How much is the Internet Worth?

BCG

This week, news publication, The Economist, reprinted a chart from a report, The Internet Economy in the G-20, by the Boston Consulting Group (BCG), a global management consulting firm, which allegedly shows the contribution of the internet to the total GDP of various countries.

Of the countries taken into account in the report, Britain is in first place with an internet-to-GDP ratio of 8.3% with Korea, China, Japan, USA, India and Australia trailing behind.

BCG came to these results by measuring the total spending by consumers in each country and then calculating how much of that spending occurs online. Once they have that amount, they would then add the amount consumers pay to their Internet Service Providers (ISPs) each month. Finally they would add amounts for private investment in internet infrastructure and “net exports”.

However, financial journalist, Felix Salmon, is doubtful that the BCG is really measuring the internet in their report at all.

Salmon points out that this report is measuring basic e-commerce: items bought and sold. By doing so, it’s not measuring how many hours are spent online with other past times such as watching videos, communicating with friends, reading news or simply updating your personal information on an account you may have.

Salmon also states that there are things being measured which aren’t internet-related at all. He gives an example of e-commerce being more common in countries with a reliable postal service and thus scoring higher on the list.

In fact, in his opinion, without considering these extra factors, you end up with a limited view of the internet’s contribution to the economy.

This report is an interesting look into just how the Internet is impacting economies as it grows. As one of the authors of the report, managing director of BCG’s London office, Paul Zwillenberg says, “It’s like electricity. It’s part and parcel of the fabric of daily life. It’s touching every part of the economy.”

The full BCG report is available here: The Internet Economy in the G-20

Categories : Science & Tech  |  Tags :