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May 25, 2011

Internet causing world economic growth greater than industrial revolution of the 1800s

McKinsey - Internet matters: The Net’s sweeping impact on growth, jobs, and prosperity (70 pages)

Two billion people are connected to the Internet. Almost $8 trillion exchange hands each year through e-commerce. In some developed markets, about two-thirds of all businesses have a Web presence of some kind, and one-third of small and medium-sized businesses extensively use Web technologies.

The Internet compares well with the development and commercialization of electric power.

* more than 75 percent of the value added created by the Internet is in traditional industries





* the Internet accounts for, on average, 3.4 percent of GDP in the 13 countries we studied.

* If Internet consumption and expenditure were a sector, its weight in GDP would be bigger than energy, agriculture, or several other critical industries.

* The Internet’s total contribution to the GDP is bigger than the GDP of Spain or Canada, and it is growing faster than Brazil.

* the Internet accounted for 10 percent of GDP growth over the past 15 years. And its influence is expanding. Over the past five years, the Internet’s contribution to GDP growth in these countries doubled to 21 percent

* Leveraging endogenous economic growth theory, we have been able to show that Internet maturity correlates with growth in per capita GDP. Using the results of the correlation, a simulation shows that an increase in Internet maturity similar to the one experienced in mature countries over the past 15 years creates an increase in real GDP per capita of $500 on average during this period. It took the Industrial Revolution of the 19th century 50 years to achieve same results.

* McKinsey’s global SME (small medium enterprise) survey found the Internet created 2.6 jobs for every one destroyed

* by 2015, cloud computing could be a $70 to $85 billion opportunity, with the market doubling every two years.

* productivity increase of 1 percent over the next ten years in healthcare would represents $300 billion in value (over ten years).



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