Economy refers to a systematic way of describing how goods and services are exchanged among members of a given community. Digital means anything that can be fully expressed using digits, or numbers. Effectively this means anything that can be translated into numerical form, and can be retranslated back to its original state without losing its essential aspects. For instance, a book or a photograph can be expressed digitally but cars or fresh flowers cannot be expressed digitally because they possess physical aspects that cannot yet be turned into digital form without radically altering their inherent qualities.

Any macroeconomic theory consists of explaining the inter-workings of four principal components - land, labour, capital and technology - as they facilitate the exchange of goods and services within a specific community. Though all of these components are necessarily involved in all economic systems, the extent to which each one impacts a specific economy varies dramatically. For example, the agricultural economy was centered on producing, exchanging, and consuming products derived from working with the natural world. In these economies, land and labour were the most precious components for determining economic success. Capital - or money - did play a part, as did technological innovations such as the plough, the train or the thresher. However, an agricultural community could subsist with a minimum of money and technology, but could not survive at all without land or labour. Later, with the Industrial Revolution, technology assumed a more important role, as proved with the inventions of electricity and the telephone. However, because the economy was primarily driven by the ability to produce goods for the mass market, capital (possessing enough money) and labour (commanding an adequately trained workforce) were by far the most important ingredients for success.

Industrial economy gradually evolved from the agricultural economy, and now the industrial economy is making way for the digital economy. With the advent of the digital economy, information has become the driver of value and wealth creation and therefore information technology (IT) is considered the key to success in a growing number of industries. Manufacturers may compete less on their manufacturing skill and more on the ability to streamline their procurement and distribution processes by electronically connecting to suppliers and customers - and exploit IT for process improvement. Four types of economic activities would drive the growth of digital economy in future: