Socio-Economic Impactof Internet Development

Dr. Piotr Stryszowski, OECD

ITU Regional Workshop on ICT IndicatorsSharm ElSheik, Egypt, 8-9 June 2012

The views expressed in this presentation are those of the author anddo not necessarily reflect the opinions of the OECD or its Membership.

Context

Context

Several existing studies focus on the Internet in the context of:- its share of GDP- its impact on GDP growth.

It is important but is that all?

Lacking a structure to measure

• Experience shows us that we are lacking tools to understand the Internet economy

• Policy makers need good indicators about the relative size and socio-economic impact of the Internet

Size of the Internet Economy (GDP)

The share of GDP that is generated by Internet-related activities

GDPGDP

What are the existing studies?• BCG, McKinsey, Deloitte…

Size of the Internet Economy (GDP)

• BCG: UK Internet Economy worth GBP 100 million per year.7.2% of GDP

• Web sector delivers 3.4% of top 13 economies’ GDP

Dynamic, economic impact of the Internet

What is the net share of additional GDP that is generated by all Internet-related activities across the economy.

yesterdayyesterday

GDPGDPGDPGDP

todaytoday

Thanks to the Internet

What are the existing studies?• Mostly academic studies; econometric analysis (Czernich, Lehr, Koutroumpis…)

Is that all?

Egypt: 28 January 2011

Egypt: Cost of Internet shutdown

• Direct impact on GDP– About USD 90 million in lost

telecommunication revenues

• Other impacts… – Lost revenues of business relying on the

Internet – Loss of confidence/FDI– Social costs– …

Indirect, socio-economic impact

The internet has some socio-economic impact that reaches beyond the GDP.

Two main impact areas:• consumer surplus, and • broader gains generated thanks to the Internet

The Internet

Consumer surplushappy customers

Broader gains:- education- environment- transparency- social capital…

Indirect impact

Consumer surplus

•Little research has been done to quantify the economic impact on consumer surplus.

•Effects scattered across sectors / areas but potentially significant.

•Greestein and McDevitt (OECD, 2012) estimate a significant consumer surplus only for the Internet itself.

Indirect impact

Broader impact areas

OECD (2012), The Impact of the Internet in the OECD countries (upcoming Digital Economy Working Paper)

The impact of the Internet on:• Environment • Education• Scientific research• Healthcare•Transparency• Social capital formation

…

Conclusions

Measuring the size of the Internet economy is not straightforward. The measurement:• Depends on the approach taken• Can be performed at different levels

The socio-economic impact of the Internet reaches far beyond the GDP.

Piotr StryszowskiDirectorate for Science,

Technology and Industry

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