Of the regular podcasts that quietly appear on my iPhone and fill up some of the hours I spend in my car, the McKinsey Quarterly podcast is not exactly the most entertaining or well produced. Some of them can downright boring.
One however, just this last week, had me hitting the “30 second” repeat button over and over to try and pick up and absorb some of the facts that were being thrown around from a recent research exercise McKinsey Global Institute did.
One of my more futile searches when I was with Storm, was that of trying to find some definitive research on the economic impact of VoIP in countries where it had been legalized. Nothing seemed to have been done. Strangely enough, it seems little has been done along those lines for the Internet itself, other than studies focused on broadband or eCommerce.
McKinsey have come up with some fascinating figures. I’ll post a link to their website below, but here are a few of the figures that stood out for me:
2 billion people connected to the Internet today (about 2 in 7).
That figure is growing by 200 million per year (as opposed to population growth which is at about 80m/a).
In the countries that McKinsey examined (G8 countries + Brazil + China + India + South Korea + Sweden - 13 countries representing 70% of global GDP, the Internet contributed 3.4% of GDP. While that may not seem huge, consider that this is equivalent to the GDP of Canada or Spain (and about 3x that of South Africa). It is apparently bigger than that of sectors such as utilities, energy, or agriculture.
In the last 15 years, in the G8, the internet has contributed 10% of the growth in GDP. In the last 5 years, it is 21%.
2.6 jobs have been created for every 1 lost as a result of the Internet.
For SME’s (4,800 surveyed in more than 12 countries) those with a strong web presence grew 2x as quickly as those with minimal or no presence.
These same SME’s reported 2x as much revenue earned from exports as the others.
They also created more then 2x the number of jobs
10% productivity increase for SMEs from internet usage was recorded.
In the last 15 years, the internet has contributed in real GDP growth per capita as the Industrial revolution’s 50 years of growth.
75% of the impact of the Internet has been in sectors outside of high tech and telecoms.
In developed markets, eCommerce is 10% of total sales, while only 1or 2% in developing markets. Travel and retail obviously leading the way.
While 38% of Internet production comes from US based companies, India and China have Internet growth rates several times that of other countries. Interestingly enough, UK and Sweden are apparently changing the game in many ways, underpinned by the strength of their telecoms operators.
Recommendations from the report are summarized along the lines of:
* eGovernment is an enabler. Governments can model and act as a catalyst for GDP growth through the Internet, by using it themselves.
* Innovationn using the internet should be a priority for all corporate leaders.
* Dialogue between private and public entities w.r.t. leveraging the power of the Internet to stimulate growth is an imperative.
If you like me, asked yourself “how exactly did they do this and how did they define the Internet economy in this case”, the following may be helpful:
“To measure the impact of the Internet on the economy, they looked at both expenditures and supply, following three quantitative, and complementary approaches:
A macroeconomic approach using national accounts to calculate the contribution of GDP via a classical macroeconomic spending approach, where the Internet economy is simply the sum of Internet consumption (service, access, e-commerce, etc.), private investment, public expenditure, and the trade balance in Internet related goods and services
A statistical econometric approach analyzing the correlation between Internet maturity and a country’s GDP per capita growth, leveraging the theory of endogenous economic growth
A microeconomic approach, analyzing the results of a survey of 4,800 small and medium-sized businesses in 12 countries we studied”
The podcast can be found here:
http://ax.itunes.apple.com/za/podcast/mckinsey-quarterly-audio/id285260960
The reports can be found here:
http://www.mckinsey.com/mgi/publications/internet_matters/index.asp
Happy reading!
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