Dr. Hamad Kasasbeh

Economic performance is usually measured through gross domestic product, or GDP: the value of goods and services produced within a country over a year. This figure tells us whether an economy is growing or shrinking and allows comparisons across time and between countries. Yet the expansion of the internet, digital platforms and online services raises an important question: do conventional growth figures capture all the value created by the modern economy?

The problem begins with the fact that a large part of digital life has no clear market price. We use maps, search engines, email, social networks and educational content without paying directly for most of them. Advertising and subscription revenues may appear in economic accounts, but the time these services save and the benefits they provide to users are not fully reflected in GDP.

This is not the first time national accounts have faced value that does not pass through the market. Unpaid household work, such as childcare and meal preparation, may be estimated in supplementary accounts but is generally not added to official GDP. By contrast, the value of farm output consumed by the farmer’s own household is estimated and included. The digital economy lies between these cases: part of it is already recorded, while other services, benefits and activities remain only partly measured.

Sales of devices, software, subscriptions, advertising and e-commerce are already included in GDP. What the figures do not always capture is the time and cost saved through digitisation. When a citizen completes a government transaction by phone, or a customer carries out a banking service without visiting a branch, the service becomes faster and cheaper. Yet this improvement may not raise measured GDP and may even reduce recorded spending.

Digital products also differ from traditional goods. A software program, electronic book or educational video can reach millions of users at very little additional cost. A smartphone has also combined the functions of a camera, map, radio, computer and many other tools in one device. Quality and usefulness may therefore improve substantially while prices remain stable or fall, leaving part of that progress invisible in headline growth figures.

As a result, an economy may advance digitally without the full improvement appearing in GDP. Worker productivity may rise, transaction costs may fall and services may improve, while measured growth remains modest. The reverse is also possible: the profits of a small number of digital companies may rise and lift the figures, even though the gains do not reach most people or spread fairly across regions and sectors.

The effect also differs between countries that produce technology and those that mainly consume it. A country that develops software and platforms and exports digital services gains jobs, wages, exports and tax revenues. A country that relies largely on foreign applications may benefit from convenience and efficiency, but a large share of payments and profits flows abroad. Measuring usage alone is therefore not enough; policymakers must know how much value is produced locally and how its returns are distributed.

For this reason, countries such as the United States, Canada and the United Kingdom have developed supplementary indicators alongside GDP to measure e-commerce, online services, digital employment and software exports. Better measurement does not mean that an economy suddenly achieves new growth merely because the statistics are revised. It may simply reveal activity that already existed but was not properly recorded. Genuine growth occurs when digital production, exports, productivity and incomes actually increase.

In Jordan, the digital economy still represents a relatively small share of GDP, so improving its measurement alone will not produce a large or immediate rise in the overall growth rate. Its importance is nevertheless increasing as the sector expands and as digitisation helps lower costs and raise productivity across other industries.

Jordan should therefore measure what its citizens produce in digital services, the income earned through online work and the exports generated by local firms. The sector’s contribution may be limited today, but it is well placed to become an important source of future growth.