Rethinking Economic Growth: The Role of Digital Transformation in Post-Industrial Economies

Abstract

The economic growth engines are shifting to a paradigm shift in the post-industrial economies where the traditional economic drivers (i.e. manufacturing output and the build of physical capital and similar) are slowly being replaced by knowledge-based activities, services, and digital capabilities. To reconsider classic ideas of the economic growth, this paper deals with such a concept that the digital transformation provides the new manner of thinking about productivity, competitiveness, and structural change in the post-industrial environments. The article explores the impacts of the digital technologies of artificial intelligence, cloud computing, big data platform-based analytics and business models on how advanced economies transform the production process, labour market, and value creation processes.

The research works on the synthesis of the findings of the existing economic literature, policy reports and cross-country indicators to investigate the impact of digital transformation on the dynamics of the growth in the conceptual and evidence-based approach. Particular attention is paid to the contribution of digitalization towards total factor productivity, the formation of innovation ecosystems, and a way through which companies may expand exponentially at diminishing marginal costs. In the meantime, the paper critically evaluates emerging problems, such as skills polarization, digital inequalities, market concentration, regulatory constraints, which may impact the sustainability of digitally induced growth in the long run.

The findings suggest that the digital transformation is not always an additive growth factor but it is increasingly becoming a leading economic growth factor in post-industrial economies. However, it can grow only with facilitating institutional frameworks, investments in human capital and universal digital infrastructure. The study concludes that transformation in the economic growth policies towards development of digital capability is essential in achieving sustainability and resilience of the post-industrial societies and proposes that there should be a proportionality of policies to counter the social and economic inequality that comes with the digital transformation.