Five ways technology can help the economy

At a time of slowed growth and continued volatility, many countries are looking for policies that will stimulate growth and create new jobs. Information communications technology (ICT) is not only one of the fastest growing industries – directly creating millions of jobs – but it is also an important enabler of innovation and development.

The number of mobile subscriptions (6.8 billion) is approaching global population figures, with 40% of people in the world already online. In this new environment, the competitiveness of economies depends on their ability to leverage new technologies. Here are the five common economic effects of ICT.

1. Direct job creation

The ICT sector is, and is expected to remain, one of the largest employers. In the US alone, computer and information technology jobs are expected to grow by 22% up to 2020, creating 758,800 new jobs. In Australia, building and running the new super-fast National Broadband Network will support 25,000 jobs annually. Naturally, the growth in different segments is uneven. In the US, for each job in the high-tech industry, five additional jobs, on average, are created in other sectors. In 2013, the global tech market will grow by 8%, creating jobs, salaries and a widening range of services and products.  

 2. Contribution to GDP growth

Findings from various countries confirm the positive effect of ICT on growth. For example, a 10% increase in broadband penetration is associated with a 1.4% increase in GDP growth in emerging markets. In China, this number can reach 2.5%. The doubling of mobile data use caused by the increase in 3G connections boosts GDP per capita growth rate by 0.5% globally. The Internet accounts for 3.4% of overall GDP in some economies. Most of this effect is driven by e-commerce – people advertising and selling goods online.

 3. Emergence of new services and industries

Numerous public services have become available online and through mobile phones. The transition to cloud computing is one of the key trends for modernization. The government of Moldova is one of the first countries in Eastern Europe and Central Asia to shift its government IT infrastructure into the cloud and launch mobile and e-services for citizens and businesses. ICT has enabled the emergence of a completely new sector: the app industry. Research shows that Facebook apps alone created over 182,000 jobs in 2011, and that the aggregate value of the Facebook app economy exceeds $$12 billion.

 4. Workforce transformation

New “microwork” platforms, developed by companies like oDesk, Amazon and Samasource, help to divide tasks into small components that can then be outsourced to contract workers. The contractors are often based in emerging economies. Microwork platforms allow entrepreneurs to significantly cut costs and get access to qualified workers. In 2012, oDesk alone had over 3 million registered contractors who performed 1.5 million tasks. This trend had spillover effects on other industries, such as online payment systems. ICT has also contributed to the rise of entrepreneurship, making it much easier for self-starters to access best practices, legal and regulatory information, marketing and investment resources.

 5. Business innovation

In OECD countries, more than 95% of businesses have an online presence. The Internet provides them with new ways of reaching out to customers and competing for market share. Over the past few years, social media has established itself as a powerful marketing tool. ICT tools employed within companies help to streamline business processes and improve efficiency. The unprecedented explosion of connected devices throughout the world has created new ways for businesses to serve their customers.

Author: Elena Kvochko is Manager of Information Technology Industry at the World Economic Forum

Image: REUTERS