Technology-Driven Economic Model: Digital Transformation and the Future
Digital technologies are reshaping the economic model of the future. That is, technology is transforming the economy. Let us look together at what the 'Technology-Driven Economic Model' is in order to be aware of this transformation and capture the change.
The economic model in question is actually a model that aims to increase economic growth and efficiency through the power of technology, and technologies such as digital infrastructure, artificial intelligence, blockchain, and the Internet of Things (IoT) are at the heart of this model. As is well known, the sustainability of the economy is important in every period, and countries follow innovations that will ensure this sustainability for economic growth. At this point, different strategic plans and roadmaps are created by states, institutions, and organizations. In particular, for developing countries like Turkey, correctly following these developments and making the right strategic moves means an increase in investments in this area.
Determining strategies suitable for a technology-driven economic model consists of four important elements:
- Innovation and technology: First and foremost, new generation technologies need to be developed and these technologies need to be adopted.
- Digital infrastructure: A strong and reliable infrastructure must be able to support all digitalization.
- Efficiency growth: The technologies designed and developed must increase efficiency in business processes from the public sector to universities.
- Economic growth: When all these items are realized, technology will ensure a Technology-Driven Economic Model aimed at sustainable economic growth.
The Technology-Driven Economic Model essentially increases countries' competitiveness, creates new business opportunities, and improves quality of life. With the effective use of technology, it is possible to build a more sustainable and inclusive economic model. Various topics such as AI technologies, analytical information, problem-solving, automation, and machine and language learning offer new and different opportunities to businesses, public institutions, the private sector, and society. So much so that the AI market is expected to exceed $825 billion by 2030. This figure is more than twice the annual sales revenue of the technology giant Apple.
In the AI sector, which has a large market share, it is inevitable that many different lines of business will undergo changes. The following graph shows the investments made in different sectors in a technology-driven economic model and the growth potential of these sectors. While the blue rows show investments in the sectors, the growth potential of the sectors is expressed in dashed green lines. In short, for a technology-driven economic model to be successful, the importance of investments in strategic sectors and the potential returns of these investments should not be overlooked.
Those who adapt to the changes can become game makers in the technology-driven economic model. It can be said that following digital transformation adds value to business competencies and business models, because customer service in institutions that accelerate digital transformation processes is starting to improve. In addition, their market shares are also seen to expand. In this case, both institutions and, in the long run, countries are inevitable to be at an advantage by moving toward a technology-driven economic model. This is because, by 2027, global digital transformation expenditures are estimated to reach $3.9 trillion.
As the market gains importance, it also creates new competitive environments in every area related to AI technologies. To have a say in chip production, which is the backbone of AI technologies, countries are investing in this area and establishing chip production facilities. For example, the Republic of Korea wants to make a name for itself in the chip sector with a $19 billion incentive package.
Additionally, Korea also gives direction to the technology-driven economic model with the large technology brands it has produced. For example, Samsung made more than $53 billion in sales in the second quarter of this year, providing significant income for its country's economy. As such, examining the Republic of Korea closely as a development initiative can be important for evaluating Turkey's place in the digital economy as well.
Government support for investments, technology-based firms, entrepreneurs, and innovative projects is a plus for our country. The contribution of incentives cannot be ignored. So much so that the number of AI product development firms in Turkey, which was five in 2000, is known to have risen to 1,012 in 2023 and 1,195 in the first half of 2024. In this context, it can be said that Turkey has been developing itself on digital economy, and that graduates from engineering and information and communication technologies departments are becoming increasingly important in employment.
In global competition, our country has a young generation with high potential in its hands, and this also increases our potential to be a regional leader. We need to use this advantage by developing strategies and policies. In this direction, the technological competence of young people should be increased, and programs for digital literacy should be organized. The steps Turkey is taking on the path of transition to a technology-driven economic model will offer us, on a silver platter, the potential to create a more sustainable and competitive economy in the future. Now is the time to act to internalize this model, which will determine the place of countries in the global economy and play a critical role in sustainable growth, and to change our companies, institutions, education system, and our own perspectives!
R. Erdem Erkul
HBR Turkey
