Gross domestic product (GDP), the basic measure of a country’s overall economic output, is generally used by governments to inform their policies and decisions. “What we measure affects what we do; and if our measurements are flawed, decisions may be distorted,” noted a 2009 Commission convened to look at the adequacy of GDP as an indicator of economic performance, - which was led by Nobel-prize winning economists Joseph Stiglitz and Amartya Sen.
GDP is essentially a measure of production. While suitable when economies were dominated by the production of physical goods, GDP doesn’t adequately capture the growing share and variety of services and the development of increasingly complex solutions in our 21st century digital economy.
Digital Spillover, a recent report co-developed by Huawei and Oxford Economics, explores how to better define and measure the true impact of the digital economy. It argues that the scope of the digital economy is expanding and proposes a novel way of measuring its impact.
“A truly digital economy is one in which businesses from across the industrial spectrum are investing in digital and making the most productive use of it,” notes the report. “The mechanisms by which this is happening are complex and evolving. Over and above the direct productivity boost that companies enjoy from digital technologies, a more profound chain of indirect benefits also takes place, as the impact spills over within a firm, to its competitors, and throughout its supply chain. These digital spillover effects materialize through numerous channels, and are integral to understanding the role digital technologies play in the economy.”