GDP Cannot Explain The Digital Economy

The world’s primary measure of growth is largely irrelevant for the most important part of economy

The engine of the digital economy is the technology used to deliver finished digital services to businesses and consumers.

Comprising connected devices, broadband infrastructure, cloud software, internet-based services and many other markets, the societal benefits that this technology delivers is measured by proxy, by adding up the total spending by businesses and consumers on finished digital products and services.

Our analysis is that the digital economy could already account for 20% of the real value delivered by the global economy, which is dramatically different to the consensus view which is that the digital economy currently accounts for just 5% of global GDP.

This report provides a clear explanation and compelling examples and analysis for why the value benefits delivered by the digital economy cannot be correctly measured by using conventional economic measures such as spending by consumers or businesses. or GDP and what this implies.

Executive Summary4


What is the digital economy?6

Why are policy makers fixated on GDP & GDP growth?6

GDP Explained8

How is GDP defined?8

Where did GDP come from?8

Known Limitations of GDP9

GDP is merely a proxy for societal prosperity9

GDP excludes social factors9

GDP is calculated using a methodology defined in the 1940s10

GDP cannot measure work that is done ‘outside’ of the economy11

GDP assumes that planetary resources are infinite and the cost of pollution is zero12

Counter argument: everything is fine13

Using GDP To Measure The Digital Economy15

Example Industry Segments15

Recorded music15




Other Examples19

Analysis: How Big Is The Problem?20

The True Value of the Digital Economy22

Conventional estimates22

More realistic estimates22


Dr Dave Taylor23

Andrew Sheehy23


Report Highlights

  • Clear definitions: GDP & digital economy
  • 5 Major limitations of GDP
  • Using GDP to measure the digital economy
  • By how much does GDP underestimate the size of the digital economy?
  • Consensus value of the digital economy
  • True value of the digital economy

Ordering Information

Title: GDP Cannot Explain The Digital Economy
Pages: 23
Updated: 03 Jun 2016
License: Single User
Format: PDF
Delivery: Email and Online.
Price: £175
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