The future development of the digital economy will depend on the success of several breakthrough technologies.
These technologies are in an intensive stage of development and are becoming more and more advanced each year, attracting more and more young scientists. Each technology can have a subversive effect on a number of traditional industries and on business as a whole. Before turning to the leading industries that have already become digital or have fully experienced the impact of new technologies, let us consider the prospects of the selected breakthrough technologies.
Mobile communication systems common in large cities operate in LTE 4G (2665 MHz) networks at speeds of up to 100 Mbit/s. Further progress is related to the use of millimeter waves (1-100 GHz), which have unique features and are widely used, for example, by the military. The new networks will be able to provide speeds up to 10 Gbps. It is the ten-fold increase in data transfer rate that is the opportunity that will lead to tremendous changes in the world.
Tests already conducted show that the era of 5G is close and will most likely come in the early 2020s after the introduction of the new unified communications standard (IEEE 5G). It is the new generation networks that will open the way for ubiquitous industrial automation (m2m), unmanned transport and real breakthroughs in the Internet of Things. Initially, the technology will be used in major metropolitan areas and can significantly change their economies.
Additive manufacture allows to impose thin layers of a material on each other, creating demanded 3D-model. At present, this market is very small – about $6 billion. It is expected that the use of 3D printing can reduce the cost of production, give new highly qualified jobs and together with other technologies to transform the industry. The 3D printing market experienced a slowdown and a complete mismatch with analysts’ expectations.
However, the sector waits growth about 16 %, and the total number of sold 3D-printers will grow on 39 %. Estimates of the consulting companies are rather optimistic – the next 5 years average annual growth of volume of the market of 3D-printers will reach 33 % (according to Context). The greatest contribution is made by industrial devices.
Distributed registry technology allows to carry out a transaction (i.e. transfer some valuable information, e.g. currency or contractual obligations) without copying it and without further comparison of copies – the method of distribution (share) between many independent and anonymous users (nodes).
It should be emphasized that, first of all, the Blockchain is relevant for those countries and industries where the level of trust in established organizations (banks, governments, counterparties, etc.) is low, because technology attracts with its transparency and security.
It enables the development of smart contracts (i.e., automatically executed when conditions are met), share economy (already established with the examples of Uber and Airbnb), crowdfunding, electronic elections, new types of intellectual property protection and user identification, microgrides in the energy industry, and can find application in any other operations requiring instant and secure data exchange.
In addition, Blockchain technology makes it possible to create cryptov currencies, the most famous of which is Bitcoin. A crypt currency is a digital currency that is traded on a computer network. Cryptov currencies have a number of advantages: high speed of transactions, transparency of operations and security.
Artificial Intelligence (AI).
Artificial Intelligence technologies include such developments as machine learning for image and speech recognition. AI is used in ICT, media, retail, health care, and other industries. McKinsey estimates that the largest high-tech companies spend between $20 billion and $30 billion annually on AI, while start-ups spend between $6 billion and $9 billion. More than 90% of the costs are spent on research and development, and 60% on machine learning technology.
Most applications of AI are at the experimental stage, so estimates of the prospects for this market vary greatly (from $0.6 to $126 billion by 2025). Although investment is growing rapidly, it is too early to talk about the commercial use of AI. AI is best implemented in three industries: telecommunications, automotive and financial services.
Virtual reality technologies are usually considered together with augmented and mixed reality technologies. Goldman Sachs estimates that by 2025 the leaders in virtual reality implementation will be video games (over $11 billion) and healthcare (over $5 billion).
The entire market could exceed $80 billion. According to the results, the market is estimated at 2.7 billion dollars. It should be noted that Asia is ahead of North America in terms of sales of the relevant software, but the USA is growing rapidly, from $97 million to $403 million.
There are three challenges of the digital economy
First, the digital sector, the Internet and new forms of communication are developing very rapidly. New platforms and services are emerging that require regulators’ attention and new approaches. Consequently, introduced legislation can quickly lose relevance and effectiveness, which increases pressure on regulators.
Secondly, there is media convergence. Internet, television, mobile communications are increasingly interconnected. This entails a mix of markets that have traditionally been regulated separately, and also creates new challenges for competition authorities. The EU has already responded to this challenge by combining the control of telecommunications and TV and radio broadcasting in one supervisory body.
Thirdly, the decentralized nature of the Internet and the digital economy, with its lack of clear geographical boundaries, poses challenges for jurisdictions and harmonized regulatory approaches in different countries.
Some aspects of the Internet and digital technologies have been standardized and internationally agreed upon (domains, mobile principles, some intellectual property rights). However, there are still more unresolved regulatory issues. These are proxy servers, pirated content, “darknet”, transactions through third countries (with other regulations). In addition, the issues of the principles of taxation and liability of the parties are becoming more and more acute.
Given these challenges, the central issue for regulators is choosing the regulatory approach. Approaches range from self-regulation, in which users and companies have to deal with each other’s problems before going to the government regulator and coregulation, in which the public and private sectors cooperate within a single organization, to administrative and management regulation, in which the government sets common rules.
Compared to administrative and management regulation, self-regulation has advantages: decisions regarding technical standardization are made by industry representatives who are more familiar with how the industry operates. Such an approach seems relevant in such a complex market as the digital economy.
Moreover, self-regulation can be more flexible than administrative and management regulation, which is well suited to a dynamic digital economy. However, there are drawbacks: when self-regulating, representatives of the industry may not take into account the interests of other economic entities, including consumers. Thus, joint regulation is the best approach.