Tuesday, February 25, 2014

4.3 Billion People Do Not Have Internet Access

Of the world’s seven billion people, 2.7 billion have access to the Internet, while 4.3 billion do not. 

Most of them live in developing countries.

Though it still is possible to argue about whether the high adoption of Internet access and higher degree of economic development are causal or correlated, even those who might tend to think high Internet access and higher economic development are correlated, not causal, might support fastest possible adoption of Internet access everywhere, for the same reasons it was deemed important to provide voice communications to everyone.

If developing countries were to catch up with levels of internet access in developed economies today, they would reach a penetration level of around 75 percent, more than tripling the number of present “global south” Internet users from 800 million to three billion.

Of the new global south Internet users, some 700 million would be in Africa, 200 million in Latin America and 1.3 billion in Asia.

Public policy makers can help through initiatives that focus on reducing costs and administrative barriers for operators, strengthening competitive incentives for operators to expand coverage and the services they offer, and ensuring that consumers face affordable prices, the study suggests.

Expanded Internet access in developing countries to levels seen today in developed economies could increase productivity by as much as 25 percent in developed economies,  generating $2.2 trillion in gross domestic product,  and more than 140 million new jobs, lifting 160 million people out of poverty, according to a new study by Deloitte, and sponsored by Facebook.

Deloitte estimates that if developing regions achieved internet access levels seen today in
developed regions, their long run productivity could increase by about 25%. This effect is most pronounced in regions currently characterised by lower current levels of productivity or lower penetration rates.

In India, long run productivity could increase by 31 percent, while Africa productivity could grow 29 percent.

In South and East Asia, productivity increases of about 26 percent is possible. Productivity in Latin America could increase by 13 percent.

Mobile and internet connectivity in the agricultural sector would improve productivity by providing farmers with information on weather conditions, disease control and new methods of maximizing crop yield, as well as provide livestock tracking.

Access to market and pricing information through the internet and mobile phones enables small-scale farmers to access markets directly instead of through costly intermediaries. That could increase profits for farmers by up to 33 percent, the report suggests.

In the Kerala region of India, the use of mobile phones to track weather conditions and compare
wholesale prices led to an eight percent increase in profits for fishermen, along with a four percent drop in prices for consumers, Deloitte says.

These gains in productivity might benefit up to 360 million individuals, many of them small-scale subsistence farmers.

By reducing transaction costs, the internet reduces barriers to market entry and allows small and medium-sized businesses to reach a broader market, as well.

Smaller businesses with Internet access in countries such as Vietnam, Mexico, Malaysia, Argentina, Turkey, Taiwan, Hungary and Morocco all experienced on average an
11 percent productivity gain due to Internet-accessed applications, the study suggests.

A World Bank study suggests developing economies with a 10 percent increase in
broadband penetration can increase growth in per capita gross domestic product by 1.3 percent.

Deloitte estimates that an expansion in internet access is worth between $450 and $630 per year to individuals in the developing world, an average increase in per capita incomes of
about 15 percent.

In Africa, Internet access could grow per capita income by 21 percent. In India, Internet access could increase per capita income by 29 percent.

Deloitte estimates that increasing internet access to levels experienced in developed countries can increase GDP by up to $2.2 trillion (an increase of 15 percent), with South and East Asia and India each gaining about $0.6 trillion in additional economic activity.

Output in Africa could increase by over $0.5 trillion. Across the developing world, the GDP growth rate would be boosted over 72 percent. In India GDP growth rates have the potential to double, in Africa to grow by 92 percent and in South and East Asia to rise by 75 percent.

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