Digital Economy
« Data & IndicatorsThe Digital Economy refers to those economic and other activities "enabled by" the Internet and information technology (IT). Direct measures of the digital economy, then, would include retail sales via e-commerce and business-to-business (B2B) e-commerce. Such data is not available at the state or sub-state level. Measures of IT adoption by economic sector would be an extremely useful indicator of the extent of transformation to the digital economy. The adoption of IT in the health care sector or the extent of public sector use of IT would provide ideal indicator measures. Again, this data is not available.
In the 21st century global knowledge economy, access to the global information network is critical to a region's economic success. According to the Committee for Economic Development (2001), "the commercial use of the Internet and associated technologies is a major factor in raising productivity growth, which is the key to raising incomes. Higher productivity growth produces large economic and social benefits when sustained over a long period." The use of the Internet in many service sectors improves efficiency by cutting out the "middle-man" in most transactions, and by allowing firms to provide products and services to customers much farther away.
The importance of the digital economy is unquestionable. Nationally, venture investment of $4.9 billion in Internet-specific companies (those fundamentally dependent on the Internet) represented 17% of all venture capital dollars in 2008, according to the National Venture Capital Association. The digital economy cuts across all traditional economic sectors, including retail, manufacturing, tourism, finance, and others.
Indicators of the Digital Economy that are used here include surrogate measures, High-Speed Internet Access and Wireless Hotspots.
Digital Economy: High-Speed Internet Access
High-speed Internet, or broadband, access provides critical knowledge economy infrastructure. It is estimated that for each percentage point increase in broadband penetration, employment will increase 0.2-0.3% per year. This suggests an increase of 300,000 jobs on the national level (Crandall, Litan, & Lehr, 2007). A 10% increase in broadband coverage, then, could result in an increase of 290-440 jobs in the 21 counties of Northern Michigan based on a current workforce of 14,500.
An ideal indicator of the digital economy would be the current number of actual broadband subscribers by location. However, service providers refuse to disclose this data (although this may change with the data collection mandates included in the 2009 American Recovery and Reinvestment Act). Not knowing the extent of broadband penetration is a severe problem that undermines efforts in numerous rural areas across the country to provide broadband service. As broadband is the backbone of the knowledge economy, this is a hugely significant area to measure. To provide surrogate measures of the digital economy, the project team obtained data on high-speed Internet providers and wireless hotspots.
High-Speed Internet Access Providers (By ZIP Code, 2007)
Federal Communications Commission (FCC) data on the number of high-speed Internet service provider holding companies with at least one subscriber in a ZIP code was obtained.
| Northeast MI1 | Northwest MI2 | Eastern UP3 | Michigan | |
|---|---|---|---|---|
| High-Speed Internet Access Providers | 6.36 | 6.67 | 4.36 | 8.01 |
This measure clearly does not provide meaningful subscriber data. However, the data suggests, as limited as it is, that high-speed Internet service providers are not as active in the three regions as they are in other parts of the state.
Digital Economy: Wireless Hotspots
Wireless Hotspots (2008)
Providers of wireless hotspots (locations with wireless Internet access) want the public to access their service locations to increase their business. Two wireless providers, AT&T and T-Mobile, provide complete listings of their wireless hotspots on their Websites. This data was obtained from those Web sites. However, other businesses (commercial networks and independent establishments) also provide wireless services.
| Northeast MI1 | Northwest MI2 | Eastern UP3 | Michigan | |
|---|---|---|---|---|
| Wireless Hotspots | 12 | 32 | 8 | 864 |
| Per 1,000 sq mi | 2.50 | 6.76 | 2.30 | 15.21 |
The data in this table represents only a fraction of the actual number of wireless hotspots. Wireless hotspots provide an important service to consumers and businesses in the digital economy. Hotspots may be particularly important in the three regions where broadband penetration is spotty.
Definitions
- Northeast Michigan corresponds to the Northeast Michigan Council of Governments (NEMCOG) region of eight counties in the Lower Peninsula: Alcona, Alpena, Cheboygan, Crawford, Montmorency, Oscoda, Otsego, and Presque Isle.
- Northwest Michigan corresponds to the Northwest Michigan Council of Governments (NWMCOG) region of ten counties in the Lower Peninsula: Antrim, Benzie, Charlevoix, Emmet, Grand Traverse, Kalkaska, Leelanau, Manistee, Missaukee, and Wexford.
- The Eastern Upper Peninsula corresponds to the Eastern Upper Peninsula Regional Planning and Development Commission (EUPRPDC) region of three counties: Chippewa, Luce, and Mackinac.