Report Predicts Massive Growth of Global Digital Economy

BOSTON—The Boston Consulting Group has just released a highly referenced report that provides a "comprehensive analysis of how the scale and speed of Internet-driven economic growth is changing countries, cultures, and companies around the world." In a nutshell, according to the report, growth will not only be explosive, but exponentially so, with the digital economies of the developing G-20 countries alone expected to double by 2016. Though the report, which was three years in the making, does not address adult entertainment per se, it does tackle the extent to which consumers worldwide have come to consider the internet as an indispensible component of their social and shopping lives. Also, while America remains a significant and sophisticated source of ecommerce and digital innovation, other countries rushing to catch up in terms of internet penetration and money spent getting online and buying things online will see the gap close at an increasingly faster pace. "By 2016," the authors write, "there will be 3 billion internet users globally—almost half the world’s population. The internet economy will reach $4.2 trillion in the G-20 economies. If it were a national economy, the internet economy would rank in the world’s top five, behind only the U.S., China, Japan, and India, and ahead of Germany. Across the G-20, it already amounted to 4.1 percent of GDP, or $2.3 trillion, in 2010—surpassing the economies of Italy and Brazil. The internet is contributing up to 8 percent of GDP in some economies, powering growth, and creating jobs." One of the most interesting aspects of their findings, according to its authors, is the rate at which the exponential growth is increasing. To drive its significance home, they refer to an ancient fable recounted by Ray Kurzweil in his book, The Age of Spiritual Machines. "It tells of a rich ruler who agrees to reward an enterprising subject starting with one grain of rice on the first square of a chessboard, then doubling the number of grains on each of the succeeding 63 squares," they write. "The ruler thinks he’s getting off easy, and by the thirty-second square, he owes a mound weighing 100,000 kilograms, a large but manageable amount. It’s in the second half of the chessboard that the real fun starts. Quickly, 100,000 becomes 400,000, then 1.6 million, and keeps growing. By the sixty-fourth square, the ruler owes his subject 461 billion metric tons, more than 4 billion times as much as on the first half of the chessboard, and about 1,000 times global rice production in 2010." The Internet, they say, has moved into the second half of the chessboard. There is nary a country, industry or individual that can "ignore" the internet and its "myriad" opportunities, despite the challenges that remain. "There are threats too, some misunderstood, and policymakers and regulators alike are challenged to make the right choices in a fast-moving environment," the authors warn. "As is often the case with fast-paced change and complex issues, many governments are still trying to determine what their role should be." Likewise, they write, "Some small and medium enterprises (SMEs)—the growth engine of most economies—have been uneven in their uptake, but they are moving online in increasing numbers and with an increasingly intense commitment." Not everyone thinks the report is without a few flaws. CNNMoney, for instance, calls the authors out for using some "slightly silly metrics to measure how consumers value the internet," but overall the reception of the report, which basically says, "you ain't seen nothin' yet," seems to be a collective cheer: "Good. We need the growth, we need the jobs, and maybe, just maybe, the internet will be the engine that keeps the global economy from collapsing." G-20 economies include the European Union and these 19 countries: Argentina Australia Brazil Canada China France Germany India Indonesia Italy Japan Mexico Russia Saudi Arabia South Africa South Korea Turkey United Kingdom United States