Economy Digitalization in Paradigm of Reproductive Process

Piotr Gudz

, Nadiia Shmygol

, Maryna Gudz

, Olena Cherniavska

and Yulia Cherniavska

"Zaporizhzhia Polytechnic" National University, Zukovskogo str.64, Zaporizhzhia, Ukraine

Kyiv National University of Technologies and Design KNUTD Nemyrovycha-Danchenka Street, 2, Kyiv, Ukraine

National University of Construction and Architecture KNUCA, 31 Povitroflotskij Ave, Kyiv, Ukraine

Keywords: Digital Economy, Digitalization of Economy, Reproduction, Platform, IT-Business, Network Readiness

Index.

Abstract: The aim of the work is an analytical study of reproducible phenomena and connections, that are manifested

in the development of innovative economics of the digital type. The article reflects the importance of the

digital economy for GDP growth, analyzes and gives an interpretation of the digital economy, identifies the

prerequisites for the formation and development of the digital industry, proves the reproductive nature of

business processes in order to create new value. The article uses such research methods as structural, logical

and analytical methods for better understanding of nature and structure of the digital economy; method of

comparative analysis and method of extrapolation for the formation of the reproduction model in digital

economy; generalization method for making conclusions. The model of reproduction process transformation

under the conditions of digital economy is offered. In addition features of digital economy reproduction are

defined and priorities of digital economy development in Ukraine are substantiated.

1 INTRODUCTION

Formulation of the problem. Even under COVID-19

today's economy characteristic is the growing

influence of a new type of economy, which is based

on network services, as well as digital and electronic

economy or economy of the virtual world. Depending

on the methods of determining the size of the digital

economy, its share ranges from 4.5 to 15.5 percent of

world GDP (Digital economy report, 2019). In 2010,

Boston Consulting Group estimated the amount of

digitization at $ 2.3 trillion for a group of top 20

countries, or about 4.1% of their GDP. And it predicts

that the digital economy will have reached $ 16

trillion by 2035 (World Bank, 2020). Digital business

is also attractive and cost-effective at macro level.

After all, the cumulative effect, the dollar invested

into digital technology over the past three decades,

has added an average of 20 dollars to GDP (Xaustov,

https://orcid.org/ 0000-0001-7604-549X

https://orcid.org/0000-0001-5932-6580

https://orcid.org/ 0000-0002-1454-4987

https://orcid.org/ 0000-0001-9819-578X

https://orcid.org/ 0000-0003-1576-281X

2019). Meanwhile, despite the rapid development of

information technology and the formation of the

digital economy on their basis it requires theoretical

understanding of new realities, awareness and

justification of the latest theoretical constructs of the

digital economy.

Analysis of recent researches. It should be noted

that in the scientific literature and in practice there is

terminological uncertainty, differences in views on

the essence and content of the new economy, as

researchers often reduce its essence to the Internet or

networks, platform or information technology, new

business management methods or new virtual

technologies. However, in the English-speaking

environment, the theoretical aspects of the digital

economy are considered by Becker L. (Becker, 2018),

Gumerova G. I., Shaimiev E.Sh. (Gumerova &

Shaimiev, 2019), Lapidus L.V. (Lapidus, 2018) in the

context of the transformation of management

decisions.

Gudz, P., Shmygol, N., Gudz, M., Cherniavska, O. and Cherniavska, Y.

Economy Digitalization in Paradigm of Reproductive Process.

DOI: 10.5220/0011341600003350

In Proceedings of the 5th International Scientiﬁc Congress Society of Ambient Intelligence (ISC SAI 2022) - Sustainable Development and Global Climate Change, pages 67-75

ISBN: 978-989-758-600-2

Thus, the main determinant of the digital economy

is determined by Podolchak N. Yu., Bilyk O. I.,

Levytska Ya. V. computer networks as the field of its

activity: "Digital economy is a kind of economic

market system, where one, several or all stages of

economic processes are carried out through computer

networks. Digital economy is one of the

manifestations of economic freedom, innovation and

the level of economic development" (Podolchak et al,

2019). It is true, but it is not enough to understand the

depth of the processes, that take place in the system of

productive forces and production relations in Industry

4.0.

In domestic and foreign literature the various

prerequisites for the development of the digital

economy are identified. Thus, Nureyev R.M.,

Karapayev O.V. determine the development of the

Internet, network society as prerequisites for the

development of the digital economy is called (Nureev

& Karapaev, 2019). The main reason for the

expansion of the digital segment of the economy is the

growth of the transaction sector, which accounts for

more than 70% of national GDP in the developed

countries. This sector includes: public administration,

consulting and information services, finance,

wholesale and retail trade, as well as the provision of

various utilities, personal and social services (OECD,

2017). However, we must note that the lack of

scientific work on the methodology of digital

economy such as the theory of factors of production,

the value theory, the price theory, the expanded

reproduction theory, the theory of capital movements,

the competition theory and etc. Conflicting views on

the conceptual and categorical apparatus, forecasting

the effects of E-economy and E-government are also

enumerated among them.

Objective setting. The aim of the work is an

analytical study of reproducible phenomena and

connections that are manifested in the development of

innovative economics of the digital type. The work

uses such research methods as structural, logical and

analytical ones in order to understand the nature and

structure of the digital economy; method of

comparative analysis and extrapolation method for the

formation of the reproduction model in digital

economics; generalization method for making

conclusions.

2 RESULT AND DISCUSSION

In our opinion, in terminological discussions, the

position of the Polish scientist Mikhail Holinski, who

believes that the pseudo-definition of the digital

economy should not be born in advance, is the most

real. Moreover, considering the point of view of the

scientific methodology, the interpretation of the

economic category must contain measures of its state

of development. Since these phenomena occur in our

life and it is in the initial phase of development, we

should not worry about finding a holistic definition of

digital economy (Goliński, 2019). Foreign researchers

have different views on the essence of the digital

economy, pointing to the increased degree of

connections and interaction of all authors of the

reproduction process on a single electronic platform,

including manufacturers, intermediaries, suppliers,

consumers: "A form of economic people’s activity,

businesses, devices, data and processes. The basis of

the digital economy is hyper connection. So, the

growing interconnectedness of people, organizations

and machines, formed through the Internet, mobile

technology and the Internet of Things" (Deloitte,

2019).

Despite this pragmatism, we must note that more

expanded vision of the digital economy is provided in

the government document "Ukraine 2030E is the

country with the developed digital economy": digital

economy is a type of economy, where the key factors

and means of production are digital data (binary,

information, etc.) and network transactions, as well as

their use as a resource, which can significantly

increase efficiency, productivity and value for

products and services (Ukrayina, 2020). However, it

is difficult to imagine economies without workers and

digital competencies.

Analysis of legal and regulatory acts showed, that

the world's leading developed countries in the context

of technological and civilization challenges responded

by adopting strategies for the development of

information communities: Poland in 2013

(Długookresowа Strategiа, 2013), Russia in 2017 (O

Strategii, 2017), the European Union in 2015 began to

implement a digital agenda, a kind of road map, but

with strategic guidelines (Europejska agenda, 2017),

Ukraine since 2019 (Ukrayina, 2020). It has happen

since 2015.

The European Commission has launched the

digital single market by promoting e-commerce,

digitizing copyright protection, electronic privacy,

harmonizing the digital rights of market participants

and the state, harmonizing tax rules and cyber security

(Komunikat, 2015).

The digital single market strategy will be based on

three pillars:

better access for consumers and businesses to

online goods and services across Europe. It requires

that the most important differences between the virtual

ISC SAI 2022 - V International Scientiﬁc Congress SOCIETY OF AMBIENT INTELLIGENCE

and real worlds must be quickly removed in order to

remove barriers to cross-border online activities;

creating the right conditions for the development

of digital networks and services. It requires fast,

secure and reliable content infrastructure and services,

as well as the right legal conditions for innovation and

investment, as well as fair competition and a level

playing field;

maximizing the economic growth generated by the

European digital economy. It requires the investment

into ICT infrastructure and technology, such as cloud

computing and large database sets, as well as research

and innovation that will increase the competitiveness

of industry, will improve utilities and expand the circle

of people, who use digital economy and improve their

skills (Komunikat, 2015).

Funding of the European Structural and

Investment Funds in the amount of more than 21.4

billion Euros is only provided for the development of

EU digital infrastructure and single market services,

as well as for research and innovation startups

(Komunikat, 2015).

Analysis of the development of the digital

economy indicates the preconditions for its formation.

It is believed that a number of factors contribute to the

development of the digital economy. The first is

determined by the abrupt growth of technical

capabilities of information processing and

transmission. According to the UN report on the

development of the digital economy, the evolution of

global Internet traffic from 2002 to 2022 has

increased. It will continue to grow in 10 and 20 years,

respectively, in 230 and 1507 times! In 2002 it will

grow to 100 Gb / s. In 2007 it will grow to 2000 Gb /

s. In 2012 it will grow to 46000 Gb / s, in 2022 it will

grow to 150700 Gb (Digital economy report, 2019).

The intensive development of the economy

platform is another factor in the development of the

digital economy. The strength of the digital platform

is reflected in the fact that seven of the top- eight

world's companies use business models on the

platform through market capitalization. Five

companies were IT manufacturers, which were the

top- five at market value in 2019. The total value of

platform companies with market capitalization of

more than 100 million US dollars was estimated at

more than 7 trillion dollars in 2017, what is 67%

higher than in 2015 (Digital economy report, 2019).

Digital platforms provide mechanisms for

combining a set of counterparties to interact via the

Internet. A distinction can be made between

transaction platforms and innovation platforms.

Transaction platforms are bilateral or multilateral

markets with a network infrastructure that supports the

exchange between numbers of different agents. They

have become the main business model for large digital

technology corporations, such as Amazon, Alibaba,

Facebook and eBay, as well as for those, who are

developing digitally supported market segments (e.g.

Uber, Didi, Chuxing, Airbnb). Innovative platforms

create an environment for encoding and producing

content by developing applications and software in the

form of operating systems such as Android or Linux.

In our opinion, the beginning of the digital

economy development is the result of more global

processes than technical innovations, the development

of the Internet and so on. In this sense, we agree with

the opinion of Polish scientists that technological

change is not a determinant of the digital economy ...

in contrast to social, economic, cultural factors

(Cyfrowa gospodarka, 2017). Indeed, the

globalization of the economy, accompanied by the

concentration of social communities, leads to the

development of cities and the concentration of the

population of countries around large cities, the share

and importance of which will only increase. Thus,

since 1950, the number of people living in cities has

increased almost six fold, from 751 million to more

than 4 billion people in 2018, which is more than half

of the world's population. Over the next three decades,

the cities are projected to grow another 2.5 billion

people (The comprehensive smart environment,

2016). These processes form the demand for business

and government for an effective system of

management, control infrastructure development,

provision of services and production of innovative

products. So, we believe that this entropy is leading

one in order to understand the development of

infrastructure for metropolises and agglomerations:

from transport and financial hubs, to the development

of information technology, big data management for

urban administration and other technologies,

including the digital economy in response to the new

system of population settlement.

The digital economy is operationally represented

at all stages of the product reproduction cycle. It is

essentially Industry 4.0, which makes the economic

and technological basis of the fourth industrial

revolution. Today digit law is an artificial intelligence,

robotics, web money, industrial biology, processing of

large data arrays Big Data, 3D industrial printing,

unmanned vehicles, drones, block chain and crypto

currencies, 4G communication, e-government and

servicing of state and municipal government and

administrative services ("Action" service), etc. In

business management, modern digital technologies

are mostly used to solve supply chain management

problems to optimize and control the cycle of

Economy Digitalization in Paradigm of Reproductive Process

procurement of raw materials, production of material

goods and their further distribution, as well as

enterprise resource planning and customer

relationship management (OECD, 2017).

The digital or virtual economy is mostly

represented in the Internet in the form of information

and communication technologies. Network is a system

of centralized management, where network benefits

are endowed with four properties:

1. Complementary, compatibility, standardization.

2. Significant production scale of economy.

3. External network effects. B. Metcalfe's law

indicates that the value of any network for the

consumer is equivalent to the square of the number of

connection nodes.

4. Effects of the trap: customers of network are

caught by the terms of contracts and agreements;

network operating conditions; the effects of loss of

loyalty when the customer loses the preferences that

the consumer had in the network (Osnovy, 2018).

It is must be noted that in scientific research it is

important to distinguish the concept of digital

economy, which in fact remains complementary,

terminologically. In this sense, the position of

American scientists, who distinguish the following

components of the digital economy, is clear:

a) the main digital sector,

b) digital economy,

c) digitalization of the economy (Digital economy

report, 2019).

Another position is held by Head of Ukraine

Innovative Development Association, who identifies

two components of digitalization. They are digital

economy and the IT sector (Ukrayina perexodyt,

2018).

Guided by this approach, we would like to define

the peculiarities of the functioning of the digital

economy from a theoretical point of view.

1. The main means of production as a set of objects

and means of labor, which are used by people in the

production of material goods and service, are divided

into tools and objects of labor.

Tools are a thing or a set of things that a person

acts over labor objects in order to transform them

according to their needs. Hence, in the digital

economy they are earns of information processing and

operations with it via a computer and its software,

means of connections and communications such as

mobile devices, the Internet as a virtual network of

information space. In contrast to the material

economy, where the main resource of wealth is land,

these functions are performed by the Internet in the

information economy.

Comparative analysis allows us to establish certain

semantic parallels. Land is known to perform three

functions: a place for cultivation (agriculture), a place

for extraction (mining), a place for location (location

of productive forces). The Internet also shows its

purpose as a place for activity. Services are created

and goods are designed there. In this case there is a

process of writing a scientific product. The location

feature exponentially grows as a platform for running

your own business. The quarantine, caused by the

spread of COVID-19, confirms a similar conclusion,

when a number of service organizations are mostly

switched to the platform of Internet representation and

activities. Finally, the parallels with the place of

extraction are obvious. Users of the platforms and the

general public use a huge amount of information to

ensure the activities. They are involved in its

"drawing" on a paid or free basis. The literature

represents quite different opinion: the Internet has the

properties of communication as a source of

communication, media as a source of information and

production as a basis for business (Kudryavceva &

Kolos, 2005; Shmygol, 2021; Pulina, 2021).

2. Labor objects are the objects, which a person

influences in the process of labor. They are the objects,

which are given by nature, or they have undergone

primary processing. They are positioned as raw

materials. In the digital economy, the main object of

labor is the intangible form of the product –

information, data, databases and data banks. In the

digital economy, the main object of labor is the

intangible form of the product such as information,

data, databases and data banks.

3. Man as a basic element not only of the economy

but also of society in terms of digital transformation

also acquires specificity. Modern research indicates

the dynamic processes of social reproduction: the

growing tendency of the weight of human capital in

relation to physical capital in the overall structure of

total capital (tabl.1).

Table 1: Structural changes in total capital in Western

countries, % of the total.

Total

capital

1800

year

1860

year

1913

year

1950

year

1973

year

1990

year

2020

year

Physical

capital

78-80 77-79 67-69 52-53 43-44 31-33 19-20

Human

capital

20-22 21-23 31-33 47-48 56-57 67-69 80-81

Compiled by the authors based on (ShchetininV, 2001)

ISC SAI 2022 - V International Scientiﬁc Congress SOCIETY OF AMBIENT INTELLIGENCE

Data analysis of table 1 represents the

prerequisites for creating a new model of economic

development. Its basis is formed on ethical norms and

environmental standards by directing investments in

renewable natural capital, including per person and

reducing the non-renewable flow of natural resources.

If Adam Smith spoke of the economic man, then

in the economy of numbers the main productive force

is the "digital man". At this stage of scientific

development and technology, a “digital person” is

qualified personnel, who have digital competencies

such as knowledge, skills and abilities to use them in

specific production or management situations to solve

specific problems. The content of professional

competencies of the “digital man" correlates the

factors and product of knowledge in economy.

4. The production process is considered through

the prism of the reproduction process. In this case, it

does not matter about the narrowed, simple or

extended reproduction it will be discussed, because it

is the prerogative of the study of quantitative

parameters and values. Although the scientific and

civic competencies and views of the authors of the

article are close to those researchers, who are

considered questionable and even harmful economic

policies, aimed at ever-increasing rates of social

production. It does not lead humanity and dwellers to

individual quality of life, happiness index and so on.

The digital economy is operationally represented

at all stages of the product reproduction cycle; it is

essentially Industry 4.0, which is the economic and

technological basis of the fourth industrial revolution.

Digital today is artificial intelligence, robotics,

electronic money, industrial biology, processing of

large data arrays Big Data, 3D industrial printing,

unmanned vehicles, drones, block chain and crypto

currencies, 4G communication, e-government and

servicing of state and municipal government and

administrative services ("Action" service), etc. In a

reproductive perspective, the most appropriate is the

interpretation of the digital economy as "activities for

the creation, dissemination and use of digital

technologies and related products and services",

presented by scientists from the Higher School of

Economics in Moscow (Gokhberg, 2019). It is here

that the digital platform, as can be seen from (Fig. 1),

allows reducing the traditional reproduction process

from the model: production – exchange – distribution

– consumption (PECD) to the model production:

digital economy – consumption (PDC).

In our opinion, the transformation of the

traditional economy into a digital one, based on the

theory of the reproduction process, can be represented

graphically (Fig. 2).

Source:

DLF Attorneys-at-law, 2021

Figure 1: Changing the economic model of reproduction.

In the reproductive phase of the digital economy,

the stage of production is not only the use of

information technology, software products at the

stage of design, construction, but also the

intellectualization of the product, tangible know-how,

design, but also the production process.

Compiled by the authors

Figure 2: Transformation of reproduction process in digital

economy.

It is manifested in technological innovations of

3D, 4D, 5D-technologies of manufacturing materials,

semi-finished products, parts, assemblies, etc. The

formed new values indicate for evolutionary and

favorable for the economy cycle to the producer:

benefits of saving resources; ease of scaling;

reduction of Time2market; expansion of the sales

network. It is believed that during and after the

economic crisis determined by the global COVID-19

pandemic, the transformation of all sectors and

markets, in particular in the form of digitization, can

Economy Digitalization in Paradigm of Reproductive Process

contribute to the production of higher quality goods

and services at reduced costs.

The exchange and distribution phase is related to

the distribution and logistics relationships and

connections of market agents.

That is, the digital economy is characterized by

the movement of market processes of exchange and

distribution of the product to the network space. That

is, the digital economy is characterized by the

movement of market processes of exchange and

distribution of the product to the network space. This

creates a new configuration of the economic space

and the market as a whole.

Such a pattern of economic relations is not

artificially created, as it may seem at first glance. The

benefits are also obvious for business intermediaries.

They are the following: speed of transactions,

resource savings, improving the efficiency of

logistics operations. The digital economy allows

greater control over the creation of value chains in

different business models on a digital platform.

The components of the operational process of the

digital economy are technological and information

blocks: IoT Monitor – Marketer – OBL (Omni bulk

messaging). IoT and M2M connections around the

world provide full visibility, event management and

control from the network to end devices, with priority

security. Omni bulk messaging is Omni channel

marketing technology. Omni messaging platform is

for business network. Different operators provide

different mobile communication channels to really

connect and communicate with the target audience, as

well as effectively reach potential customers.

The stage of consumption to a lesser extent, but

associated with the paradigm of the digital economy.

The consumer saves time on the choice and purchase

of goods and services, has a more balanced choice of

consumer solutions, determined by information

support, and so on. In addition, the digital economy is

creating new jobs in digital services, especially for

high-skilled professionals, as well as new forms of

digital activity for smaller skilled workers. In

business management, modern digital technologies

are mostly used to solve supply chain management

problems in order to optimize and control the cycle of

raw material procurement, production of goods and

their further distribution, as well as to plan enterprise

resources and customer relationship management.

5. Property relations. In an industrial economy,

the relationship of ownership (possession,

appropriation and disposal) of means of production is

associated with the object of ownership for a specific

material object: land, real estate, etc. In the digital

economy, there is a theoretical construct that

characterizes the new relationships between right to

property and property. To conduct and control

business means of production in the classical sense in

such a system of relations are superfluous. Instead,

ownership of a brand, trade mark, business creates

and sells conditions for other businesses. The sale or

use of which by a business or individual is a profitable

part of a digital business. For example, Uber

corporation does not have its own cars to provide

passenger and freight services. Didi does not have its

own retail space to sell goods and services to

customers. Chuxing does not have self-service in

automotive technology, based on artificial

intelligence. Airbnb does not have its own hotel fund

to provide accommodation services.

The digitalization of the economy is characterized

by the impact of information and communication

technologies on other sectors of the economy in

comparison with the digital economy, which directly

creates added value in production, logical,

distribution and sales chains. In this case, digitalism

plays the role of locomotive for accelerating

economic growth (Table 2).

Table 2: Average annual values of additional contribution

of growth factors to the value added of sectors of the

economy as a result of digitalization for the period from

2019 to 2030.

Sector of the

economy

Аnnual

average

cost of

fixed asset

(OPF) %

Capital

contrib

ution,

Labor

contribut

ion,%

Total,

Financial

sector

0,92 1,20 0,93 3,04

Transport 1,29 1,20 0,55 3,03

Construction 0,98 1,02 0,88 2,88

Education 1,00 1,20 0,57 2,77

Chemical

industr

1,64 1,40 –0,43 2,61

ineerin

1,52 1,48

–

0,46 2,54

Other

services

0,93 0,79 0,24 1,95

Heath care 0,81 0,58 0,25 1,65

ht industr

1,02 0,96

–

0,65 1,32

Power

Industry

0,32 0,83 0,04 1,19

Trade 0,60 0,36 0,04 1,00

Agricultural

Complex

0,78 0,69 –0,56 0,91

Publc

Administratio

0,58 0,24 –0,40 0,41

Timber

industry

com

lex

0,31 0,14 –0,53 –0,08

Metallur

0,25 0,10

–

0,55

–

0,21

Mining

industr

0,08 0,04 –0,46 –0,35

Compiled by the authors based on (L. M. Gokhberg, 2019)

ISC SAI 2022 - V International Scientiﬁc Congress SOCIETY OF AMBIENT INTELLIGENCE

Data analysis on the average annual values of the

contribution of growth factors to the added value of

sectors of the economy as a result of digitalization for

the period from 2019 to 2030 (Tab. 2), performed by

Russian scientists at the Higher School of Economics,

confirms the trend of the global economy about the

accelerated growth of digitalization in science and

education, the financial and banking sector, transport

and construction, as well as in the service sector. In

the forecast period, digitalization will provide from

3.04 to 2.77% growth in value added in these sectors.

Thus, the digitalization of the economy becomes a

structural factor in economic growth.

It should be fairly added that the digital economy

is not a panacea for solving social problems. At the

Thieß Petersen and Falk Steiner, the effects of

progressive digitization in the labor market are

contradictory, as digital technological progress has

both the destruction of jobs and job creation.

However, in the short run in 10-15 years significant

net job losses are unlikely happen to be in contrast to

the long run in 2040/50, when the effects of job cuts

may outweigh the pace of job creation (Thieß

Petersen, 2019). At the same time, 375 million

workers, what covers about 14% of the global

workforce, will be forced to change their profession

from 2019 to 2030 (McKinsey, 2017). The digital

economy provides more opportunities to test the

economic security of counterparties for corporate

manufacturers and agents in general.

The analysis of the roadmap adopted by the

Government of Ukraine for the implementation of the

strategy for the development of the digital economy,

despite its pioneering and positive content, indicates

the lack of tools to achieve specific goals for the

development of digital economics. According to

domestic experts, the share of the digital economy in

Ukraine fluctuates within 3-4% of GDP, and by 2025

may double. Weak nature of the development of the

components of the digital economy is confirmed by

the results of foreign studies. Thus, according to the

Networked Readiness Index, it is an indicator that

characterizes the level of development of information

and communication technologies in 139 countries,

Ukraine ranked 64th in 2016. So we are not enlisted

to the world map of the digital economy.

A number of scientists, based on the research of

foreign research centers and scientists, state the state

of factor support for the development of the digital

economy in Ukraine as weak, at the initial stage.

Thus, the weaknesses of the development of domestic

digital economics are: low protection of intellectual

property rights, underdeveloped banking and

financial services, high investment risks, small

number of mobile broadband subscribers, inefficient

cyber security, advanced software piracy, insufficient

funding for technological development, low digital

consumer competences. Instead, the pros are: positive

dynamics of investment in telecommunications,

revitalization in the IT business sector, the speed of

Internet connections, e-democracy, the use of big data

and the quality of education (Xaustov, 2019).

According to these indicators, Ukraine is on the

sixtieth position among 139 countries studied, which

refers it to marginal digital countries.

Indeed, Ukraine still has an underdeveloped

infrastructure of information markets, the Internet,

network communication channels, low technological

education of consumers and a general syndrome of

"outdated technologies". But the situation of low

adaptability to information change is not unique to the

domestic economy: according to a study by ESG

commissioned by Dell EMC, 95% of large companies

do not meet the requirements of the new digital

business. However, 96% of those companies, which

have transformed into digital standards, have almost

doubled their revenue earnings next year (ESG,

2017). It’s a clear illustration of the effectiveness of

change management at the corporate level.

The policy of catching up provides for a planned

increase in the share of Ukraine's digital economy in

total GDP from 3% in 2021 to 65% in 2030

(Ukrayina, 2020). The declarative nature of the

forecasts is evidenced by the fact that the program

document "Ukraine 2030E - a country with a

developed digital economy" does not contain specific

financial, tax, customs, banking instruments to

influence business (supply) or citizens (demand) that

would stimulate development, implementation ,

production of technologies of SMART-economy,

increase of digital competences at citizens and their

capitalization which could and should provide

achievement of ambitious purposes on the way of

digitalization of domestic economy as a competitive

model of development in modern types.

4 CONCLUSIONS

According to the results of the study, it can be

generalized that the digital economy in the

reproductive sense is a constantly recurring activity

for the creation, exchange, distribution and use of

digital technologies and complementary with goods

and services aimed at efficiency and greening of

social production. The peculiarity of the reproduction

process under the conditions of digitalization is its

transformation from the traditional model

Economy Digitalization in Paradigm of Reproductive Process

"production – exchange – distribution – consumption

(PEDC)" to the production model "digital economy –

consumption (DEC)".

In terms of digitalization, Ukraine is among 139

surveyed countries, what makes it marginal. Thus, the

infrastructure of information markets, the Internet,

network communication channels remains

underdeveloped in Ukraine, low technological

education of consumers and the general syndrome of

"outdated technologies" are noted. To intensify the

development of the digital economy, it is necessary to

develop specific financial, tax, customs, banking

instruments to influence business (supply) and

citizens (demand), which would accelerate the

development, implementation, production of

SMART-economy technologies, and increase and

capitalize digital competencies.

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