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Internet adds 5 and 3 percent to India and China’s GDP

May 25, 2011

Entrepreneurship, efficient international collaboration, lower costs, transparency, and the transcendence of localizing new global ideas immediately is why the internet is being plugged as the medium which has added 5 percent to India’s and 3 percent to China’s GDP growth in the past 5 years. It has also contributed  3.2 percent to India’s GDP in 2009  and 2.6 percent to China’s GDP in the same year.

The new statistics are part of a report by McKinsey entitled ‘The Internet Matters: The net’s sweeping impact on jobs, growth and prosperity“. The report analyses the growth of the internet across 13 major countries including China and India, two of the largest internet users worldwide. According to the report there are 200 million internet users worldwide and the internet accounts for 3.4 percent of GDP growth across those 13 countries and almost US$8 trillion exchange hands each year through e-commerce. The Internet has transformed the way we live, the way we work, the way we socialize and meet, and the way our countries develop and grow. In two decades, the Internet has changed from a network for researchers and geeks to a day-to-day reality for billions of people.

Contrasting with popular belief that the internet seeks to take away jobs, the report states that the internet created 2.6 jobs for every 1 job lost. Furthermore, the Internet bridges vast distances and has made the world flatter by allowing instant access to an almost endless stream of information that can be immediately brought into play. Its impact on economic wealth reaches well beyond pure players in the industry. Indeed, the brunt of its economic contribution derives from established industries that, in the shadow of the Internet, have become more productive, have created more jobs, have increased standards of living, and have contributed more to real growth after all,  75 percent of internet impact arises from traditional industries that don’t define themselves as pure Internet players.

The web has its highest impact on small and medium businesses who’ve seen a 10 percent rise in productivity from internet use. Further, small and medium businesses that rely heavily on the internet have doubled exports. Astonishingly, if the Internet were considered as its own sector, its contribution to global GDP would outweigh that of energy, agriculture, mining, and other industries.

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