The digital economy is becoming ever-more ubiquitous. Yet, its implications for investors remain largely unaddressed, as the link between the micro developments found in all types of start-ups, the wider economy and asset prices, is not always clear. In this thematic review, we are seeking to address this issue – how the digital revolution at the micro level is changing the macroeconomic environment, and with it, the investment world.
We are not pretending that we have all the answers. But our analysis leads us to believe that the digital economy will drive investors to diversify further across alternative investment sources, provided regulation allows them to do so. However we also firmly believe that there are a number of digital economy “truths”, which have been misinterpreted and as such warrant deeper interrogation.
It has been widely thought that because technology disrupts routine jobs it will reduce employment numbers, wherever there is the possibility of automation. But conversely, we should keep in mind that where creativity prevails, jobs are flourishing in different forms, not necessarily in a traditional employee format. Hence entrepreneurial adventures rise. If this structural change accelerates significantly, it may lead to a rise in unemployment during a transitory period while skills adapt. However, because technology will lead to improved skills and may enhance productivity across sectors, it is unlikely to lead to higher unemployment levels, after a possible transition period.
Conversely, it could even lower levels in the medium term - provided labour, product and services markets are flexible enough.
Source : Axa Real Estate