Since the late 1980s, the digital revolution has transformed the economy and society. First came the development of a connected economy, characterised by mass take-up of the Internet and the roll-out of broadband networks. This was followed by the development of a digital economy via the increasing use of digital platforms as business models for the supply of goods and services. Now the movement is towards a digitalised economy whose production and consumption models are based on the incorporation of digital technologies in all economic, social, and environmental dimensions.
The adoption and integration of advanced digital technologies (fifth-generation (5G) mobile networks, the Internet of things (IoT), cloud computing, artificial intelligence, big data analysis, robotics, etc.) means that we are moving from a hyperconnected world to one of digitalised economies and societies. It is a world in which the traditional economy, with its organisational, productive and governance systems, overlaps or merges with the digital economy, with its innovative features in terms of business models, production, business organisation and governance. This results in a new, digitally interwoven system in which models from both spheres interact, giving rise to more complex ecosystems that are currently undergoing organisational, institutional, and regulatory transformation.
These dimensions of digital development are constantly evolving, in a synergistic process that affects activities at the level of society, the production apparatus and the State. This makes the digital transformation process highly dynamic and complex, and thus challenging for public policies insofar as it requires constant adaptation and a systemic approach to national development. Within this framework, 5G networks will make the convergence of telecommunications and information technologies viable, changing the structure and dynamics of the sector, while the adoption of digital technologies and artificial intelligence (as general-purpose technologies) marks a new stage, that of the digitalized economy.
At the societal level, digital disruption leads to changes in communication, interaction and consumption models that are reflected in greater demand for devices, software with more functionalities, cloud computing and data traffic services and the basic digital skills needed to use the associated technologies. In turn, the digital economy represents an opportunity for consumers to access information and knowledge of all kinds in various formats, goods and services, and more streamlined forms of remote consumption. The move towards the digital economy should mean that consumers’ needs can be met with smart products, often associated with advanced services that are highly customized.
All this means an increase in consumer welfare, accompanied by a reconfiguration of the digital skills needed for more advanced digital consumption and for the new labour requirements resulting from the new production models. At the same time, the new forms of consumption are associated with potential benefits from reduced material use and more sustainable environmental choices, insofar as these are based on more and better information (about the environmental footprint of a product, for example) or reward more environmentally friendly practices.
The development of the digital economy has radically changed the value proposition of goods and services via the reduction of transaction and intermediation costs and the exploitation of information from data generated and shared on digital platforms. These digitally enabled models facilitate the generation and capture of data which, when processed and analysed with smart tools, can be used to improve decision-making, and optimise supply.
This results in more streamlined operating processes, in market segmentation and in product customisation and transformation. Data and digitalized knowledge become a strategic production factor. All this entails a need for regulatory changes in a variety of areas ranging from telecommunications to trade, taking in competition and data protection and cybersecurity policies on the way.
The digital transformation of the production sector is taking the form of new management, business and production models that are facilitating innovation and the introduction of new markets and disrupting traditional industries. The expansion of the industrial Internet, smart systems, virtual value chains and artificial intelligence in production processes is speeding up innovation and generating productivity gains, with positive effects on economic growth. In addition, all this is driving the transformation of traditional industries through automotive technology (autotech), agricultural technology (agritech) and financial technology (fintech), among others. Smart production models can bring increased competitiveness with a smaller environmental footprint, as companies are using digital tools to map and reduce their footprint in order to assess their impact on climate change and modify their production processes.
A similar process ought to take place in the public management models of State bodies, to meet citizens’ demands and improve government action. The adoption of these technologies by such institutions would increase the efficiency and effectiveness of provision for services such as health care, education, and transport. It would also improve citizen participation in democratic processes, increase transparency in government operations and facilitate more sustainable practices. Smart city solutions are transformative because of their potential social, economic, and environmental impact.
Despite all this potential, however, digital development that is not governed by principles of inclusiveness and sustainability can reinforce patterns of social exclusion, as well as unsustainable exploitation and production practices. Although digitalization can make a major contribution to the three dimensions of sustainable development (growth, equality and sustainability), its net impact will depend on the extent to which it is adopted and on its system of governance.