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How Internet is creating jobs worldwide

Last updated on: May 27, 2011 13:39 IST

How Internet is creating jobs worldwide

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Internet, which has transformed the way we live, work, shop and socialize, is also emerging as a powerful catalyst for job creation, says a survey by global management consultancy McKinsey.

According to a report by McKinsey Global Institute, the Internet has a sweeping impact on growth, prosperity and has 'created 2.6 jobs for every job that it has destroyed'.

"The Internet is a contributor to net job creation," McKinsey Global Institute said in its report, titled, 'Internet matters: The Net's Sweeping Impact on Growth, Jobs and Prosperity'.

"While jobs have been destroyed by the emergence of Internet, many more have been created during the same period, including jobs directly linked to the Internet, such as software engineers and online marketers as well as more traditional jobs -- logistics to deliver online purchases," it added.

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Image: Internet is a contributor to net job creation, says McKinsey.

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How Internet is creating jobs worldwide

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McKinsey examined the impact of the Internet on 13 countries - the members of the G8, Brazil, China, India, South Korea and Sweden.

In the 13 countries that the survey covered, the Internet contributed an average 3.4 per cent to the GDP, more than agriculture, energy and other better established industries.

Around two billion people are now connected to the Internet and the number is growing by 200 million each year.

India and China are strengthening their position in the global Internet ecosystem rapidly and are showing growth rates of more than 20 per cent in terms of new connections.

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Image: Two billion are connected to Internet.

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Internet users worldwide: 2 billion.

Internet accounts for: 3.4 per cent of GDP in 13 countries.

Internet accounts for: 21 per cent of GDP growth in the last five years in mature countries.

Internet has created 2.6 jobs for every job lost.

75 per cent of Internet impact arises from traditional industries.

10 per cent increase in productivity for small and medium industries from Internet usage.

Small and medium industries heavily using web technology grow and export twice as much as others.

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Image: Internet has created 2.6 jobs for every job lost.

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Internet ecosystem

The United States leads the global Internet supply ecosystem. The United States captures more than 30 per cent of global Internet revenues and more than 40 per cent of net income.

It is the country with the most diverse structure within the global ecosystem among the 13 analyzed in this research, garnering relatively equal contributions from hardware, software and services and telecommunications.

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Image: US leads the global Internet supply ecosystem.

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The United Kingdom and Sweden are changing the game.

These two countries have leveraged very strong Internet usage across the board to gain greater importance within the global Internet ecosystem.

This move is helped by the strength and strong performance of their telecom operators.

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Image: Sweden is changing the game.

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India and China are strengthening their position in the global Internet ecosystem rapidly.

Both countries show growth rates of more than 20 per cent.

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Image: India is showing growth rates of more than 20 per cent.

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France, Canada, and Germany have strong Internet usage.

All three could leverage this usage to increase their presence in the global supply ecosystem.

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Image: Canada has a strong Internet usage.

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South Korea is rapidly accelerating its influence on the Internet economy at a faster rate than Japan.

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Image: Influence of Internet on South Korean economy is growing.

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Internet contribution to GDP in 13 countries, 2009

i) Private consumption: $736 billion

Share of total contribution: 53 per cent

Share of GDP: 1.8 per cent

ii) Private investment: $395 billion

Share of total contribution: 29 per cent

Share of GDP: 1.0 per cent

iii) Public expenditure: $209 billion

Share of total contribution: 15 per cent

Share of GDP: 0.5 per cent

iv) Trade balance: $36 billion

Share of total contribution: 3 per cent

Share of GDP: 0.1 per cent

v) Total contribution: $1,326 billlion

Share of total contribution: 100 per cent

Share of GDP: 3.4 per cent

Private consumption: This is the total consumption of services and good via Internet. Private consumption is primarily driven by online purchases of good and services. In the US, users made purchases worth $250 billion in 2009.

Private investment: Private-sector investment in Internet-related technologies accounts for 29 per cent of Internet's total GDP contribution.

Public expenditure: Investment made by government, such as software, hardware and telecoms.

Trade balance: Exports of goods, services and Internet equipment, plus B2B and B2B e-commerce.

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Image: Internet's contribution to prosperity is increasing.

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If Internet were a sector, it would have a greater weight in GDP than agriculture or education.

Real estate's contribution: 11 per cent of GDP in 2009

Financial services contribution: 6.4 per cent of GDP in 2009

Transport sector's contribution: 3.9 per cent of GDP in 2009

Internet's contribution: 3.4 per cent of GDP in 2009

Education's contribution: 3.0 per cent of GDP in 2009

Agriculture's contribution: 2.2 per cent of GDP in 2009

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Image: Internet contributes more to GDP than education.

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Breakdown of contribution country-wise

Sweden:

Private consumption: 46 per cent

Private investment: 26 per cent

Public expenditure: 11 per cent

Trade balance: 17 per cent

Total: 6.3 per cent

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Image: Private consumption contributes 46 per cent in Sweden.

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The United Kingdom:

Private consumption: 58 per cent

Private investment: 25 per cent

Public expenditure: 20 per cent

Trade balance: N/A

Total: 5.4 per cent

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Image: Private consumption contributes 58 per cent in the UK.

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The United States:

Private consumption: 60 per cent

Private investment: 24 per cent

Public expenditure: 20 per cent

Trade balance: N/A

Total: 3.8 per cent

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Image: Private consumption contributes 60 per cent in the US.

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India

Private consumption: 20 per cent

Private investment: 28 per cent

Public expenditure: 5 per cent

Trade balance: 47

Total: 3.2 per cent

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Image: Private consumption contributes 20 per cent in India.

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China

Private consumption: 32 per cent

Private investment: 23 per cent

Public expenditure: 6 per cent

Trade balance: 39

Total: 2.6 per cent

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Image: Private consumption contributes 32 per cent in China.

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Internet indicators country-wise

United States:

Human capital: 83 points

Financial capital: 84 points

Infrastructure: 60 points

Business environment: 76 points

The United States has historically produced and attracted a large quantity and quality of trained professionals, which is why it has an edge over others when it comes to human capital.

Access to appropriate funding, like loans and investments, helps the US in financial capital ranking.

Unlike many other countries, the US not only has an excellent Internet infrastructure, it also has a positive business environment.

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Image: Talent pool and infrastructure helps the US.

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Sweden

Human capital: 54 points

Financial capital: 41 points

Infrastructure: 60 points

Business environment: 92 points

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Image: Sweden scores 54 points in human capital.

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Canada

Human capital: 55 points

Financial capital: 26 points

Infrastructure: 60 points

Business environment: 81 points

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Image: Canada scores 55 points in human capital.

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The United Kingdom

Human capital: 53 points

Financial capital: 26 points

Infrastructure: 60 points

Business environment: 75 points

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Image: The UK scores 53 points in human capital.

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China

Human capital: 53 points

Financial capital: 20 points

Infrastructure: 46 points

Business environment: 64 points

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Image: China scores 53 points in human capital.

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India

Human capital: 31 points

Financial capital: 21 points

Infrastructure: 26 points

Business environment: 51 points


Image: India scores 31 points in human capital.

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