Internet Access Could Grow Global South GDP 25 Percent

By Gary Kim February 25, 2014

Expanded Internet access in developing countries to levels seen today in developed economies could increase productivity by as much as 25 percent, 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 percent. 

This effect is most pronounced in regions currently characterized 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 are 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 pro?ts 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 pro?ts for ?shermen, along with a four percent drop in prices for consumers, Deloitte says.

These gains in productivity might bene?t 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.

Edited by Cassandra Tucker

Contributing Editor

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