Digital Economy Of Innovative Regions: A European Agenda And Development Indicators

The concept of «digital economy»

The term «digital economy» was first used by Tapscott ( 1997), who pointed out the opportunities of the Internet to change drastically markets and business environment, social relations, the projections for the economy in line with growing up new generation using digital technologies. However, these authors’ academic works sought a clear definition of the term «digital economy». The analysis of what constitutes and the context of the notion «digital economy» in foreign authors’ academic papers demonstrates the continuing evolution of the term associated with digital technologies development and economic digitalization. According to Lane ( 1999), digital economy is “…the convergence of computing and communication technologies in the Internet and the resulting flow of information and technology that is stimulating all of electronic commerce and vast organisational changes” (p.318). Haltiwanger and Jarmin ( 1999) defined the digital economy as “having three primary components: e-business infrastructure; electronic business (e-business) is any process that a business organization conducts over computer-mediated networks; electronic commerce (e-commerce) is the value of goods and services sold over computer-mediated networks” (p.21). Benni, Elmasry, Patel, and Aus Dem Moore ( 2016), concludes that digital economy is “less as a concept and more as a way of doing things” but with three attributes: “creating value at the new frontiers of the business world, optimizing the processes that execute a vision of customer experiences, and building foundational capabilities that support the entire structure” (p.14-15). The best-known definition was given by Knickrehm, Berthon, and Daugherty ( 2016) who defined digital economy as “the share of total economic output derived from a number of broad “digital” inputs”. According to the author, these digital inputs include “digital skills, digital equipment (hardware, software and communications equipment) and the intermediate digital goods and services used in production” (p.2). Rouse ( 2016) specifies Knickrehm’s definition from the technological point of view considering that «the digital economy is the worldwide network of economic activities enabled by information and communication technologies (ICT)” (p.5). Dahlman, Mealy, and Wermelinger ( 2016) go even further in that direction defining digital economy as “the amalgamation of several general purpose technologies (GPTs) and the range of economic and social activities carried out by people over the Internet and related technologies (p. 11). It encompasses the physical infrastructure that digital technologies are based on (broadband lines, routers), the devices that are used for access (computers, smartphones), the applications they power (Google, Salesforce) and the functionality they provide (IoT, data analytics, cloud computing)”.

The semantic analysis and the synthesis of submissions allows for conclusions about digital economy as an activity based on digital technologies, whose product are digital goods and services or mixed goods and services the production of which is dependent from digital technologies. According to its territorial platform, digital economy is a worldwide network of economic and social subjects creating and using the possibilities of the Internet and the technologies derived from it.

The priorities for digitalization and building up the digital economy

According to the European developers of the reports «Measuring the Digital Economy A New Perspective» ( OECD, 2014) and «Information Economy Report 2017 – Digitalization, Trade and Development» ( UNCTAD, 2017), G20 initiatives ( Presidential Executive Office, 2016a), as well as van Gorp and Batura ( 2016) who research into the policy of the European parliament toward the digital economy, the European agenda for digitalization includes a wide range of economic activities that include using digitized information and knowledge as the key factor of production, modern information networks as an important activity space, and the effective use of information and communication technology (ICT) as an important driver of productivity growth and economic structural optimization, as well as regional economies and the creation of territorial innovative systems. The agenda for digitalization being pursued by the EU creates «Industry 4.0» that is the digital economy containing technologies and products of cloud computing, mobile devices, IoT platforms, location detection technologies, advanced human-machine interface, authentication and fraud detection, 3D printing, smart sensors, big data analytics and advanced algorithms, multilevel customer interaction and customer profiling, augmented reality/wearables.

The Russian Strategy for Digital Economy also includes the digitalization issues resulting from the European agenda, and the program “Digital economy of the Russian Federation” contains markets and economic sectors; platforms and technologies; regulation; information infrastructure; staff and information security. The main cross-cutting digital technologies of the program are big data; neurotechnologies and artificial intelligence; distributed ledger platforms; quantum computing technologies; Internet of things, robotics and sensory components; DECT technologies; virtual and augmented reality technologies. The European agenda for digitalization has obviously been reflected in the Russian documents of strategic planning and created the solid institutional framework of the digital economy development in the Russian subjects. The digitalization priorities being realized are drastically changing the business environment and the conditions of employment in regions, providing economic growth, productivity gains, reducing transaction costs, facilitating the access of local businesses to world markets. The 15-25 per cent growth recorded by the digital economy within the last decade rewards regions with “digital dividends” in the form of lower regional inequality in the levels of socio-economic development, the increase in average per capita incomes, the creation of unique local markets of digital goods and services. However, the European best practices show that digitalization is incurs the risks of limited or imperfect resources and institutes, lack of opportunities to create the digital economy in particular regions. The risks of creating the digital economy are associated with the problems of redundant workers because of changes in technologies, the danger of marginalized workers as the digital labour increases, fragile privacy and digital security, the risk of decrease in traditional production and premature de-industrialization. Faced with new opportunities and the existing risks created by digitalization, the development of the digital economy needs to be well-managed and approved on the priority areas – the regions of innovative development that are the AIRR regions in Russia.

The indicators of measuring the digital economy development in Russian innovative regions

The well-run digital economy development would provide the whole society with “digital dividends” in the form of increased national wealth, business profits and transparency of public administration which are realized by a Digital Economy Country Assessment (DECA) methodology to help countries and regions assess their readiness for digital adoption developed by the World Bank in collaboration with the Institute of the Information Society (see Table 01 ).

The DECA framework is designed as a common set of indicators that can be applied for the whole country, for its regions, and for certain sectors of the economy. According to the results of comparative assessment, a region is ranked at elementary, emerging, intermediate, advanced, high levels of digital economy development. The Samara Region is among 16 Russian subjects – the AIRR members, and the digital transformation of the economy is designated as a priority task of long-term development in the Strategy of the socio-economic development. The analysis of the digital economy development in the Samara Region based on DECA methodology enables to assess its readiness for digital adoption as “emerging” (see Table 02 ).

High quality of DECA methodology and the European experiences in developing the evaluative indicators is that the assessment methodology includes the indicators to measure the comprehensive set of conditions and results of the digital economy. For the Samara Region, the use of the DECA methodology reveals poor results in the digital economy development provided that circumstances are conducive expressed by a more educated population (the proportion of students in total population is higher than in the Russian Federation) and high level of economic activity (growth rates of ICT costs exceeding the average for the whole country).