Socio-Economic Impact. of Internet Development Dr Socio-Economic Impact of Internet Development Dr. Piotr Stryszowski, OECD ITU Regional Workshop on ICT Indicators Sharm ElSheik, Egypt, 8-9 June 2012 The views expressed in this presentation are those of the author and do 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 GDP 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. yesterday GDP today 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 Broader gains: education environment transparency social capital … Consumer surplus happy customers

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 Stryszowski Directorate for Science, Technology and Industry for further information >>> Contact us Piotr Stryszowski Directorate for Science, Technology and Industry OECD 2, rue André-Pascal 75775 Paris CEDEX 16 France Email: Piotr.Stryszowski@oecd.org Phone: (+33) 1 4524 9130 Fax: (+33) 1 4430 6257