Digital Economy in the 21 Century: An Introduction to the Institutional Approach

The 21 century is the age of prime of the digital economy. Each next decade of the 21 century starts a new wave of digitalization of economic systems, thus determining the internal specifics of their functioning and the conditions of their global competition. During the first decade (2000–2010), the telecommunication infrastructure was created – development and preparation for practical application of digital technologies and their pilot implementation into the economic practices of households and entrepreneurial structures. The initial experience of new technologies’ application was accumulated, and sustainable practices of implementing digital economic processes formed. A motive for market players who used digital technologies was receipt of competitive advantages from higher speed, precision, and quality of the economic result. This prepared a social environment for further technological progress. The information society was formed – its specifics include high level of media literacy, high demand for hi-tech and hi-tech products (goods and services), flexibility of behavior in market, striving for optimizing individual economic practices (at the level of households) based on the leading technologies, openness and acknowledgment of the value of new knowledge, information and technologies, positive treatment of globalization and readiness to use its capabilities, and susceptibility and inclination for support for innovations. The second decade (2010–2020) stimulated further dissemination of digital technologies. Hi-tech entrepreneurship was formed based on the formed telecommunication infrastructure and as a response to the existing demand. In the course of its development, application of digital technologies turned from voluntary to mandatory – forced under the pressure of competition. As a result, high technological barriers of entrance formed in a lot of sectorial markets. Governments around the world adopted national programs and strategies of economic systems’ digitalization. The Fourth industrial revolution received official support and government financing. Digital competition passed from the corporate level (micro-economic) to the national (macro-economic). An international ranking of digital competitiveness appeared, and global competitiveness index received an addition “4.0”. This stage-by-stage character of the digital economy’s development in the 21 century reflects its institutional nature – essence and perspectives of the digital economy’s development are determined by successfulness of institutionalization of progressive economic practices. The basic social institutions of the digital economy of the 21 century are information society, telecommunication infrastructure, hitech entrepreneurship, and e-government.