Gaidar Forum: How to Measure the Digital Economy?

On the first day of the 11th Gaidar Forum, held at the Russian Presidential Academy, the participants discussed ways to assess the growth of the digital economy during the session on Problems and Prospects of Building a System for Monitoring the Digitalization of the Russian Economy.

Digital economy is a fairly new concept coined in the mid-1990s, still lacking a clear and unambiguous definition. The purely terminological problem became a challenge for national economies: the existing SNA (System of National Accounts) does not embrace some of the modern economic realities. As a result, it is impossible to objectively evaluate the digital economy indicators or their dynamics. This leads to statistical paradoxes: for example, the quality of goods and services in IT is growing faster than their prices, which is reflected in the negative by the existing accounting system.

“We will not be able to discuss methods for measuring the digital economy unless we define the digital economy concept in the first place,” said Alexander Abroskin, Leading Research Fellow at RANEPA. “Here is a definition we have worked out: an economy based on the integration of production processes, distribution and use of internet-based resources, which effectively expands the range and improves the quality of goods (services) and reduces costs in various sectors of the national economy. We also propose a system of information and statistical accounting based on this understanding of the digital economy.”

According to Leading Expert at Rosstat Department for National Accounts Andrei Tatarinov, in 2018, a statistical commission at the UN identified areas for the development of an accounting methodology. They included measuring digitalization processes, satellite accounts, methods for accounting for crypto assets, cost estimation of free assets, and measuring the value of goods and services affected by digitalization. “In fact, we are faced with the same problem: how to measure something that permeates the economy through and through. For example, we could have measured the electric economy at the turn of the 20th century in the same way,” the expert said.

“Data needs to be accounted for as an economic asset because it plays an important role and affects the results of production. For the macroeconomics, this is a relatively new area; only databases and the costs of making them available are accounted for at present, but not information per se,” Tatarinov added.

Experts agreed that it makes no sense to single out the digital economy as a special industry: in one way or another, it affects all areas of production, and deeper digitalization is inevitable. At the same time, the gap between leading companies and those lagging behind is growing too fast. As to how soon new assessment methods will be developed, experts noted that this problem is unlikely to be solved overnight, since the digital economy affects all spheres of life in modern society.

Furthermore, according to Bill Thompson, Head of the Eurasia Division of the Global Relations Secretariat, Organization for Economic Cooperation and Development, even advanced economies are facing a huge problem of digitizing the public service: “We do not fully understand how digitalization affects the quality of public service and the effectiveness of the public administration.” At the end of the discussion, the expert expressed confidence that, with the growth of digitalization, accounting specialists will have work to do: “Measuring the digital economy is not the main challenge for statisticians – it is economic activity in the context of digitalization that needs to be measured. This is a major headache for us, but at least we are not threatened by unemployment.”


Reference

The 11th Gaidar Forum, Russia and the World: Challenges of the New Decade, held at the Presidential Academy on January 15 and 16, 2020, focuses on discussing national and global development goals and finding practical answers to the most pressing challenges of our time. The forum is attended by Cabinet ministers of the Russian Federation, members of the Federal Assembly, governors of Russian regions, major international experts, and representatives of foreign states.

11th Gaidar Forum Organizers:

The Russian Presidential Academy of National Economy and Public Administration (RANEPA); The Gaidar Institute for Economic Policy (Gaidar Institute); The Association of Innovative Regions of Russia (AIRR).

Forum partners:

General partners: Gazprom, Gazprombank. Strategic partners: Coca-Cola, Mastercard, Russian Railways, Pharmstandard group, Johnson & Johnson, Sanofi, Novartis Group, MSD, ACIG Group, EF Education First. Partners: Prosveshcheniye Group, EY, Huawei, RVC, Russian Agricultural Bank.

General information partners: Rossiya 24 TV Chanel, TASS, RBC, Business FM; strategic information partners: Kommersant Publishing House, Interfax, Rossiyskaya Gazeta, Invest Foresight online business magazine, RIA FederalPress; main information partners: Anews.com, Gazeta.ru, Lenta.ru, News.ru, Profile; international partners: RT, Thomson Reuters, Sputnik, EFE, Cision, Pan Pacific Agency; information partners: Snob media project, PRIME economic news agency, RNS, Expert magazine, Parlamentskaya Gazeta, Polit.ru, Radio Ekho Moskvy, PRO Business TV channel, FINAM.RU agency, Davydov.Index, Strategia magazine, Ekonomika i Zhizn newspaper, ECONS.ONLINE website, Gosudarstvennaya Sluzhba magazine, TV BRICS.