Internet economy of the G-20 nations will grow more than 10% a year through 2016, according to the Boston Consulting Group (BGC) report published as part of its Connected World Series.
The BGC reports says the internet economy will grow at approximately 8% annually in the developed markets of G-20, whereas in developing markers, it will grow more than twice as fast—at an average annual rate of 18%. Countries like Argentina and India will be the fastest growing nations with 24 and 23 per cent respectively a year. The two developed markets like Italy and the UK will grow about 12 percent and 11 percent per a year respectively.
The report also projected that internet economy will contribute a total of $4.2 trillion to the total G-20 GDP in 2016.
David Dean, BGC senior partner and co-author of the report said: “If it were a national economy, it would rank in the world’s top five, only behind the US, China, India and Japan, and ahead of Germany.”
In 2010, the UK witnessed the highest internet economy growth, followed by South Korea (7.3%) and China (5.5%).
According to its survey, internet economy can be bigger than mining, at least in India and also revealed that 71% of those who participated in the survey would let go alcohol for internet access. This driving participation in the country would rise the internet industry to 5.6 percent of country’s GDP.
“China and India stand out for their enormous internet related exports. China in goods and India in service. In retail alone, G-20 consumers researched online and then purchased offline more than $1.3 trillion in goods in 2010-the equivalent of 7.8% of consumer spend or more than $900 per connected consumer,” the survey highlighted about the world’s two biggest emerging economies.
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% and only slightly exceeded the emerging markets average of 3.6%.
The report projects that by 2016, internet economy within the EU and India will advance to fourth and fifth places respectively, whereas Japan and US will grow slowly and would drop down to sixth and seventh position.
Small and Large Enterprise Growth
Presently, countries like India, China, Germany, Turkey and France are largely working on Information and Communication Technology (ICT) – telecommunication networks and personal computer technology – have the capacity to take businesses globally.
E-Governance, considered as the broader concept, is involved in both public and private sectors. It helps managers and supervisors to manage, plan, organise and execute work effectively. It also refers to innovative use of ICT that helps in governing small and medium enterprises (SME).
In many developing and developed countries, SMEs have actively engaged in internet business and witnessed three years of sales growth with 22% compared to SMEs with no internet business.
“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,” Paul Zwillenberg, BCG partner and co-author of report, said.
The Rise of Internet Economy
The BCG study assumes that by 2016, half the population of the world would go online and among those out of 5 would access internet via smart phone.
UK already has been accounted as one of the largest online economies in the world, as the web currently holds approximately 8% of the GDP.
Internet economy accounted only 4% of G-20 economies in 2010, but BCG researchers are quite confident that by 2016 the growth rate would be more integrated with wider economic picture.
“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 co-author of the report.
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.”
The internet business has now become very essential for country’s economy because of more and more consumers turning to internet for product buying. Most traditional business is moving towards internet which also means a loss.
David Dean, Internet Expert in BCG says, “Products like apps and music downloads also create a new business.”
Also at the same time, businesses are now using internet on a larger scale for business trade and new product development. The study said it was complemented by export of good through internet for organizing; investing in the expansion of internet infrastructure, as well as it is being to reach people.
Boston Consulting Group is a global management consulting firm and is the world’s leading advisor for business strategy. Founded in 1963, it is a private company with 75 offices around 42 countries.
Sources: Marktwire, Economic Times, thelocal.de, the telegraph