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Biztech Mar 19, 2012

G-20 Internet Economy To Expand At 10% Per Annum Through 2016

By Biztech2.com Staff

In the G-20 nations, the Internet economy will grow more than 10 percent a year through 2016, according to a new report published by The Boston Consulting Group (BCG) as part of its Connected World series.

In the developed markets of the G-20, the Internet economy will grow approximately 8 percent annually; in the developing markets, it will grow more than twice as fast -- at an average annual rate of 18 percent. Argentina and India will grow the fastest, at 24 percent and 23 percent a year, respectively. The leading developed markets -- Italy and the U.K. -- will grow about 12 percent and 11 percent a year, respectively.

BCG projects that the Internet economy will contribute a total of $4.2 trillion to the G-20's total GDP in 2016. "If it were a national economy, it would rank in the world's top five, behind only the U.S., China, India, and Japan, and ahead of Germany," said David Dean, BCG senior partner and a coauthor of the report.

In 2010, the Internet economy in the U.K. accounted for the highest percentage of national GDP, followed by South Korea (7.3 percent) and China (5.5 percent). In each of these three countries, the Internet economy would rank among the top six industry sectors. At 4.7 percent, the 2010 share of U.S. GDP contributed by the Internet was about the same as the share contributed by the federal government -- and ranked slightly ahead of the developed markets' average share of 4.3 percent.

Although it is home to some of the world's leading Internet nations - such as the U.K., the Nordic countries, and the Netherlands - the EU-27 as a whole trailed the average of developed markets at 3.8 percent and only slightly exceeded the emerging markets average of 3.6 percent.

BCG projects significant shifts, however. By 2016 the Internet economy in the EU-27 and India will leapfrog into fourth and fifth place, respectively. Japan and the U.S. will grow more slowly and drop to sixth and seventh, respectively.

"The Internet economy offers one of the world's few unfettered growth stories," said Dean. "Policymakers often cite GDP growth rates of around 10 percent per year in the developing markets, but they look past similar, or even higher, rates close to home."

The Value Of Internet For Small And Medium Enterprises

In multiple countries - including China, Germany, Turkey, and France - small and medium enterprises (SMEs) that have engaged actively with consumers on the Internet also have experienced three-year sales growth rates up to 22 percentage points higher than those of companies with low or no Internet presence, according to the report.

"Around the world, SMEs that embrace the Internet are growing faster and adding more jobs than those that don't. By encouraging businesses to turn to the Internet, countries can improve their competitiveness and growth prospects," said Paul Zwillenberg, a BCG partner and coauthor of the report.

Assessing Consumers' Value Of The Internet

Connected consumers place a considerable value on the Internet. "The results are eye-opening in the sense that they demonstrate how completely the Internet has ingrained itself into daily life almost everywhere," said Zwillenberg. "We assessed its value by how much consumers said that they would have to be paid to live without Internet access. In the G-20, they would need to be paid $1,430 each."

This value varies among countries, from $323 in Turkey to $1,215 in South Africa to $1,287 in Brazil, and $4,453 in France. The aggregate value across 13 of the G-20 countries is $1.9 trillion, or about 4.4 percent of their GDP.

by Biztech2.com Staff

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