Tuesday, November 1, 2011

The impact of internet on economic growth

James Manyika and Charles Roxburgh of the McKinsey Global Institute have a very interesting study about the impact of internet on economic growth and prosperity. They argue that the internet accounted for 21 percent of the GDP growth in mature economies over the past 5 years. If you include emerging economies of China, India and Brazil, then the internet contributed to 11 of GDP growth over the past five years.

Their research shows that internet accounts for, on average, 3.4 percent of GDP across the large economies that make up 70 percent of global GDP (13 countries). The total estimated worldwide contribution of internet is $1.672 trillion (2% of global GDP). If internet were a sector, then it would have a greater weight on GDP than agriculture or utilities.

Are we in an era of internet-led growth and prosperity? The study found that internet maturity like in the past 15 years correlates with an increase in real per capita GDP of $500 on average during the period. Quite interestingly, their survey also showed that 75 percent of the economic impact of the internet “accrued to traditional companies that would not define themselves as pure internet players”.

Furthermore, the study states that “while large enterprises and national economies have reaped major benefits from this technological revolution, individual consumers and small, upstart entrepreneurs have been some of the greatest beneficiaries from the Internet's empowering influence.”

What’s next?

[…]we are still in the early stages of the transformations the Internet will unleash and the opportunities it will foster. Many more technological innovations and enabling capabilities such as payments platforms are likely to emerge, while the ability to connect many more people and things and engage them more deeply will continue to expand exponentially.

As a result, governments, policy makers, and businesses must recognize and embrace the enormous opportunities the Internet can create, even as they work to address the risks to security and privacy the Internet brings. As the Internet’s evolution over the past two decades has demonstrated, such work must include helping to nurture the development of a healthy Internet ecosystem, one that boosts infrastructure and access, builds a competitive environment that benefits users and lets innovators and entrepreneurs thrive, and nurtures human capital. Together these elements can maximize the continued impact of the Internet on economic growth and prosperity.

Doing Business 2012: Nepal Edition

Doing Business 2012: Nepal
DB rank 2011 110  
DB rank 2012 (out of 183 economies) 107
Improvement in ranking (position) 3
Topic ranking
Topics DB 2012 Rank DB 2011 Rank Change in Rank
Starting a Business 100 95 -5
Dealing with Construction Permits 140 161 21
Getting Electricity 99 102 3
Registering Property 24 23 -1
Getting Credit 67 64 -3
Protecting Investors 79 74 -5
Paying Taxes 86 90 4
Trading Across Borders 162 161 -1
Enforcing Contracts 137 137 No change
Resolving Insolvency 112 113 1
Starting a Business
Indicator Nepal South Asia OECD
Procedures (number) 7 7 5
Time (days) 29 23 13
Cost (% of income per capita) 37.4 21.6 4.7
Paid-in Min. Capital (% of income per capita) 0 19.1 14.1
Dealing with Construction Permits
Indicator Nepal South Asia OECD
Procedures (number) 13 16 14
Time (days) 222 222 152
Cost (% of income per capita) 753.3 980 54.1
Getting Electricity
Indicator Nepal South Asia OECD
Procedures (number) 5 6 5
Time (days) 70 145 103
Cost (% of income per capita) 1,995.80 1,775.90 92.8
Registering Property
Indicator Nepal South Asia OECD
Procedures (number) 3 6 5
Time (days) 5 103 31
Cost (% of property value) 5 7.3 4.4
Getting Credit
Indicator Nepal South Asia OECD
Strength of legal rights index (0-10) 7 6 7
Depth of credit information index (0-6) 3 3 5
Public registry coverage (% of adults) 0 1.7 9.5
Private bureau coverage (% of adults) 0.3 5.8 63.9
Protecting Investors
Indicator Nepal South Asia OECD
Extent of disclosure index (0-10) 6 5 6
Extent of director liability index (0-10) 1 4 5
Ease of shareholder suits index (0-10) 9 6 7
Strength of investor protection index (0-10) 5.3 5 6
Paying Taxes
Indicator Nepal South Asia OECD
Payments (number per year) 34 28 13
Time (hours per year) 326 281 186
Profit tax (%) 17.2 18.6 15.4
Labor tax and contributions (%) 11.3 7.7 24
Other taxes (%) 3 18.2 3.2
Total tax rate (% profit) 31.5 44.4 42.7
Trading Across Borders
Indicator Nepal South Asia OECD
Documents to export (number) 9 8 4
Time to export (days) 41 32 11
Cost to export (US$ per container) 1,960 1,590 1,032
Documents to import (number) 9 9 5
Time to import (days) 35 33 11
Cost to import (US$ per container) 2,095 1,768 1,085
Enforcing Contracts
Indicator Nepal South Asia OECD
Time (days) 910 1,075 518
Cost (% of claim) 26.8 27.2 19.7
Procedures (number) 39 43 31
Resolving Insolvency
Indicator Nepal South Asia OECD
Time (years) 5 2.9 1.7
Cost (% of estate) 9 8 9
Recovery rate (cents on the dollar) 24.5 29 68.2

In terms of ease of doing business, Nepal ranked 107 out of 183 countries. Last year, Nepal’s ranking was 110 (non adjusted figure was 116). It is quite an improvement in terms of easing doing business in the country. Most of the push is contributed by making property registration easy, by enacting measures to protect investors and by improving enforcement of contracts.The Finance Act 2008 has reduced the fee for transferring a property from 6 percent to 4.5 percent of the property’s value.In 2011 Nepal improved oversight and monitoring in the court, speeding up the process for filing claims. This is the only reform enacted in terms of easing procedures to do business this year.

Here is how Nepal compares with the regional average:

  • Best regional performance in registering property -- ranked 24 overall (regional average is 123). In Nepal, you need 3 procedures, takes 5 days and costs 5% of property value to get a property registered. The corresponding figures for the region are 6, 103, and 7.3.

  • In terms of protecting investors, Nepal’s performance in the region was the best -- ease of shareholder suits index (0-10) is 9 (regional average is 6).

  • In terms of enforcing contracts, Nepal’s performance was the best in the region -- 39 procedures to enforce a contract (regional average is 43)

  • Lowest regional performance in cost of starting a business -- 37.4 % of income per capita (regional average is 21.6% of income per capita)

  • In the ten indicators, ranking climbed up in four of them (when compared to previous year): dealing with construction permits, getting electricity, paying taxes, and resolving insolvency.

More here