The internet economy accounts for a bigger slice of UK’s national output than any other country, as the UK evoves into a nation of “digital shopkeepers”.
In 2010, the internet economy in the UK accounted for the 8.3 per cent of national GDP, followed by South Korea (7.3 per cent) and China (5.5 per cent). In contrast, the internet economy in the US accounted for 4.7 per cent of GDP - the same as the federal government.
In each of the top three countries, the internet economy would rank among the top six industry sectors. In the UK, for example, the internet’s contribution to GDP is greater than that of construction and education, according to the Boston Consulting Group report “The $4.2 Trillion Opportunity”.
The report said that retail represents almost one-third of total GDP in the G20, and online retail contributes a significant part of that, adding: “Nowhere is the impact more apparent than in the UK. Thanks in part to high internet penetration, efficient delivery infrastructure, a competitive retail market, and high credit-card usage, the UK has become a nation of digital shopkeepers, to paraphrase Adam Smith.”
But various barriers hold back the EU as a whole, the world’s biggest single market, when it comes to cross-border e-commerce.
The report said Argentina and India’s internet economies will grow the fastest, at 24 per cent and 23 per cent a year, respectively, while the leading developed markets - Italy and the UK - will grow at 12 per cent and 11 per cent a year, respectively.
The report calculates that the internet economy will contribute a total of $4.2tn to the G-20’s total GDP in 2016. This means that if the internet were a national economy, it would rank in the world’s top five, behind only the US, China, India, and Japan.
“Policymakers often cite GDP growth rates of around 10 per cent per year in the developing markets, but they look past similar, or even higher, rates close to home”, said David Dean, BCG senior partner and a co-author of the report, in a statement.