It’s easy to visualize the digital economy as one of limitless abundance. However, according to Dr. Vili Lehdonvirta, a researcher at the Helsinki Institute of Information Technology and the lead author of the forthcoming infoDev publication The Development Potential of the Virtual Economy, the notion of an infinite digital economy is not only misleading but also incorrect. In fact, the digital economy has new forms of scarcity which, when combined with human needs and desires, constitute the virtual economy and present opportunities for developing countries.

While the official report will be released in February, Dr. Lehdonvirta’s findings were showcased at ICTD2010 at Royal Holloway University of London. In describing goods and services that exist only digitally, his research shows that income opportunities exist for semi-skilled and unskilled workers in developing economies. It also identifies the challenges faced by entrepreneurs and regulators as they seek to harness this potential.

 

Tim Kelly, Virtual Economy Panel Chair

Joining Dr. Lehdonvirta at the infoDev workshop were Leila Chirayath Janah, the founder of Samasource; Jared Psigoda, the founder and CEO of Niubility Co., Ltd.; and Tom Chatfield, the author of Fun, Inc. In the session, chaired by Lead ICT Policy Specialist Tim Kelly, the panelists shared their reflections on and experience with virtual commerce.

Ms. Janah, whose business connects impoverished women, youth and refugees to microwork (small, computer-based tasks that build skills and generate income), emphasized the huge opportunity for microworkers to capture parts of the rapidly growing outsourcing market which is estimated to be worth $1.3 trillion.

Mr. Psigoda explained “gold farming,” which is a sector of the virtual economy in which “people in rich countries with little time but plenty of money, pay people in poor countries with little money but extra time to improve their video game accounts.” He cast aside critiques of purely digital goods, such as improved character attributes, noting that, “things like diamonds are only valuable because people are willing to pay for them.”

According to research supported by DFID, the microwork and online gaming services sectors are the two most profitable and promising ones of the virtual economy. However, Mr. Chatfield emphasized some of the challenges that remain, such as the need to connect virtual businesses to larger discussions around workers’ rights and regulation. Additionally, as a member of the audience pointed out, governments need to approach virtual businesses holistically because generating opportunities in the virtual economy is only one part of the path to development.

Check back soon for further information about infoDev’s virtual economy work and the upcoming publication of The Development Potential of the Virtual Economy!

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