Challenges of the Digital Economy

There are some challenges which have to face with the appearance of the digital economy: rise of inequality, threats to cyber security and major shift in the labour market.

First, the digital economy qualifies as “intangible capitalism” which contributes to social division. For example, Jonathan Haskel and Stian Westlake (2018) pointed out that asset intangibility can widen the gap between small and medium-sized enterprises and transnational corporations as when a company went bankrupt, banks get their money back by selling physical assets.

However, if intangible assets fall, these assets cannot be easily sold as the value of the company falls. As a result, in contrast to small and medium-sized enterprises that are more dependent on venture capital, which is different from bank financing, easier access to resources allows transnational corporations to benefit from the synergy of intangible assets, and it helps them strengthen the market dominance.

Beside that, the digital economy is expanding, cybercrime is becoming one of the biggest criminal activities. Data breaches exposed 4,1 billion records in the first half of 2019, and Cybersecurity Ventures (2019) predicts the rise of cybercrime will cost the world in excess of $6 trillion annually by 2021.

Finally, the spread of information technology entails the automation of production, which results in radical change of traditional jobs and the structure of unemployment. According to a study by The Future of Jobs, by 2020 only 2 million new jobs will be added, while 7,1 million will disappear