The net’s sweeping impact on growth, jobs, and prosperity

New McKinsey research into the Internet economies of the G-8 nations as well as Brazil, China, and India, South Korea, and Sweden finds that the Web accounts for a significant and growing portion of global GDP.

Indeed, if measured as a sector, Internet-related consumption and expenditure is now bigger than agriculture or energy.

On average, the Internet contributes 3.4 percent to GDP in the 13 countries covered by the research—an amount the size of Spain or Canada in terms of GDP, and growing at a faster rate than that of Brazil.

These findings suggest that corporate leaders will need to sharpen their focus on the opportunities the Internet offers for new products and expanded customer reach. At the same, supply chain educators are insisting that young professionals continue to concentrate on their internet skills.

“Machinery and technology can become obsolete in a short time, but the same is true of people in the workforce. Unless you continue to grow and take on new responsibilities a person becomes stale and vulnerable,” said Dr. Theodore P. Stank, Bruce Chair of Excellence in Business, University of Tennessee.

He made this observation in a recent webcast sponsored by SCMR’s sister publication, Logistics Management.

According to McKinsey, companies should also pay attention to how quickly Internet technologies can disrupt business models by radically changing markets and driving efficiencies.

“Public-sector leaders ought to promote broad access to the Internet, since Internet usage, quality of infrastructures, and Internet expenditure, are correlated with higher growth in per capita GDP. For governments, investments in infrastructure, human capital, financial capital and business environment conditions will help strengthen their Internet supply domestic ecosystems,” said McKinsey analysts.

Research prepared by the McKinsey Global Institute and McKinsey’s Technology, Media and Telecommunications practice as part of a knowledge partnership with the e-G8 Forum, offers the first quantitative assessment of the impact of the Internet on GDP and growth, while also considering the most relevant tools governments and businesses can use to get the most benefit from the digital transformation. To assess the Internet’s contribution to the global economy, the report analyzes two primary sources of value: consumption and supply.

The report draws on a macroeconomic approach used in national accounts to calculate the contribution of GDP; a statistical econometric approach; and a microeconomic approach, analyzing the results of a survey of 4,800 small and medium-sized enterprises in a number of different countries.

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