The Economic Impact of Internet in The Philippines: Red Christian Palustre

3/13/2014
Mr. Nehemiah Gabayno
RED CHRISTIAN PALUSTRE
THE ECONOMIC IMPACT OF INTERNET IN

THE PHILIPPINES
As based on a study conducted in India and U.S.
THE INTERNET AND ECONOMIC GROWTH
The Internet is a vast mosaic of economic activity, ranging from millions of daily online
transactions and communications to smartphone downloads of TV shows. But little is
known about how the web in its entirety contributes to global growth, productivity, and
employment (Rausas et al., 2011).
According to the New McKinsey research (2011) into the Internet economies of
the G-8 nations as well as Brazil, China, 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 researchan amount the size of Spain or Canada in terms of GDP, and
growing at a faster rate than that of Brazil.
The Internet's impact on global growth is rising rapidly. The Internet accounted
for 21 percent of GDP growth over the last five years among the developed countries
MGI studied, a sharp acceleration from the 10 percent contribution over 15 years. Most
of the economic value created by the Internet falls outside of the technology sector, with
75 percent of the benefits captured by companies in more traditional industries. The
Internet is also a catalyst for job creation. Among 4,800 small and medium-size
enterprises surveyed, the Internet created 2.6 jobs for each lost to technology-related
efficiencies (Rausas et al., 2011).
There is a growing wave of innovation as entrepreneurs and large corporations
alike launch Web-based ventures, from e-commerce sites and digital entertainment
platforms to mobile health technologies and online educational content (Macharia,
2013).
Macharia (2013) also said that the key areas where the Internet will generate
economic growth and social transformation include; financial services, education,
health, retail, agriculture and government.
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If more people are connected to the internet, it can move the economy faster and
even increase the countrys growth (Stephen Thomas Misa, Cisco Systems Philippines
Country General Manager).
It will put more armed workers or people, especially in the countryside. [They]
will be armed with greater information for agriculture, manufacturing, trade, business,
selling their products and services across the world, and not just limiting themselves in
the market, he said.
The increase in the number of Internet users can have a one percent increase on
the GDP of the economy and this is why it is very important for countries to have a
national broadband infrastructure, made available at a lower cost to the Filipino people,
Misa said.
If you think about the difference between one person who has Google and
another who doesnt, its really a big difference, Tom Koenig, Cisco Systems Mobility
Business Development Manager said.
The Internet helps people improve their productivity in contributing to the
countrys economic skilled labor force by giving them information that educates them,
he said.
In the Philippines, however, Misa said that only 33 percent of Filipinos currently
have Internet access. The speed of Internet in the country was also near the bottom of
the charts when compared with neighboring countries, he said. He however said that
there is nothing stopping the country from being at par with other countries in Internet
speed. What is needed is a unified plan to provide Internet connectivity to the entire
country that can deliver it to improving its economy, he said.
.
INTERNET AND GDP (GROSS-DOMESTIC PRODUCT)
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- The Internet has 3.4 % share of total GDP of the 13 countries that were studied. The
share of the Internet in India with respect to its GDP is 3.2%,fairly close to the global
average but still lower than it.
- Private consumption online is driven by purchase of goods and services by consumers
through the Internet. India and China have the lowest Private consumption among
the 13 countries.
- Trade Balance is the ( total export of goods, services and internet equipment
along with B2C and B2B e-commerce) minus ( internet related imports). The
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impact of the internet in India was powered by strong exports and contributed 47% to
the Internets share in Indias GDP.
- The spending by the government is the Public expenditure in the chart and you will
see that the government spending accounts for only 5% of the Internet generated
GDP.
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3/13/2014

Mr. Nehemiah Gabayno

RED CHRISTIAN PALUSTRE

THE ECONOMIC IMPACT OF INTERNET IN

As based on a study conducted in India and U.S.

THE INTERNET AND ECONOMIC GROWTH

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