UK: Not growing faster

The Department for Digital, Culture, Media and Sport (DCMS) has divided the Digital Sector into nine sub-sectors and 36 sub-categories. These nine sub-industries are: electronic products and computer manufacturing, wholesale of computers and electronic products, publishing (excluding translation and interpretation), software distribution, film, television, video, radio and music, telecommunications, computer programming, consulting and related activities, information services activities, computer and communications equipment repair.

TVD1.3-15-03 The UK measures the size of its economy using Gross Value Added (GVA), which is GDP + subsidies – taxes. In 2019, the nominal GVA of the UK digital sector was £150.6 billion, up 8.3% year on year and accounting for 7.6% of the national GVA. Among them, computer programming/consulting and related activities, telecommunications, film/TV/video/radio/music are the three largest sub-sectors, which together account for 75.5% of the digital sector’s GVA. In terms of growth, there are three sub-industries that saw GVA growth faster than the digital sector as a whole in 2019: information services activities, film/TV/video/radio/music, computer programming/consulting and related activities, with growth rates of 23.3%, 14.2% and 10.1%, respectively. Electronics and computer manufacturing was negative, while computer and communications equipment repair grew only 0.8 percent. As shown in the following picture.

Figure 2010-2019 Nominal GVA of sub-industries in the UK digital sector

Source: DCMS, 19 February 2021

It is important to note that the UK digital sector is not growing TVD1.3-15-03 faster than the national economy as a whole. In the nine-year period from 2011 to 2019, only three years – 2011, 2016 and 2019 – saw GVA grow faster than the national rate.

According to DCMS data (28 October 2021), from 2019 to the most recent year (that is, July 2020 – June 2021, the same below), the number of jobs in the UK fell by 579,000, while the number of jobs in the digital sector increased by 211,000, from 1.557 million to 1.768 million. The proportion of the total number of jobs in the country increased from 4.6% to 5.4%. In the most recent year, 89.5% of full-time jobs and 10.5% of part-time jobs were in the digital sector; Computer programming, consulting and related activities are not only the largest sub-sectors, but also contribute to more than half of employment in the digital sector (52.4%).

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The following table is a summary of key indicators of digital economy in China, the United States, Canada and the United Kingdom. Among them, the data of the Information and Communication Institute is larger, mainly because of the statistical caliber. The ICT Institute included industry digitization in its calculations, while other agencies did not. If only the digital industrialization part is calculated, the proportion of GDP in 2020 is 7.3%, which is similar to the data of the other four companies. In the case of the four countries, the added value of the digital economy (in particular, the core industry or digital industrialization in China) accounts for between 5% and 10% of GDP, and the number of jobs contributed is about 5% (the latest data of the UK has reached 5.4%).

Table: The overall development of digital economy in China, the United States, Canada and the United Kingdom

TVD1.3-15-03 Note 1: The data on the proportion of core industries in GDP of China’s digital economy comes from the 14th Five-Year Plan and the Outline of the 2035 Vision Goals.

Note 2: The UK uses GVA (rather than GDP) to measure the size of the economy.

Digital technologies are general-purpose technologies that can be diffused across industries. Strictly speaking, the digital economy is not an industry (Statistics Canada, 2019), only a collection of industries related to digital technologies. Therefore, defining the industry scope of the digital economy is the first challenge. According to Statistics Canada (2019), perhaps the biggest challenge in measuring the size of the digital economy is the lack of a clear and consistent definition of what it should include.

In recent years, the Internet, big data, cloud computing, artificial intelligence, blockchain and other technologies have accelerated innovation. There is no doubt that these five technologies are the most intuitive and dynamic parts of the digital economy. However, the digital economy reflected in the statistics is dominated by the electronic information industry and e-commerce, which seems to have little relationship with these intuitive active factors. For example, in 2019, the combined value added TVD1.3-15-03 of the three sub-sectors of the US software, e-commerce and telecommunications services accounted for 65.2% of the digital economy, Internet and data services accounted for 6%, and cloud services accounted for only 3.6%. In 2017, the total value added of the three sub-industries of telecommunications, support services and software in Canada accounted for 71.2%; In 2019, the value added of the three sub-industries of computer programming/consulting and related activities, telecommunications, film/TV/video/radio/music in the UK accounted for 75.5% of the digital sector. According to the estimation of the chart of the Information and Communication Institute, the main body of China’s digital industrialization in 2019 is the software industry and the electronic information manufacturing industry, and the combined value added of the two accounts for more than 80%; Telecommunications accounted for more than 10 percent, and the Internet industry only about 6 percent. The second challenge is that satellite accounts of national income accounts struggle to capture the most dynamic parts of the digital economy.

Organizations such as OECD, BEA, DCMS, National Bureau of Statistics and ICT have TVD1.3-15-03 made useful explorations and attempts on how to measure the digital economy. In the future, we should “strengthen the theoretical research on the development of the digital economy”, take a long time to work, constantly improve the cognitive level of the digital world, constantly improve the measurement methods and means of the digital economy, and constantly improve the ability to understand the world and transform the world.