Liz Gannes

Recent Posts by Liz Gannes

Sad About Regular Economic Growth? Try the Internet Economy!

The G-20 Internet economy will be worth $4.2 trillion by 2016, or 5.3 percent of those nations’ combined GDP, and almost double what it was last year.

That’s according to a newly released report from the Boston Consulting Group based on three years of research including economic estimates and surveys of businesses and consumers.

The Internet economy in G-20 developed markets will grow at an annual rate of 8 percent, outpacing just about every other traditional economic sector, BCG projected. Meanwhile, in developing markets the average annual growth rate will be 18 percent.

All told, the Internet economy is set to add 32 million jobs between 2010 and 2016.

BCG noted, “Policymakers cite with envy the GDP growth rates of emerging markets, but they look past similar rates we have in our own backyard, with the Internet economy growing at a healthy 6.5% per year in the U.S. At the same time, the U.S. risks losing some of its competitive edge unless it increases its growth rate, which is below the average of other developed nations in the G-20.”

A few more interesting observations:

  • The U.K. is way out in front when it comes to the Internet’s portion of national GDP. That was 8.3 percent last year, estimated to grow to 12.4 percent in 2016 — thanks in large part to a thriving e-commerce market. Check out the chart above — the U.K. bar shoots out beyond the rest of the G-20.
  • Developing Internet markets tend to be extremely social. “People are just coming online in rapid numbers, and moving straight to the latest tools and technology,” said report co-author Paul Zwillenberg. “Social is today what AOL was 10-15 years ago in the U.S.”
  • Also, BCG did one of those cute survey things where they ask people how much they’d want to be paid to live without Internet access. U.S. respondents said $2,548 per year, in France $4,453 and in Turkey $323. BCG noted that in most cases people are paying much less for Internet access than they say it is worth to them.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work