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Canada
Global Issues in the Digital Economy
OECD - APEC Global ForumPolicy Frameworks for the Digital Economy
Honolulu, January 2003
Global Issues in the Digital Economy
OECD - APEC Global ForumPolicy Frameworks for the Digital Economy
Honolulu, January 2003
Richard SimpsonDirector General
Electronic Commerce Branch, Industry Canada
Richard SimpsonDirector General
Electronic Commerce Branch, Industry Canada
[email protected]@ic.gc.ca
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OutlineOutline
I - Electronic Commerce and the New Economy
II - The Maturing of the Digital Economy (1998-2003)
III - The Real Legacy of the Dotcom Revolution: Business Innovation and Market Transformation
IV - Global Policy Priorities
I - Electronic Commerce and the New Economy
II - The Maturing of the Digital Economy (1998-2003)
III - The Real Legacy of the Dotcom Revolution: Business Innovation and Market Transformation
IV - Global Policy Priorities
I - Electronic Commerce and the New Economy
I - Electronic Commerce and the New Economy
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OECD Ministerial ConferenceOttawa, October 7-9, 1998OECD Ministerial ConferenceOttawa, October 7-9, 1998
• Held in partnership with business, labour, and social interest groups
• Involved other international organizations
• Produced joint conference conclusions supported by governments, business, labour and social interest groups for:
9 Building trust for users and consumers9 Establishing ground rules for the digital marketplace9 Enhancing the information infrastructure for electronic
commerce9 Maximising the benefits
• Held in partnership with business, labour, and social interest groups
• Involved other international organizations
• Produced joint conference conclusions supported by governments, business, labour and social interest groups for:
9 Building trust for users and consumers9 Establishing ground rules for the digital marketplace9 Enhancing the information infrastructure for electronic
commerce9 Maximising the benefits
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Business Action PlanBusiness Action Plan
International Organizations’ Work Plan International Organizations’ Work Plan
• Taxation: Framework Conditions and Implementation Plan• Declaration on the Protection of Privacy on Global Networks• Declaration on Consumer Protection in the Context of Electronic Commerce • Declaration on Authentication for Electronic Commerce
• Taxation: Framework Conditions and Implementation Plan• Declaration on the Protection of Privacy on Global Networks• Declaration on Consumer Protection in the Context of Electronic Commerce • Declaration on Authentication for Electronic Commerce
• Action Plan for Cooperation on Developing Self-Regulatory Approaches and Mechanisms (e.g., technological solutions)
• Action Plan for Cooperation on Developing Self-Regulatory Approaches and Mechanisms (e.g., technological solutions)
• World Trade Organization (WTO)• UNCITRAL• World Intellectual Property Organization (WIPO)• International Telecommunication Union (ITU)
• World Trade Organization (WTO)• UNCITRAL• World Intellectual Property Organization (WIPO)• International Telecommunication Union (ITU)
OECD Action Plan OECD Action Plan
OECD Ministerial Conference OutcomesOECD Ministerial Conference Outcomes
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National E-Commerce Initiatives: 1997-1999National E-Commerce Initiatives: 1997-1999
• The Canadian Electronic Commerce Strategy, Industry Canada, September 1998
• A Framework for Global Electronic Commerce, U.S., Executive Office of the President, July 1997
• Putting Australia on the Silk Road: The Role of Trade Policy in Advancing Electronic Commerce
• [email protected], U.K. Cabinet Office, September 1999
• Singapore E-Commerce Master Plan and Electronic Transaction Act, 1998
• The Canadian Electronic Commerce Strategy, Industry Canada, September 1998
• A Framework for Global Electronic Commerce, U.S., Executive Office of the President, July 1997
• Putting Australia on the Silk Road: The Role of Trade Policy in Advancing Electronic Commerce
• [email protected], U.K. Cabinet Office, September 1999
• Singapore E-Commerce Master Plan and Electronic Transaction Act, 1998
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II - The Maturing of the Digital Economy (1998-2003)II - The Maturing of the Digital Economy (1998-2003)
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0 10 20 30 40
13
16
38
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© 1998, Cisco Systems, Inc.
Years to 50 Million UsersYears to 50 Million Users
Internet Being Adopted Faster than Any Previous TechnologyInternet Being Adopted Faster than Any Previous Technology
9
0
100
200
300
400
500
600
700
1996 1997 1998 1999 2000 2001 2002
1997 Predictions2002 Actual Users
In Millions of Users
Almost 10% of the world’s population now has access to the Internet*Almost 10% of the world’s population now has access to the Internet*
Source: NUA Internet Surveys, How Many Online?, 1997, August 13, 2002
* Where possible, figures represent both adults and children who have accessed the Internet from any location at least once during the 3 months prior to being surveyed.
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Canada4%ROW
3%
Western Europe
20%
Asia5%
Japan21% U.S.
45%
Latin America
2% Canada4%ROW
3%
Western Europe
20%
Asia5%
Japan21% U.S.
45%
Latin America
2%
U.S.38%
Canada3%
Western Europe
33%
Asia10%
ROW2%
Japan12%
Latin America
2%
U.S.38%
Canada3%
Western Europe
33%
Asia10%
ROW2%
Japan12%
Latin America
2%
2000 - U.S. $354 B2000 - U.S. $354 B2005 - U.S. $4,608 B2005 - U.S. $4,608 B
World E-Commerce Growth Accelerating...World E-Commerce Growth Accelerating...
Note: Charts reflect "Internet Commerce", a subset of electronic commerce that includes the purchase or trade of goods and services via the Internet / World Wide Web, but excludes financial services’ transactions
Source: International Data Corporation, 1998, 2002
1997 - U.S. $13.1 B1997 - U.S. $13.1 B
Canada5%
Western Europe
8%
Asia4% ROW
1%
U.S.81%
Canada5%
Western Europe
8%
Asia4% ROW
1%
U.S.81%
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...And Exceeding Expectations...And Exceeding Expectations
$-
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
Worldwide E-Commerce (U.S.
$Billions)
1999 2000 2001 2002 2003 2004 2005
1999 Estimates2002 Estimates
Note: Charts reflect "Internet Commerce", a subset of electronic commerce that includes the purchase or trade of goods and services via the Internet / World Wide Web, but excludes financial services’ transactions
Source: International Data Corporation, 1999 and 2002
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Dynamic Growth Continues in CanadaDynamic Growth Continues in Canada
Source : Statistics Canada, 2000, 2001, 2002
0
2
4
6
8
10
12
14
1999 2000 2001
($ B
illio
ns)
B2BB2C
5
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Technology Technology TriggerTrigger
Peak ofPeak ofInflated Inflated
ExpectationsExpectations
Trough ofTrough ofDisillusionmentDisillusionment
Slope ofSlope ofEnlightenmentEnlightenment
InternetWeb
Dot.ComBegins
Christmas1998
Dot.Com ShareFallout
Dot.ComShake-out
BusinessDisillusionment
“True”Convergence
Emerges
Public Expectations
HYPE
1990-96 2000 2005
“Telecom Meltdown:Profits are vanishing. Companies are going belly-up. And this industry’s troubles just might flatten the economy”
-- Business Week, Apr. 23, 2001
Source: Gartner Group
The Dotcom PhenomenonThe Dotcom Phenomenon
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0
50
100
150
200
250
300
1900 1905 1910 1915 1920 1925
0
1
2
3
4
5
6
Automobile Industry Restructured and Consolidated But Car Production Continued to Grow
Automobile Industry Restructured and Consolidated But Car Production Continued to Grow
U.S. AutomobileManufacturers
U.S. AutomobileManufacturers
U.S. AutomobilesProduced
U.S. AutomobilesProduced
(million cars)(million cars)(# of Manufacturers)(# of Manufacturers)
• “Hi-Tech Wreck” not a new phenomenon
• Demand for Internet continues to grow, traffic doubling every year
• “Hi-Tech Wreck” not a new phenomenon
• Demand for Internet continues to grow, traffic doubling every year
Source: Klepper & Simons, “Technological Extinctions of Industrial Firms”, Feb. 1997Source: Klepper & Simons, “Technological Extinctions of Industrial Firms”, Feb. 1997
Natural Pattern of Technology AdoptionNatural Pattern of Technology Adoption
III - The Real Legacy of the Dotcom Revolution: Business Innovation and Market TransformationIII - The Real Legacy of the Dotcom Revolution: Business Innovation and Market Transformation
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• The transformation of business-to-business supply chains
• Development of new electronic marketplaces
• Impacts on competition and industry structure
• The “Virtual” firm
• The reshaping of the consumer marketplace
• The Renewal of Public Services
• The transformation of business-to-business supply chains
• Development of new electronic marketplaces
• Impacts on competition and industry structure
• The “Virtual” firm
• The reshaping of the consumer marketplace
• The Renewal of Public Services
Fundamentals of the New Networked EconomyFundamentals of the New Networked Economy
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The True Legacy of the DotcomsThe True Legacy of the Dotcoms
DOTCOM Hype (pre-2000)DOTCOM Hype (pre-2000)
Government OnlineGovernment Online
Digital Economy Reality (2003)Digital Economy Reality (2003)
e-government through integrated “Multi-channel” service deliverye-government through integrated “Multi-channel” service delivery
B2C “pureplays”B2C “pureplays”
Public e-marketplacesPublic e-marketplaces
“Bricks & clicks” multi-channel retailing strategies“Bricks & clicks” multi-channel retailing strategies
Private e-marketplaces for closed user groupsPrivate e-marketplaces for closed user groups
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Established Dotcom StarsEstablished Dotcom Stars
1997 revenues: $147.8 million1.5 million customers
2001 revenues: $3.12 billion25 million customers
1997 revenues: $147.8 million1.5 million customers
2001 revenues: $3.12 billion25 million customers
Launched September 19992001 revenues: $901 million
20.5% of all online Health & Beauty market
Launched September 19992001 revenues: $901 million
20.5% of all online Health & Beauty market
1998 revenues: $86 million
Expected 2002 net revenues: $1.17 billion2002 market value: $9.1 billion
24.2 million unique users in 2002
1998 revenues: $86 million
Expected 2002 net revenues: $1.17 billion2002 market value: $9.1 billion
24.2 million unique users in 2002
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E-Com Radically Changes Traditional Business Models...E-Com Radically Changes Traditional Business Models...
Customer Distribution Marketing Manufacturing Suppliers
… across the entire economy… across the entire economy
Customer
Distribution Marketing
Manufacturing
Suppliers
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E-Business Is the Engine of InnovationE-Business Is the Engine of Innovation
Buying & Selling Online Is Just The Beginning...
Buying & Selling Online Is Just The Beginning...
Inventory Management
Customer ServiceOnline MarketingProduct Delivery
e-Payments
Inventory Management
Customer ServiceOnline MarketingProduct Delivery
e-Payments
In almost every industry, business processes of all kinds... In almost every industry, business processes of all kinds...
…are taking an electronic form along the entire supply chain…are taking an electronic form along the entire supply chain
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Next Wave of Productivity GrowthNext Wave of Productivity Growth
IT productivitywave
IT productivitywave
E-business productivity waveE-business productivity wave
19901990 20002000 20122012
Productivity:(%change inoutput per
unit oflabor input)
Productivity:(%change inoutput per
unit oflabor input)
How does e-business affect productivity?
• Lower transaction costs
• Improved market information
• Intensifies competition
• Improves inventory Management
• Eases product delivery
How does e-business affect productivity?
• Lower transaction costs
• Improved market information
• Intensifies competition
• Improves inventory Management
• Eases product delivery
TimeTime
Source: Forrester Research Inc. Nov. 2001Source: Forrester Research Inc. Nov. 2001
• E-Business is increasingly a key tool for (firm level) productivity improvement and competitiveness
– survival in a competitive, global economy– essential for sustainable growth
• e-Business has to be adopted across all sectors of the economy to achieve competitive advantage
• E-Business is increasingly a key tool for (firm level) productivity improvement and competitiveness
– survival in a competitive, global economy
– essential for sustainable growth
• e-Business has to be adopted across all sectors of the economy to achieve competitive advantage
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E-Business Applications are driving the economyE-Business Applications are driving the economy
… The deployment of Internet business solutions has yielded to date a cumulative cost savings of $155 billion to U.S. organizations, and is expected to produce another $373 billion in cost savings, most of which will be realized by 2005.
Internet business solutions could account for 40% of the U.S. productivity growth increase over 10 years, possibly making it the single largest private sector contribution to productivity growth over the next decade.
… The deployment of Internet business solutions has yielded to date a cumulative cost savings of $155 billion to U.S. organizations, and is expected to produce another $373 billion in cost savings, most of which will be realized by 2005.
Internet business solutions could account for 40% of the U.S. productivity growth increase over 10 years, possibly making it the single largest private sector contribution to productivity growth over the next decade.
Cost
Productivity
Source: The Momentum Group, The Net Impact Study, Dec 2001
IV - Global Policy PrioritiesIV - Global Policy Priorities
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Building a Global Digital EconomyBuilding a Global Digital Economy
• Strengthening confidence and trust in online markets
• Confirming the ground rules for online commerce
• Universalizing the benefits of the digital economy
• Strengthening confidence and trust in online markets
• Confirming the ground rules for online commerce
• Universalizing the benefits of the digital economy
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The Trust AgendaThe Trust Agenda
• Privacy
• Consumer protection
• Authentication and e-signatures
• Cyber-security
• Lawful access
• Privacy
• Consumer protection
• Authentication and e-signatures
• Cyber-security
• Lawful access
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Governance AgendaGovernance Agenda
• WTO and trade rules
• E-Commerce Work Programme
• Services negotiations -focus on infrastructure services enabling the digital economy e.g. telecom, computer, distribution
• Enabling e-trade
• Tax and fiscal regimes
• Customs facilitation
• Secure electronic supply chains
• WTO and trade rules
• E-Commerce Work Programme
• Services negotiations -focus on infrastructure services enabling the digital economy e.g. telecom, computer, distribution
• Enabling e-trade
• Tax and fiscal regimes
• Customs facilitation
• Secure electronic supply chains
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Digital Divide AgendaDigital Divide Agenda
• Issues: mainstream ICTs in the development process
• Who: ODAs, international organizations, recipient countries
• Key thrusts:
– advocacy
– policy coherence
– coordination of initiatives
• Instruments: UN ICT TF, OECD/DAC, WSIS
• Issues: mainstream ICTs in the development process
• Who: ODAs, international organizations, recipient countries
• Key thrusts:
– advocacy
– policy coherence
– coordination of initiatives
• Instruments: UN ICT TF, OECD/DAC, WSIS
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Electronic Commerce Branch Web Sitewww.e-com.ic.gc.ca
Electronic Commerce Branch Web Sitewww.e-com.ic.gc.ca
For More InformationFor More Information
