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New dynamic economic model with a digital footprint

It is a fact that a new dynamic economic model is now beginning to emerge in entrepreneurship in the framework of the 4th industrial revolution and the digital challenges of our time

By: EBR - Posted: Thursday, April 25, 2024

It is a strategically important technology in the context of the fourth industrial revolution, aimed at improving the competitiveness of businesses and bringing innovative features to the services offered.
It is a strategically important technology in the context of the fourth industrial revolution, aimed at improving the competitiveness of businesses and bringing innovative features to the services offered.

by Antonis Zairis*

It is a fact that a new dynamic economic model is now beginning to emerge in entrepreneurship in the framework of the 4th industrial revolution and the digital challenges of our time. This paradigm will create new data, bringing revolutionary changes and overturning centuries-old economic models.

Important aspects of this new model that need to be taken into account and given careful attention are:

1. The source of surplus value, the value added to the product produced, is no longer considered to be the process and the duration of production, nor the participation of the factors of production, even if they operated in terms of increased productivity. The source of surplus value in the new economy is the valuation of the creative time spent on the conception of an innovation, a different idea, e.g. the design of a smart product or service (inventing an algorithm, new software, a smart application, etc.). Added value is now the clever idea, the innovation of the product’s characteristics and the diversity found in all four marketing elements (product, distribution, promotion, price). The intangible element, the intelligent, the creative, now takes the place of added value, which is reflected in the cost of the product. This will now determine its competitiveness rather than its production. Moreover, it is this which ultimately weighs in terms of the productivity and competitiveness of the firm itself, which has the privilege of selling and marketing similar products.

2. The value of useful information, primary or secondary, from the internal or external environment of the enterprise is worth much more if this information will lead to the design of e.g. a technological product with particularly competitive characteristics that make it unique. In the past, access to information was a commodity reserved for a few, the political or economic elite, whereas today many more have access to it. However, the privilege of processing this information in order to obtain useful data to help design a product or service belongs to those with specialised knowledge and advanced technocratic perception.

3. Innovation and the business policies that adopt it and the government policies that encourage the corresponding environment for innovative initiatives. Based on international experience, as Bruno Lanvin, Executive Director of Global Indices INSEAD, argues, innovation policies are no longer supported not only by developed economies but also by developing economies as indicated by the Global Innovation Index (Global Innovation Index-GII). For example, in India there is the Remidio Innovative Solutions medical device company, thanks to which compact devices are connected to a Smartphone for the diagnosis of retinopathy and rapid treatment of infants in remote areas of the country. Also in collaboration with INSEAD, Cornell University and the World Intellectual Property Organization (WIPO), the GII measures a country’s innovation performance based on both innovation inputs (regulatory environment, higher education, R&D spending, infrastructure) and innovation outputs (online creativity and knowledge creation). In our country, the shift of Entrepreneurship to Innovation should be focused on high-tech products on the one hand, and on those of the agri-food sector on the other hand, where there is scope for the emergence of an innovative comparative advantage at the level of internationally marketable products capable of competing with similar products of other countries outside Greece.

4. AI is an important chapter of the new era and is expected to bring about fundamental changes in both the public and private sectors. It is a strategically important technology in the context of the fourth industrial revolution, aimed at improving the competitiveness of businesses and bringing innovative features to the services offered. Our country is in 23rd place in the ranking of the relevant index of the European Union (Government Al Readiness Index), with only 3% of companies using AI applications compared to 45% worldwide. According to a survey conducted by SEV, companies that adopt AI solutions have profit margins up to 17% higher than the competition. Retailers, for example, are able to achieve a 20% reduction in inventory, a 30% reduction in stocking time and a 30% increase in online sales.

5. The new 5G technology also complements the basis for the digital transformation of the economy. More data in mobile telephony, the possibility of fixed, wireless access and high-speed new innovative applications, a wide range of services in industry, transport, health, retail. We should not ignore the social dimension of 5G technology, as it contributes to reducing social inequalities, offering access for all at reduced costs in areas such as health and education!

*Deputy vice president of SELPE, professor in charge, Neapolis University of Cyprus

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