magallanes, Kenneth Anthony Luigi Reyes, Ana Francesca Rosales, Albert San Juan, and Eric Suan. Valuable insights and feedback from Nadim Ahmad, Pramila Crivelli, Sanjiv Mahajan, and Mathilde Pak helped refine the study, as did comments from participants of the Asian Impact Webinar on Measuring the Digital Economy conducted by the Asian Development Bank. Krizia Anne Garay provided expert insights and industry perspectives that aided the conceptualization of this report. The study team also acknowledges the support of our data partners, official statistics agencies, and economies participating in the bank’s statistical and analytical capacity-building initiatives. Eric Suan provided administrative and operational support throughout the course of the study and publication process. The cover of the supplement was designed by Jahm Mae Guinto and the accompanying infographics were designed by Mike Cortes. Paul Dent edited the manuscript, while Joe Mark Ganaban led the layout, page design, and typesetting process.

I hope this report will be a valuable resource for statistical compilation, research, and analysis of the digital economy, acting as a driver for evidence-based policymaking and program implementation. It is also hoped that the insights from this report serve to further stimulate research and collaboration on this relevant topic.

Yasuyuki Sawada

Chief Economist and Director General

Economic Research and Regional Cooperation Department

Asian Development Bank

Abbreviations

Highlights

•   There is a lack of consensus on an established framework to estimate the digital economy. Amid the growing trend of digitalization of socioeconomic activities, a variety of proposed definitions and measurement methods related to the digital economy have arisen. As a result, organizations and economies use different measures, which are