creative problem solving for the digital economy

Here's how digitalization is helping to transform the creative industries

Creative industries are undergoing digital transformations, partly due to the COVID-19 pandemic. Image:  Unsplash/KAL VISUALS

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Stay up to date:, the digital economy.

• The creative industries contributed nearly $3 trillion to global GDP in 2020.
• The adoption of emerging digital technologies is opening new avenues to produce, distribute and monetize content.
• These technologies can create formal income-earning opportunities for thousands of artists globally and generate economic growth for countries.
• But the industry still needs further investment by private and public stakeholders to help spur growth, create more jobs and create greater economic diversification.

The creative industries contributed close to $3 trillion to global GDP in 2020, yet their ability to support inclusive and sustainable economic growth in emerging markets is often largely invisible ― especially compared to traditional sectors such as natural resource extraction, manufacturing, and financial services.

This happens largely because of the challenges in defining and measuring the creative industries and its impact, especially given that several of its development outcomes are intangible. By neglecting to capitalize on their rich cultural assets, emerging markets are missing major opportunities in pursuing economic diversification and promoting shared prosperity.

But now there are strong incentives for governments and the private sector to measure and invest in this industry. That is because new disruptive technologies, which have flourished since the onset of the COVID-19 pandemic, have the potential to create formal income-earning opportunities for hundreds of thousands of individual artists and generate economic growth for countries around the world.

A primer on creative industries

First, some background on creative industries.

These industries use creativity and culture as their main input to produce creative products. These products include music, film, fashion, and the visual arts, among others, and extend to a range of creative content production embedded within other sectors. The sector has the potential to constitute not only a source of cultural value, but also commercial value within emerging markets.

One good example is Nollywood, the Nigerian film industry, which contributes around up to 3 percent to Nigeria’s GDP . Nollywood provides around 300,000 direct and 1 million indirect jobs and generates around 10 percent of foreign exchange earnings from non-oil exports. Still, much of Nollywood’s commercial potential remains unharnessed, as piracy of films is thought to constitute 50 percent of potential profits.

Creativity also supports economic growth through fostering productivity, promoting industrial innovation via supply chain linkages with other sectors, and improving country branding for the tourism industry. Further, unlike other economic sectors, the creative industries provide a broad array of socio-cognitive benefits for individuals, as consumption of creative goods supports educational outcomes, health and wellbeing, and inclusion. These spill over at the country level in the form of nation building, social cohesion, and diversity .

However, emerging markets historically faced substantial challenges in formalizing and commercializing their creative wealth. Broken creative value chains paired with a weak enabling environment have created a fragmented landscape with high costs of production of creative products and limited local and global distribution and monetization channels for artists from emerging markets. The fragmented nature of the sector also means there is limited coverage and enforcement of institutional frameworks to protect creative assets (intellectual property), limited public promotion of the sector, and a lack of available infrastructure, financing, and skills to develop the industries.

Enter disruptive technologies

Partly triggered by the challenges that creatives faced in developing and marketing their products during the pandemic, the adoption of emerging digital technologies is opening new avenues to produce, distribute, and monetize content. Drastic reductions in the costs of media recording technologies, such as cameras and microphones, have also helped more artists purchase equipment.

Consumer-facing digital technologies such as music streaming (Spotify, Pandora), movie streaming and production platforms (Netflix, Amazon Prime), creator tech applications (YouTube, Instagram, Facebook), and e-commerce (Etsy) ― paired with mobile money solutions ― have similarly lowered barriers to entry for talent discovery, distribution, and drawing income from creative content.

For example, musicians in Kenya, Tanzania, and Uganda previously relied on live shows for most of their income earnings, but digital platforms such as Mdundo have enabled more than 90,000 artists in those countries sell their music to global audiences.

Importantly, disruptive technologies have enabled the creative industries to become an investable sector for the first time in many emerging markets. Digital platforms are enabling artists to track earnings and provide pathways for new forms of income generation, such as brand promotion and advertising. New technologies also support technological and legal barriers to production and thereby protect intellectual property.

Evidence about the potential effects of digitalization on protection of creative assets from developed markets highlights that appealing licensed streaming alternatives can thwart piracy rates. Non-Fungible Tokens (NFTs), a relatively nascent blockchain technology that tokenizes and records digital assets on a digital ledger, help enforce copyright protections and enable artists to be rewarded for their work. These technologies also enable data generation on the creative industries, helping governments to understand the relevance of the creative industries and develop evidence-based policies to promote them.

The World Economic Forum’s Platform for Shaping the Future of Digital Economy and New Value Creation helps companies and governments leverage technology to develop digitally-driven business models that ensure growth and equity for an inclusive and sustainable economy.

• The Digital Transformation for Long-Term Growth programme is bringing together industry leaders, innovators, experts and policymakers to accelerate new digital business models that create the sustainable and resilient industries of tomorrow.
• The Forum’s EDISON Alliance is mobilizing leaders from across sectors to accelerate digital inclusion . Its 1 Billion Lives Challenge harnesses cross-sector commitments and action to improve people’s lives through affordable access to digital solutions in education, healthcare, and financial services by 2025.

Contact us for more information on how to get involved.

The next frontiers

We are seeing the emergence of several pockets of excellence with the creative industries and the role of digitalization in amplifying them, or creating entirely new creative industries in emerging market. They include:

• The re-emergence of Latin music has been driven largely by digital streaming and was spearheaded by a proactive private sector that sought to digitalize and address international demand. Latin music accounted for 5 percent of the total $12.2 billion recorded music revenues in 2020 in the U.S. market, achieving its highest revenues since 2005. The rise of Danny Ocean, a Venezuelan musician whose songs “ streamed [their] way onto the airwaves ,” is a case in point on how digital tools lower the barriers to entry for musicians to market their creative products.
• Digitalization also created entirely new creative industries, such as the creator economy ― a software-facilitated economic ecosystem that allows digital content creators to earn revenue from their creative products. Leveraging affordable production technologies and creator tech applications, creative entrepreneurship has become a viable source of living and resulted in a number of economy-wide effects. Taking the example of the creator tech application YouTube, which directly and indirectly contributed around $875 million to GDP in India , and $710 million in Brazil , in 2020. YouTube also supported around 700,000 jobs in India and 122,000 jobs in Brazil. Creator tech applications have facilitated the emergence of new digital startups that support the creator economy, such as One Impression in India, a marketing platform for influencers that automates the brokerage of brand promotion contracts between creative entrepreneurs and businesses seeking to advertise their products.

Have you read?

How the creative industries can boost the global economy, covid-19 hit the creative industries particularly hard. how can they be supported in future, how digitalization of industries can empower humanity.

The multiple benefits of developing a creative industry, paired with the unprecedented potential provided by digitalization, present opportunities for the sector to be transformed from a forgotten industry into a focal industry that supports economic growth and development. Yet much needs to be done to fulfill such promise. The industry needs a combination of investment by private and public stakeholders, including development finance institutions, and integration of the creative industries into the development ambitions of emerging markets. This could eventually help spur growth of their creative economies, create jobs, and in a broader sense lead to greater economic diversification.

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World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

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How do emerging technologies affect the creative economy?

New technologies are reshaping  the way we live and work, and their effects naturally touch the creative economy—art, journalism, music, and more. As artificial intelligence (AI), augmented reality, virtual reality (VR), and blockchain continue to emerge as powerful forces, could they be used to greater benefit?

Stay current on your favorite topics

Our paper, Creative Disruption: The impact of emerging technologies on the creative economy , presents the findings of a joint project, conducted by McKinsey & Company and the World Economic Forum, which studied the impact of these technologies on the creative economy. The project team conducted more than 50 interviews with experts from Asia, Europe, and North America, as well as three workshops in China and the United States with World Economic Forum constituents. Given the varying maturity of the different technologies, it is too early to state definitively how they will change the creative economy. Instead, our paper outlines opportunities and concerns for each technology and presents suggestions for where attention could be concentrated. The rest of this article, extracted from the full report, summarizes some of our key findings.

Artificial intelligence is changing value chains for creative content

Exciting developments using AI have been seen throughout the creative economy. Many take advantage of progress in machine learning to analyze huge data sets to learn specific behaviors, thereby allowing computers to recognize patterns and “learn” new actions without being explicitly programmed.

AI is helping creators to match content more effectively with audiences. Algorithms based on neural networks learn and classify a user’s preferences—from movies streamed on Netflix, music listened to on Spotify, or products purchased on Amazon. Providers can then recommend content tailored to a specific user.

AI aids production itself by performing tasks that are too difficult for humans. In advertising, it is used to contextualize social-media conversations to understand how consumers feel about products and to detect fraudulent ad impressions. Services such as Amper or Jukedeck compose music with AI, enabling small-scale creators to use high-quality music for their podcasts, videos, and games at low cost. Automated mastering software such as Landr provides near-studio-quality processing and rendering for between $50 and $300 a year.

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In particular, AI that generates text is widespread in journalism and used by publishers to expand the range of offerings. The Associated Press has used AI to free up around 20 percent of reporters’ time while increasing output tenfold. The Washington Post developed its own tool, Heliograf, to cover sports and political news. In its first year it generated about 70 articles a month, mostly stories it would not have dedicated staff to.

More disruptively, machine learning has begun to create original content. The implications have been felt across multiple industries. In music, AI has produced instrumental sounds that humans have never heard before. The same team taught a neural network to draw sketches of animals and objects and generate sophisticated images from photography. In fashion, researchers have generated new designs. 1 1. W. Kang, C. Fang, Z. Wang, and J. McAuley, Visually-aware fashion recommendation and design with generative image models, International Conference on Data Mining, 2017. And in film, scripts have been written , complete with stage instructions, for a science-fiction movie.

Other technologies have the potential to disrupt the value chain, though it will take time for the full implications to emerge. Notably, augmented and virtual reality offer an entirely new medium for creators to work with. Because this technology has the potential to become the “envelope” for all content, it is likely to redefine narrative conventions that have existed for decades. Other benefits are detailed in the full paper.

At the monetization phase, blockchain has the potential to change the level of control artists have over their work. The technology could allow artists to program their intellectual-property rights, revenues, and royalties into smart contracts that quickly and transparently allocate revenue to contributors. By removing the intermediaries between artist and consumer, blockchain may solve data and money issues in creative content—basing precisely how much to pay artists on actual consumption and eliminating complexity in paying them . The technology could also affect production rights, third-party monetization, and data transfer of creative work, enabling the repurposing of creative content while safeguarding the intellectual property of artists.

Impressive technology is transforming creative experiences

Content at the point of consumption is being dramatically altered by immersive technology. According to one poll , 46 percent of audiences associate virtual reality with novel experiences and 60 percent with high-end gaming. But artificial and virtual reality have the capacity to provide truly transformative experiences by promoting new and meaningful feelings, skills, and understanding.

Immersive media could transform content as wide ranging as humanitarian stories and workplace-diversity training by providing users with situational perspectives that can help avoid stereotypes and false narratives. 2 2. J. Bailenson, Experience on Demand: What Virtual Reality Is, How It Works, and What It Can Do , NY, NY: W. W. Norton, 2018. Other studies have detailed how experiences of content change when participants use different immersive devices. The right combination of story and device could make content more effective than it would be if presented through traditional media.

Many high-end immersive devices currently require high-spec stationary computers to power them, at a cost of several thousand dollars. With predictions of VR headsets declining in price by about 15 percent each year and becoming untethered to PCs, it is conceivable that immersive technologies will become progressively more available to mass-market consumers. According to one VR filmmaker , this could herald a new way of remembering, not just creating. “Think of everything you forget about a birthday party when you’re a kid. [With widespread VR content capture], the rig would capture everything…. It is going to be interesting to see what happens when we aren’t able to forget anything anymore.”

However, this promise may be challenged if our dependence on mobile technology is replicated with AR and VR. Evidence from the past decade shows that while our overall leisure time is increasing, we are spending more of it using screen-based devices (Exhibit 1). Smartphone users interact with their devices an average of 85 times a day, 3 3. L. A. Perlow, Sleeping with Your Smartphone: How to Break the 24/7 Habit and Change the Way You Work, Boston: Harvard Business Review Press, 2012. and 46 percent report they could not live without them . Potential overuse leads to other concerns and might also affect the creative economy. Studies have shown how off-screen performance is interrupted by digital devices, and recent research found that just the presence of a smartphone can reduce cognitive capacity . Immersive devices, which could be at least as engaging as smartphones, may end up being inhibiting.

The extent of the problem is starting to be acknowledged by social-media companies. Facebook has highlighted research showing how social media can affect well-being and suggests that changing user habits may help limit negative effects.

The creative economy and the platform economy are converging

While these technologies have varying potential to change how content is produced and consumed, they are being applied in a dynamic environment. Publishers have used technology to find bigger audiences for their content but have less direct control over how that content is discovered. Instead, technology platforms are the main referral sources for digital publishers, with Facebook and Google responsible for about 70 percent of online referral traffic (Exhibit 2). This relationship is affecting both the editorial elements (what type of content is seen and why) and monetary elements (where the revenue accrues) of information and entertainment content.

On the editorial side, technology platforms can influence—intentionally or not—the types of content that flourish. Companies provide incentives, including money and advice, which sway publishers toward creating content that works well on their platforms. This is not always content with high artistic or civic values but, rather, content that is likely to spread quickly online.

Proprietary AI algorithms ensure that certain formats are prioritized in consumer searches and feeds. Facebook and Google, for example, have developed technology that reduces loading times for content, but the technology requires that content adhere to its standards. In doing so, the platforms exercise “explicitly editorial” judgments on content and design standards—decisions that used to be the province of traditional media. 4 4. E. Bell, P. Brown, C. Hauka, T. Owen, and N. Rashidan, The platform press: How Silicon Valley reengineered journalism, Tow Center for Digital Journalism, Columbia University, 2017.

The monetary benefits of this new relationship do not accrue entirely to content creators and publishers. Five companies take almost 80 percent of global mobile-advertising revenue, and by some estimates almost 90 percent of the growth is going to just two companies, Facebook and Google (Exhibit 3).

It is uncertain whether this relationship between publishers and platforms will continue; some adaptation is happening . But the status is clearly changing, and in the process the responsibility for damaging content is moving away from publishers and toward other entities. One of the challenges of AI is that it lacks a conscious will and is unable to explain its output. Instead it must rely on the data it receives and the algorithms used. This may seem trivial in the context of machine-generated music or art. But when the technology can determine what editorial content appears in front of users, the ability to inform and shape public opinion grows, and the potential risks of opacity in decision making become bigger.

How can creative industries benefit from blockchain?

As demonstrated by the disinformation and misinformation that affected various elections in 2016 and 2017, the platforms are struggling to respond. They have made progress in supporting initiatives that address media literacy and provide resources for quality news companies to develop better content. However, it must be asked whether certain types of content persist because the current business models favor them. At the start of 2018, perhaps in recognition of the issue, Facebook announced a change in its News Feed to prioritize content from family and friends in place of brands, businesses, and media.

A parallel trend is the use of mobile-technology design techniques that may have unfavorable effects on users. Software designers often employ user data to personalize services and expand businesses, and that in many cases has made content more useful to consumers. The most successful companies have been able to do so rapidly . As a result, companies have an incentive to keep users engaged with their websites and apps in order to collect more data. Engineers combine data-driven behavioral insights with psychological techniques to nudge and persuade individuals to spend more time on their devices. Academics and industry insiders have detailed examples of persuasive in-software design . This is being driven by AI but has applications across a number of different mediums and could influence the way that software is designed for immersive technology.

If the creative economy is to benefit society, the policies of the public and private sectors must align with consumer interests—something that can be achieved only through conversation and collaboration. This is easier said than done; in the full report, some common ground is identified as a potential starting point for discussion.

Download Creative Disruption: The impact of emerging technologies on the creative economy , the full report on which this article is based (PDF–4MB) .

This white paper is part of a knowledge partnership between the World Economic Forum and McKinsey to examine the impact of four emerging technologies on the creative economy . Jonathan Dunn, a partner in the firm’s Consumer Technology & Media Practice, serves as an industry adviser to the World Economic Forum . This white paper originally appeared on the World Economic Forum website and is republished here by permission.

Claudio Cocorocchia is a global leadership fellow and the acting head of the System Initiative on Shaping the Future of Information and Entertainment for the World Economic Forum, where Stefan Hall is project and engagement lead for Shaping the Future of Information and Entertainment. Jonathan Dunn is a partner in McKinsey’s New York office , and Ryo Takahashi is a consultant in the Tokyo office .

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What Is Creative Problem-Solving & Why Is It Important?

• 01 Feb 2022

One of the biggest hindrances to innovation is complacency—it can be more comfortable to do what you know than venture into the unknown. Business leaders can overcome this barrier by mobilizing creative team members and providing space to innovate.

There are several tools you can use to encourage creativity in the workplace. Creative problem-solving is one of them, which facilitates the development of innovative solutions to difficult problems.

Here’s an overview of creative problem-solving and why it’s important in business.

Access your free e-book today.

What Is Creative Problem-Solving?

Research is necessary when solving a problem. But there are situations where a problem’s specific cause is difficult to pinpoint. This can occur when there’s not enough time to narrow down the problem’s source or there are differing opinions about its root cause.

In such cases, you can use creative problem-solving , which allows you to explore potential solutions regardless of whether a problem has been defined.

Creative problem-solving is less structured than other innovation processes and encourages exploring open-ended solutions. It also focuses on developing new perspectives and fostering creativity in the workplace . Its benefits include:

• Finding creative solutions to complex problems : User research can insufficiently illustrate a situation’s complexity. While other innovation processes rely on this information, creative problem-solving can yield solutions without it.
• Adapting to change : Business is constantly changing, and business leaders need to adapt. Creative problem-solving helps overcome unforeseen challenges and find solutions to unconventional problems.
• Fueling innovation and growth : In addition to solutions, creative problem-solving can spark innovative ideas that drive company growth. These ideas can lead to new product lines, services, or a modified operations structure that improves efficiency.

Creative problem-solving is traditionally based on the following key principles :

1. Balance Divergent and Convergent Thinking

Creative problem-solving uses two primary tools to find solutions: divergence and convergence. Divergence generates ideas in response to a problem, while convergence narrows them down to a shortlist. It balances these two practices and turns ideas into concrete solutions.

2. Reframe Problems as Questions

By framing problems as questions, you shift from focusing on obstacles to solutions. This provides the freedom to brainstorm potential ideas.

3. Defer Judgment of Ideas

When brainstorming, it can be natural to reject or accept ideas right away. Yet, immediate judgments interfere with the idea generation process. Even ideas that seem implausible can turn into outstanding innovations upon further exploration and development.

4. Focus on "Yes, And" Instead of "No, But"

Using negative words like "no" discourages creative thinking. Instead, use positive language to build and maintain an environment that fosters the development of creative and innovative ideas.

Creative Problem-Solving and Design Thinking

Whereas creative problem-solving facilitates developing innovative ideas through a less structured workflow, design thinking takes a far more organized approach.

Design thinking is a human-centered, solutions-based process that fosters the ideation and development of solutions. In the online course Design Thinking and Innovation , Harvard Business School Dean Srikant Datar leverages a four-phase framework to explain design thinking.

The four stages are:

• Clarify: The clarification stage allows you to empathize with the user and identify problems. Observations and insights are informed by thorough research. Findings are then reframed as problem statements or questions.
• Ideate: Ideation is the process of coming up with innovative ideas. The divergence of ideas involved with creative problem-solving is a major focus.
• Develop: In the development stage, ideas evolve into experiments and tests. Ideas converge and are explored through prototyping and open critique.
• Implement: Implementation involves continuing to test and experiment to refine the solution and encourage its adoption.

Creative problem-solving primarily operates in the ideate phase of design thinking but can be applied to others. This is because design thinking is an iterative process that moves between the stages as ideas are generated and pursued. This is normal and encouraged, as innovation requires exploring multiple ideas.

Creative Problem-Solving Tools

While there are many useful tools in the creative problem-solving process, here are three you should know:

Creating a Problem Story

One way to innovate is by creating a story about a problem to understand how it affects users and what solutions best fit their needs. Here are the steps you need to take to use this tool properly.

1. Identify a UDP

Create a problem story to identify the undesired phenomena (UDP). For example, consider a company that produces printers that overheat. In this case, the UDP is "our printers overheat."

2. Move Forward in Time

To move forward in time, ask: “Why is this a problem?” For example, minor damage could be one result of the machines overheating. In more extreme cases, printers may catch fire. Don't be afraid to create multiple problem stories if you think of more than one UDP.

3. Move Backward in Time

To move backward in time, ask: “What caused this UDP?” If you can't identify the root problem, think about what typically causes the UDP to occur. For the overheating printers, overuse could be a cause.

Following the three-step framework above helps illustrate a clear problem story:

• The printer is overused.
• The printer overheats.
• The printer breaks down.

You can extend the problem story in either direction if you think of additional cause-and-effect relationships.

4. Break the Chains

By this point, you’ll have multiple UDP storylines. Take two that are similar and focus on breaking the chains connecting them. This can be accomplished through inversion or neutralization.

• Inversion: Inversion changes the relationship between two UDPs so the cause is the same but the effect is the opposite. For example, if the UDP is "the more X happens, the more likely Y is to happen," inversion changes the equation to "the more X happens, the less likely Y is to happen." Using the printer example, inversion would consider: "What if the more a printer is used, the less likely it’s going to overheat?" Innovation requires an open mind. Just because a solution initially seems unlikely doesn't mean it can't be pursued further or spark additional ideas.
• Neutralization: Neutralization completely eliminates the cause-and-effect relationship between X and Y. This changes the above equation to "the more or less X happens has no effect on Y." In the case of the printers, neutralization would rephrase the relationship to "the more or less a printer is used has no effect on whether it overheats."

Even if creating a problem story doesn't provide a solution, it can offer useful context to users’ problems and additional ideas to be explored. Given that divergence is one of the fundamental practices of creative problem-solving, it’s a good idea to incorporate it into each tool you use.

Brainstorming

Brainstorming is a tool that can be highly effective when guided by the iterative qualities of the design thinking process. It involves openly discussing and debating ideas and topics in a group setting. This facilitates idea generation and exploration as different team members consider the same concept from multiple perspectives.

Hosting brainstorming sessions can result in problems, such as groupthink or social loafing. To combat this, leverage a three-step brainstorming method involving divergence and convergence :

• Have each group member come up with as many ideas as possible and write them down to ensure the brainstorming session is productive.
• Continue the divergence of ideas by collectively sharing and exploring each idea as a group. The goal is to create a setting where new ideas are inspired by open discussion.
• Begin the convergence of ideas by narrowing them down to a few explorable options. There’s no "right number of ideas." Don't be afraid to consider exploring all of them, as long as you have the resources to do so.

Alternate Worlds

The alternate worlds tool is an empathetic approach to creative problem-solving. It encourages you to consider how someone in another world would approach your situation.

For example, if you’re concerned that the printers you produce overheat and catch fire, consider how a different industry would approach the problem. How would an automotive expert solve it? How would a firefighter?

Be creative as you consider and research alternate worlds. The purpose is not to nail down a solution right away but to continue the ideation process through diverging and exploring ideas.

Continue Developing Your Skills

Whether you’re an entrepreneur, marketer, or business leader, learning the ropes of design thinking can be an effective way to build your skills and foster creativity and innovation in any setting.

If you're ready to develop your design thinking and creative problem-solving skills, explore Design Thinking and Innovation , one of our online entrepreneurship and innovation courses. If you aren't sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

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Don’t Let Gen AI Limit Your Team’s Creativity

Treat it as a partner in a structured conversation.

No one doubts ChatGPT’s ability to generate lots of ideas. But are those ideas any good? A recent real-world experiment showed that teams engaged in a creative problem-solving task saw only modest gains from AI assistance for the most part—and some underperformed. Surveys conducted before and after the exercise showed that the teams using AI gained far more confidence in their problem-solving abilities than the others did, but that much of their confidence was misplaced.

But don’t blame the technology, says Kian Gohar, CEO of the leadership-development firm GeoLab and one of the study’s authors. “Brainstorming with generative AI requires rethinking your ideation workflow and learning new skills,” Gohar says. This article offers guidance for approaching the exercise as a structured, ongoing conversation, opening up a staggering capacity to develop better and more-creative ideas faster.

No one doubts ChatGPT’s ability to generate lots of ideas. But are those ideas any good? In a recent real-world experiment, teams engaged in a creative problem-solving task saw modest gains from AI assistance for the most part—and some underperformed. Don’t blame the technology, says Kian Gohar, CEO of the leadership-development firm GeoLab and one of the study’s authors. Common misconceptions about generative AI, problem-solving, and the creative process are causing workers and their managers to use the tools improperly, sometimes leaving them worse off than if they’d proceeded without AI input.

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The Digital Economy Is Broken—But It’s Not Too Late

Tech titans are fostering new forms of digital colonialism, both within wealthy countries and on the global stage. But it’s not too late to build a digital economy that works for everyone.

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By Ritse Erumi & Anita Gurumurthy Aug. 30, 2023

The digital economy is not working.

Democracy, freedom, and prosperity were the original promises of the internet. The world wide web was a game changer; people could now collaboratively build and create the world they desired. The gains would be universal, and in the new internet economy, everyone would have a place. Those who faced barriers in the offline world along the lines of gender, race, ethnicity or ability would find new opportunities. Indeed, these digital technologies would enable people to transcend the geographic boundaries that constrained their ability to pursue the lives they valued, enabling them to acquire more social, economic, and political power.

However, current reality is miles apart from that vision. In place of a democratized world wide web, we live in a winner-take-all digital economy, where the gains of the winners only get larger and the losers are progressively more immiserated. A level playing field—as promised by tech founders and investors alike—has failed to materialize. The challenges working people have long faced have been compounded in the digital economy. Indeed, promises of economic mobility, access, and flexibility which underpinned digital imaginaries of future work and security ring hollow. Disruptions in the world of work have instead delivered economic precarity, employer overreach, and the normalization of endless hustle for many. Platform work has calcified structural inequalities around the world, particularly relegating women workers, especially from the Global Majority World, to the lowest labor market segments. The digital economy thus has not only failed to deliver, but has exploited racial/ethnic, gender, and geopolitical hierarchies in the process.

How Tech Moves Fast and Breaks Workers

In 2021, IT for Change, with support from the Ford Foundation, undertook a major study of the digitization of the economy to try to understand how the internet has affected work and workers’ rights. We spoke with more than 80 people, representing workers, scholars, unions, the private sector, civil society, philanthropies, and multilateral agencies. Across those interviews, we heard again and again about a set of interlocking problems: that the gains from restructuring the global value chain have brought few rewards for workers while reversing labor rights won generations ago; that companies have amassed inordinate fortunes and ever greater power while workers are left disenfranchised, precarious and atomized; that the rapidly emerging digital economy is driving systemic changes, from increased labor displacement to unequal development trajectories, leading to rising instability for workers and job markets in the Global South.

These shifts, in many ways, have accelerated with the rise of platform-based “gig work,” which was sold on the promise of making every worker their own boss, with customizable work schedules. The gig economy has proven itself an engine for transforming once-stable working-class jobs—and increasingly middle-class jobs too—into insecure, on-demand gigs, with few protections and ever-dwindling rewards. Around the world, these so-called “independent contractors” whose labor forged unicorns out of companies like Uber and Instacart now struggle to get by. In the U.S., one-in-seven platform workers make less than minimum wage, and one-in-five don’t earn enough to eat; conditions in the Global South are exponentially worse, also given the huge informal labor market, historically.

The platform model we see everywhere adopts algorithmic controls to manage workers —from hiring, scheduling, and matching to performance assessment and termination. The transfer of management from human bosses to artificial intelligence (AI) has led to numerous problems, leaving workers at the whim of digital systems that create unpredictable work schedules, ever-increasing and inhumane productivity demands, and unaccountable discipline and firing decisions offering no explanation or routes for appeal and redress. These developments are now spreading far beyond the practices of first-mover big tech firms in the economy, with workers in warehouses, hospitals, retailers, office jobs, and other sectors who must now contend with the same automated, opaque management decisions gig workers experience.

Workers also face substantially more surveillance , in varied and disturbing forms. Far from increasingly normalized workplace security cameras, workers are now being digitally monitored on and off the job, often without their informed consent, and without control over how their personal data is used and traded by their employers and third-party data brokers. From keystroke capture programs installed on remote workers’ laptops to microchipping workers or requiring shelf-stockers install company apps on their personal phones that access their cameras and private data, these Orwellian shifts feed AI-fueled productivity programs that track workers’ every location and bathroom break. Consequently, employees have progressively lost control over fundamental rights to personal and digital privacy.

Meanwhile, the specter of continuing automation looms as a constant threat to further derail workers’ lives and stability around the globe, as entire sectors of the labor market may be rendered obsolete.

These issues and more constitute a more basic problem: that the technologies undergirding today’s digital economy were designed by and for business—not for a broader set of stakeholders, and certainly not for workers. Tech culture and its attendant discourse has prioritized narratives of disruption, novelty, and efficiency while paying lip service to inclusivity, equity, and justice. As increasingly powerful geoeconomic players, tech titans are fostering new forms of digital colonialism: both within wealthy countries, where the populace is quickly being sorted into this era’s haves and have nots, and on the global stage, as wealthy Global North countries replicate exploitative relationships in other geographies.

Towards a More Responsible Digital Innovation Regime

As countries in the Global South have long been plundered for labor and precious natural resources, today’s digital economy is extracting data from its citizens. And as the new dirty jobs of the digital economy are outsourced to the Global South—for instance, content moderators and data labelers in Kenya and the Philippines scouring the dregs of social media to protect the public from extreme and graphic material—we are witnessing the construction of a new age of digital sweatshops, where the most dangerous work is offshored to be performed by workers with the fewest protections.

The tech industry likes to present itself as presiding over a new industrial revolution that will change the world forever. It’s a more apt comparison than they might realize. As Dr. Onoho’Omhen Ebhohimhen of the Nigeria Labour Congress explained to us, noting that the effects of the digital economy, such as algorithmic management of workers, “is akin to reproducing the first Industrial Revolution, where workers were bonded and locked up, worked for 20 hours or more in a day, and had no right to a family life.”

Yet, it doesn’t have to be this way. Digital innovation can disrupt economies in favor of collaborative, solidarity-based forms of decent and quality work, where all can flourish. So, how might we democratize the digital economy so workers have agency and are able to shape the future alongside the technologists and venture capitalists of Silicon Valley?

Here are three ways to build a future of work we want in the digital age:

1. Build New Standards for Decent Work in the Digital Age: Collectively, we must organize and support the development of new guaranteed standards for decent work in this economy, including a new understanding of workers’ data and digital rights; an end to opaque and unaccountable algorithmic management and abusive forms of workplace surveillance; and new governance frameworks for the role of AI and other emerging technologies in the workplace. Workers must shape the emergent conditions and economic models structuring the fabric of their working lives. Companies must consider the consequences of these technologies throughout their tech procurement, deployment, and governance processes—in partnership with their workforces. Governments around the world must set guardrails and work towards building alternative economic futures, where worker rights and sustainable local economies are centered. Philanthropies and the development sector can help foster worker-led initiatives and partnerships between worker organizations and tech communities, so that such cross-sector hubs may develop new solutions, from worker-owned platforms to worker data trusts to technology infrastructure projects. Academics can help meet the extensive need for study in multiple areas, such as how emerging technologies like AI are transforming Global Majority economies and burgeoning forms of work.

2. Build A Feminist Digital Economy: We must invest in building a feminist digital economy, where community-based service and support and a social safety net are priorities. Women and other traditionally marginalized workers need to be empowered when it comes to platform work: through training and awareness programs as well as dedicated spaces where they can articulate their concerns and drive broader policy shifts that require platform employers to begin taking care of their employees. There is also a need for new cooperative models of care services, including mutual aid societies, unions, collectives, community groups and more, and for equitable up-skilling and training opportunities for marginalized workers most at risk of losing their jobs to automation. Indeed, this feminist digital economy should foster the thriving of all people and the planet.

3. Build Better Tech by Listening to Working People: In speaking with scores of stakeholders in the digital economy, one clear lesson stood out: We must listen to workers because they understand the problems and often have the clearest vision on solutions. Those most impacted by the failures of the digital economy to date, who have suffered the worst problems associated with it, are some of our biggest assets in creating the future of work that we desire. To reach that future, we must invest in experimentation and innovation by, with, and for working people. This will, in large part, mean centering those who have been most marginalized, and allowing them to shape and design the interventions we need. This also means being patient. As Salonie Muralidhara of the Indian women’s trade union federation, SEWA , told us, “Donors must understand that investments in women workers in the Global South, for instance, is something that takes longer to return investments, especially and not least because women have been systematically excluded for a long time.” Ultimately, we can build better tech through worker-centered design .

The development and philanthropic sectors can play a major role through catalytic investments in this new agenda that protects workers’ rights and creates a digital economy that works for everyone—locally and globally. Yet, none of this can happen with the development and philanthropic sectors alone. In building a more democratic and feminist digital economy, the technology sector and investors must become major contributors—not through largesse or charity, but through ensuring the inputs, processes, and returns of innovation, often built on public investment and human labor, accrue to the local and global communities who constitute the backbone of value creation. Most crucially, rights-based regimes need to be evolved through global standards setting. It will take governments, particularly from the Global North, to address and improve the egregious conditions facing working people in (digital) supply chains.

To reach the future of work we desire in the digital age, we must invest and build with intention.

How can technological innovation be a force for liberation? Watch the discussion from SSIR’s 2023 Data on Purpose conference :

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Sustainable Development of the Agrarian Economy Based on Digital Technologies and Smart Innovations pp 185–190 Cite as

The Problem of Training Digital and Creative Personnel for the Production Sector of the Economy

• Zhanna V. Chaykina   ORCID: orcid.org/0000-0003-2829-8796 25 ,
• Olga V. Katkova   ORCID: orcid.org/0000-0002-6730-280X 25 ,
• Natalia A. Tikhonova   ORCID: orcid.org/0000-0002-2249-000X 25 ,
• Zhanna V. Smirnova   ORCID: orcid.org/0000-0001-9950-9824 25 &
• Olga V. Golubeva   ORCID: orcid.org/0000-0001-9982-8040 25  
• First Online: 01 March 2024

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Part of the book series: Advances in Science, Technology & Innovation ((ASTI))

Purpose : At present, the Russian economy is faced with objective issue of increasing the success of training highly qualified engineering and technical personnel with digital competencies and creative thinking. This problem is closely connected to the process of choosing a professional path for young people, namely, the development of professional interest of adolescents in professions related to technology and digital technologies. The authors of clause associate the solution of this problem with the possibility of attracting youth to educational robotics classes. Educational robotics has a number of advantages compared to other areas of scientific and technical creativity in problem decision of vocational guidance for students. The content of educational robotics programs involves not only the mastering of one of the relevant digital technologies in demand in modern production, but also the acquisition by students of personal qualities necessary for a modern professional: creativity, technical thinking, design skills and abilities. Design/methodology/approach : In progress of the research activities, the authors used theoretical methods: analysis of theoretical sources and practical experience, synthesis and generalization when formulating conclusions, practical methods: experiment, questioning, quantitative and qualitative processing of results. Findings : Educational robotics has unique opportunities for the development of creative technical mind and digital competencies of adolescents. The program on educational robotics can be implemented both in a general education school at technology lessons, in extracurricular activities, and in the organization of additional education for pupils. Originality/value: The use of exercises on designing robotic objects and solving technical problems in educational robotics classes recreates the required circumstances for the forming of creative technical mind, digital competencies, and the interest in the profession of the younger generation. Classes in educational robotics are considered as a means of vocational guidance for the younger generation.

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Chaykina, Z.V., Katkova, O.V., Tikhonova, N.A., Smirnova, Z.V., Golubeva, O.V. (2024). The Problem of Training Digital and Creative Personnel for the Production Sector of the Economy. In: Popkova, E.G., Bogoviz, A.V., Sergi, B.S., Kaurova, O.V., Maloletko, A.N. (eds) Sustainable Development of the Agrarian Economy Based on Digital Technologies and Smart Innovations. Advances in Science, Technology & Innovation. Springer, Cham. https://doi.org/10.1007/978-3-031-51272-8_31

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Solving the wicked problems of bridging digital, economic gaps

The results of a Stratbase ADR Institute commissioned Social Weather Stations survey draw a strong link between the economy and technology and present a case for more significant government and private sector collaboration to address current digital and economic gaps.

The nationwide survey, conducted between October 20 to 23, 2021, found that almost nine in ten Filipinos (89%) agreed that “the benefits of digital technology such as strong cell phone signals, fast e-banking, and social media can greatly help create jobs and businesses."  Agreement with the statement was even higher in the National Capital Region at 94%.

The survey also found that 92% of respondents nationwide agree that “the government should build, upgrade and extensively expand the country’s digital infrastructure to improve speed, reliability, and access to the internet nationwide.” 

Some 82% of respondents also said that the economy’s growth would be accelerated if the government collaborates with the private sector. 

Asked to identify issues that the private sector can address to boost the economy, 65% of respondents cited creating jobs, 57% expanding livelihood, 46% helping uplift the lives of Filipinos out of poverty, 30% improving healthcare systems, 22% improving the quality of education, and 11% improving the quality and access of digital services. 

These findings were presented during the first session of Pilipinas Conference 2021: Sustaining Economic Recovery Post-Pandemic Towards 2022 and beyond, organized by Stratbase -ADR Institute late last month.

Indeed, this strong link between technology and economic recovery had to be one of the key takeaways from the conference. After all, Secretary Ramon Lopez of the Department of Trade and Industry, who is also chairperson of the Board of Investments, spoke about e-commerce and how it was is one of the few industries that experienced significant growth last year despite the economic slowdown.

“The department has been supportive of the international initiatives on digital economy and trade,” he said.

“The Philippines has been working to facilitate greater adoption of the digital economy through policy regulations, frameworks, we even issued our e-commerce roadmap, we have done a lot of digitalization of MSMEs, introducing e-commerce, and linking them with known e-commerce platforms, concrete initiatives that empower the stakeholders, capacity-building, and even the digitalization of key government services,” Lopez added.

Diwa Guinigundo, former deputy governor of the Monetary and Economics Sector, Bangko Sentral ng Pilipinas, also spoke about the several advantages of the digital economy during the pandemic. Further stating that “The private sector can lead in the innovation of digital products and services that would allow us to increase the breadth and reach of markets in these digital times of pandemic.”

Further highlighting the vital role of the private sector, Jaime Augusto Zobel de Ayala, chairman of Ayala Corp., said that with the backdrop of a pandemic that worsened the fissures of inequality that were already present in our society, that “unprecedented collaboration is demanded of us -- the private sector, government, and civil society, both locally and globally -- all of us have to work together.”

Adding that “the private sector has established itself as a reliable partner of the government in addressing the people’s most urgent pain points,” which include poverty, hunger, health emergency, and unemployment. 

“Squarely addressing the challenges in these areas is the only way to create sustainable impact in its broadest and most inclusive sense,” he said.

Stratbase ADRi President Professor Dindo Manhit called the private sector’s proactive approach “stakeholder capitalism at work.” Stakeholder capitalism is a system where private companies re-orient themselves to serve the interest of all their stakeholders, not just shareholders. 

“Through the investments, expertise, and innovativeness of the private sector, coupled with heightened cooperation with other stakeholders, we believe that the most urgent socio-economic challenges can be addressed, jobs can be created, livelihood ecosystems can be nurtured, poverty can be alleviated, and the lives of millions of Filipinos can be uplifted,” he said. 

While stakeholder capitalism plays an important role in addressing the country’s problems, the country’s growing digital and economic gaps may be too complex to overcome by a pro-active private sector acting alone.

For instance, Charlotte Justine Diokno-Sicat, research fellow, Philippine Institute for Development Studies and vice president, Philippine Economic Society (PES), said the reality of the digital divide is that it exacerbates scarring for the poor and vulnerable in society that are excluded from education, healthcare, work, and credit access – all of which are necessary for human capital development.

“With the shift to a more digital economy, there is a need to upskill and retool workers and enhance technical capacities to be aligned with current public sector initiatives such as the Medium-Term Information and Communications Technology Harmonization Initiative (MITHI), which are government’s efforts to improve government online platforms for delivered better services,” she said. 

Amb. Benedicto Yujuico, president of the Philippine Chamber of Commerce and Industry (PCCI), said our young, educated, and technologically savvy workforce mindset must be oriented towards innovation strategy. 

It is clear from the survey results and from the Pilipinas Conference discussions that the private sector plays a vital role in both driving economic growth and increasing access to digital technology. However, the country’s wicked problems require more than a pro-active private sector to overcome.

The network governance approach sticks out as a way forward in tackling the complex problems of bridging the digital divide and reviving the economy. This approach, of which the concept of public-private partnership is an example, finds solutions and opportunities to address social issues in the nexus of private sector, government, and civil society collaboration.

Indeed, these uncertain times and the complex challenges of addressing the Philippines’ growing digital and economic gaps demand our “unprecedented collaboration” and serve as reminders that “all of us have to work together.”