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Report| McKinsey Global Institute

The great transformer: The impact of the Internet on economic growth and prosperity

October 2011 | byJames Manyika, Charles Roxburgh

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In a paper prepared for the Foreign Commonwealth Office International Cyber Conference, MGI examines what more can be done to fully capture the benefits of the Internet.

The Internet is changing the way we work, socialize, create and share information, and organize the flow of people, ideas, and things around the globe. Yet the magnitude of this transformation is still underappreciated. The Internet accounted for 21 percent of the GDP growth in mature economies over the past 5 years. In that time, we went from a few thousand students accessing Facebook to more than 800 million users around the world, including many leading firms, who regularly update their pages and share content. While large enterprises and national economies have reaped major benefits from this technological revolution, individual consumers and small, upstart entrepreneurs have been some of the greatest beneficiaries from the Internet’s empowering influence. If Internet were a sector, it would have a greater weight in GDP than agriculture or utilities.

And yet we are still in the early stages of the transformations the Internet will unleash and the opportunities it will foster. Many more technological innovations and enabling capabilities such as payments platforms are likely to emerge, while the ability to connect many more people and things and engage them more deeply will continue to expand exponentially.

As a result, governments, policy makers, and businesses must recognize and embrace the enormous opportunities the Internet can create, even as they work to address the risks to security and privacy the Internet brings. As the Internet’s evolution over the past two decades has demonstrated, such work must include helping to nurture the development of a healthy Internet ecosystem, one that boosts infrastructure and access, builds a competitive environment that benefits users and lets innovators and entrepreneurs thrive, and nurtures human capital. Together these elements can maximize the continued impact of the Internet on economic growth and prosperity

McKinsey Global Institute

McKinsey Global Institute

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