22/06/2016 – Governments must act faster to help people and firms to make greater use of the Internet and remove regulatory barriers to digital innovation or else risk missing out on the potentially huge economic and social benefits of the digital economy, the OECD told ministers and high-level officials from almost 40 countries today.

Opening the Organisation’s 2016 Digital Economy Ministerial Meeting in Cancun, Mexico, OECD Secretary-General Angel Gurría said national legislation and policies in everything from education to investment were not keeping up with the rapid pace of digital innovation. Countries should address a slowdown in investment in internet and communication technology (ICT), extend high-speed Internet infrastructure and improve digital skills in order to narrow the gap between digital “haves” and “have-nots”.

“Too many countries are taking a 20th Century approach to a 21st Century technology that is moving faster than any other the world has seen,” Mr Gurría said. “The Internet is profoundly transforming the way we live and work, but we could be getting a lot more out of it. The longer we dither on the digital economy, the less benefit we will get out of it as societies.”

The digital transformation crossed a critical threshold in 2013 as high-speed Internet reached 80% of people in advanced economies and smartphone shipments overtook conventional mobile phones. This has unleashed an era of ubiquitous mobile computing that has accelerated e-banking, e-commerce and digital platforms for services like ride-sharing or home rental to the point where it is urgent that we act collectively to assess how to best exploit these opportunities.

Four billion people still have no Internet access, and the United Nations has made it a global goal to connect them by 2020. Too few businesses are adopting advanced digital technologies like supply chain management tools that can boost efficiency and innovation. For example, less than 30 percent of small and medium-sized enterprises (SMEs) in OECD countries use cloud computing. Prices of access to digital infrastructure and data and concerns over security risks and privacy rights are factors discouraging investment.

While 27 of the OECD’s 34 member countries have a national digital strategy, there has not been enough consultation across borders in drawing them up. More coordination could help resolve difficult issues such as security, privacy and regulatory barriers to peer-platform businesses or services like telemedicine.

The level of Internet openness will also affect the digital economy’s potential. According to the Global Commission on Internet Governance (GCIG) “One Internet” report, presented at the Ministerial, an open and accessible Internet should generate several trillions of dollars a year in economic benefits. A fragmented Internet on the other hand would weigh on investment, trade and GDP, as well as on the right to free expression and access to knowledge.

Digital economy facts and figures:

  • As of end-2015, 43% of the world’s population has regular Internet access but 4 billion people remain offline, around three-quarters of them in 20 countries, according to the GCIG. The next billion people will likely get connected via mobile devices. Denmark, Iceland and Norway are leaders in terms of connectivity, with at least 95% of adults going online in 2014.
  • Over 2001-13, ICT investment in OECD countries, including spending on infrastructure, transmission facilities and firm-level software, fell to 2.7% of GDP from 3.4% (13.5% from 14.8% of total investment.) Firm-level studies by the OECD show that to be effective, ICT spending must be accompanied by skills training and parallel investments to integrate advanced digital technologies into business models and processes.
  • As of 2014, almost 95% of businesses in OECD countries have broadband, 76% have a website and 50% carry out e-commerce. Cloud computing is used by 40% of businesses with over 250 employees but by less than 30% of SMEs. This is a concern since a slowdown in the spread of new technologies and knowledge from frontier to lagging firms may be a source of today’s productivity slowdown. OECD studies show that firms using data and data analytics, e.g. via sensors on machinery, can boost labour productivity by 5-10%.
  • There is an average of 28.8 fixed broadband subscriptions per 100 inhabitants in OECD countries, ranging from 50.5 per 100 in Switzerland to 11.2 per 100 in Mexico.
  • There is an average of 85.5 mobile broadband subscriptions per 100 inhabitants in OECD countries, ranging from 138.8 per 100 in Finland to 34.4 per 100 in Hungary.
  • The share of fibre connections in fixed broadband subscriptions in OECD countries is 17.9%, versus 31.5% for cable and 47.6% for DSL. The share of fibre ranges from 72.6% of broadband connections in Japan to 0.2% in Greece. (Source- OECD)

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