McKinsey Global Institute
Measuring the Net's growth dividend
The Internet is a vast mosaic of economic activity, ranging from millions of daily online transactions and communications to smartphone downloads of TV shows. Little is known, however, about how the Net in its entirety contributes to global growth, productivity, and employment. New McKinsey research examined the Internet economies of the G8 nations (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States), as well as Brazil, China, India, South Korea, and Sweden. It found that the Internet accounts for a significant and growing portion of global GDP.
An extensive study by the McKinsey Global Institute (MGI)—Internet matters: The Net’s sweeping impact on growth, jobs, and prosperity—includes these findings:
- The Internet accounts for 3.4 percent of overall GDP in the 13 nations studied. More than half of that impact arises from private consumption, primarily online purchases and advertising. An additional 29 percent flows from investments by private-sector companies in servers, software, and communications equipment. The Internet economy, now larger than that of Spain, surpasses global industry sectors such as agriculture and energy.
- The Internet is a critical element of economic progress, pushing a significant portion of economic growth. Both our macroeconomic approach and our statistical approach show that in the mature countries we studied, the Internet accounted for 10 percent of GDP over the 15-year period from 1995 to 2009, and its influence is expanding. Over the last five years of that period, its contribution to GDP growth in these countries doubled, to 21 percent. If we look at the 13 countries in our scope, the Internet contributed 7 percent of growth from 1995 to 2009 and 11 percent from 2004 to 2009 (exhibit). In the global Net’s growing ecosystem of suppliers, US companies play leading roles in key sectors. China and India rank among the fast-growing players in the Internet’s global supply chain.
- Most of the economic value the Internet creates falls outside of the technology sector: companies in more traditional industries capture 75 percent of the benefits. The Internet is also a catalyst for generating jobs. Among 4,800 small and midsize enterprises surveyed, it created 2.6 of them for each lost to technology-related efficiencies.
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. Public-sector leaders ought to promote broad access to the Net, since Internet usage, quality of infrastructures, and Internet expenditure are correlated with higher growth in GDP per capita. Companies should also pay attention to how quickly Internet technologies can disrupt business models by radically changing markets and driving efficiencies. For governments, investments in infrastructure, human capital, financial capital, and business-environment conditions will help strengthen their Internet supply ecosystems.