Digitisation and 24-hour economy 2 - Substitutes or complementary development strategies?

Because digitisation maximises market and government efficiency, it can minimise or eliminate some of the underlying causes of market and government failures. 

In compliance with market and governmental regulations, it provides equal opportunities and platforms for all economic agents to function effectively.

It provides adequate access to resources and processing of information or data, improves production processes to reduce externalities and enhances rational decision making.

Prices for goods and services will reflect private and external costs. It reduces bureaucracies, rent-seeking and nepotism in government operations.  

A digitised economy will assist potential investors in avoiding the fraudulent activities of companies that flout government regulations and business ethics, as many Ponzi schemes have destroyed the lives of gullible investors.

Social welfare will increase when the production and allocation of goods and services are Pareto efficient.

Where economic activities and their outcomes can be readily tracked, private and public sector organisations can clearly define reward and penalty mechanisms to motivate good citizens and clean up the system.

Digital economies

Lastly, because digital economies offer performance-enhancing tools to boost the efficiency of the factors of production—land, labour, capital and entrepreneurial ability—they promote rapid growth of the country's output goods and services.

A digitised economy improves the productivity of production factors, lowers production costs and equips businesses with digital skills and innovative technologies to transform their culture and worker mindsets, improve business processes, boost the production and distribution of goods and services and increase the competitiveness of enterprises.

 In other words, digital transformation systems and technologies will support the country's long-term economic growth and development because they lower production costs, increase government revenue, boost trade benefits, increase productivity and efficiency in markets and government systems and create more business opportunities.

Deficiencies

There are certain drawbacks to the digital age, including the following, that, when adequately addressed, can maximise its positive effects on an economy: One of the problems of digital transformation is the high cost of acquiring, installing and operating information and communication technology infrastructural facilities and digital products and platforms.

Expanding network coverage and capacity to handle more users results in higher costs for Internet access providers. 

When a country imports almost all major technologies and human skills and cannot be proud of its citizens' technological astuteness, the cost of digital transformation usually increases.

Once more, fraud-related cases will proliferate in areas where private and public sector organisations neglect to provide sufficient security to safeguard digital installations.

Cybercriminals steal and hack digital installations (infrastructure, products, platforms), data and money belonging to organisations and customers, causing inconvenience for private and public sector clients and service providers.

In 2020, the Bank of Ghana reported that the banking sector lost GH¢1 billion because of weak digital and electronic systems (Business & Financial Times, 2022; cited in Acquah-Sam, 2022).

Furthermore, the industry lost GH¢61 million in 2021 as a result of fraud and other banking malpractices emanating from an increase in the number of customers using digital and electronic services (Ghana Netherlands Business & Cultural Council, 2022; cited in Acquah-Sam, 2022).

 Due to their fear of losing their investments, some members of the public tend to have less faith in the digital age, which could hurt the volume of transactions, savings, capital accumulation and rate of economic growth and development.

Because digitisation restricts unskilled workers' responsibilities within particular institutions, necessitates their retraining and redeployment, or results in their job loss and subsequent social burden, it may lead to an increase in unemployment among this group.

According to Berger & Frey (2016), Frey & Osborne (2013) and Strauss (2018), all of which are cited in Fuchs & Cumbers (2023), by reducing skill requirements and related earnings, digitisation may devalue the labour of professionals, experts, and specialists.

Substitutes or complementary?

Substitute development policies achieve the same national goals of increasing national income, lowering unemployment, ensuring price stability, and maximising the overall well-being of the population.

Therefore, in the absence of one, the others can achieve the same goals.

Conversely, complementary development policies jointly produce the same national goals.

If key stakeholders can effectively handle its obstacles, digitisation can help eradicate or minimise inefficiencies in both the public and private sectors of a traditional 12-hour or 24-hour economy.

It is better to think of "digital transformation" and "conventional 24-hour economy" as complementary development policies rather than as substitute development models or policies.

The development of digital transformation, which enhances the efficiency of factors of production for rapid economic growth and improves the quality of human lives, is now crucial to emerging countries' efforts to create an efficient, resilient, or highly productive traditional 12-hour or 24-hour economy.

Recommendations

Today, a developing nation's government's effort to create a traditional 12-hour or 24-hour economy that is highly productive, robust and efficient hinges also on the development of digitisation, which complements other economic growth policies and moderates their effects on the production and distribution of the economy's output of goods and services and the enjoyment of quality human lives.

A digitised economy helps eliminate inefficiencies in resource mobilisation, allocation and use in organisations and homes.

It is, however, important that private and public sector organisations make greater efforts to reduce their negative effects on society.

The public’s access to high-quality Internet connectivity helps them fully take advantage of the opportunities it presents to the nation.

Digitisation knits the world together, despite the differences in time zones.

The educational sector will require adjustments in curricula and orientation for schoolchildren and workers to understand the changes in modern labour market demands and the direction of economic development efforts and guide them in their choices of academic programmes and professions.

Digitisation will better serve the night economy, making it reasonably cashless to prevent criminals and armed robbers from attacking individuals and businesses at night.

The security of digital installations must be tightened to prevent cybercriminals from stealing equipment or hacking digital systems.

Very soon, political campaigns will begin in earnest and I am optimistic that the NPP and NDC will campaign mostly on “a resilient 12-hour economy driven by digitisation” and “a 24-hour economy.”

They must acknowledge the complementarity of their development policies so that they can give them equal attention when elected to power in 2025 to rapidly achieve Ghana’s economic growth and development aspirations.

Therefore, it is my humble appeal to the winners of the 2024 general election to mobilise resources to entrench the implementation and operation of the two policies in Ghana, bearing in mind the importance of national cohesion.

The writer is a senior lecturer/Dean, Faculty of Humanities and Social Sciences,
Wisconsin International University College.

E-mail: samacquah@yahoo.com