Internet access is essential to support the intensified knowledge dispersal required to assist the spread of innovations in economies and bridge the productivity gap between lagging and leading firms. Today, global value chains or GVCs are the reality of our trading environment. Almost all businesses source inputs from different parts of the world and shift their production stages from one location to another until a final product gets ready.
One of the most important things that allow firms to contribute to the global value chain is trans-border data transmission via the internet. It has empowered many small firms to set foot in the trade arena. Let’s explore the impact of the internet on the world economy.
Economic Growth and the Internet
Every country that is looking forward to improving its social and economic outcomes needs the Internet to fulfill this dream. Senior officials need to make well-informed decisions regarding internet availability. Otherwise, in the opposite scenario, any wrong decision could negatively impact productivity, innovation, future trade, and even an individual’s ability to utilize the internet for personal development. Here is how the internet has positively contributed to the world’s economy:
Introduced New Communication Channels
The internet has strengthened and opened doors to new opportunities for enhancing social wellbeing. This also contributed directly to economic benefits.
The communication channels that it launched gave rise to an open, clear, and easy exchange of knowledge, ideas, opinions, and creativity. You can develop your skills and avail of several educational opportunities through the internet.
In the field of medicine, the internet has introduced new and better ways to track disease and epidemic outbreaks. We have the recent example of a novel coronavirus outbreak and how the entire world responded to it together. All these things together result in many social benefits that further lead the way to more innovative, imaginative, and democratic societies.
Made Methods to Measure Innovation Less Detailed
The internet has given rise to a digital economy. In this new state, the traditional methods to measure the inputs and outputs of innovation are gradually becoming obsolete. You no longer need to show licenses, patents, or R&D to justify your resources committed to innovation and its results. The internet has made it crucial to record knowledge-based inputs like data and software in digital content and new business models forms.
Is the Internet Really Contributing to World’s Economic Growth?
The internet has integrated into almost every aspect of our daily lives. However, its exponential growth has not improved the world’s economy at a similarly fast pace.
Impact on Productivity Growth
In the United States, the manufacturing sector experienced a decline in productivity growth from 2% every year from 1992 – 2004 to negative 0.3% every year from 2005 – 2016. There is no denying the fact that the internet has resulted in a productivity increase too, but it is more like a one-off boost instead of a continuing increase every passing year.
Some sort of evidence also suggests that the internet can result in more harm to the economy. It has introduced new ways to procrastinate. Cyberslacking can keep you distracted easily for at least 3 work hours every day.
This does not imply that the internet is a bad thing. It is a source of joy and entertainment too. But if all of us get absorbed by its pleasures, little to no work gets done.
Developing Nations & the Internet
Developing countries find it difficult to give rise to economic growth due to the scarcity of resources. These countries benefit more from mobile phone and landline technologies instead of computational advances. Other types of innovations, like electricity, education, and running water provide better payoffs.
It is hard to ignore the fact that immediate economic growth still demands traditional resources like sound political institutions, trade between nations, etc. Therefore, it might take some time for the internet to rapidly and positively impact economic growth.
But, one cannot deny the significant role that the internet plays in enhancing global trading and bridging communication gaps. There are several brilliant internet service providers like Mediacom internet service that allow you to access the internet to coordinate and share knowledge, utilize platforms to launch and establish new ventures, and many other opportunities.