• November 20, 2001

Internet Continues To Fuel Global Economy - UN

The e-commerce revolution may have been born in the U.S.A., but try to get Amazon.com to deliver live sheep within 48 hours and see how far you get. On the other hand, if you live in Addis Ababa, Ethiopia, and have a major credit card, EthioGift.com has sheep in three sizes - "medium," "big" and "very big" - it can bring to your door for about the same delivery fee Amazon.com charges to ship a book.

According to the United Nations, EthioGift.com (which also sells flowers, cakes and liquor) is an example of the change the Internet is bringing to businesses around the world, even if the bloom is off the dot-com rose in North America.

The United Nations Conference on Trade and Development (UNCTAD) said in a report released today that information and communications technology (ICT) - much of it Internet-based - will continue to improve productivity in countries which take advantage of it.

And UNCTAD said in its "E-Commerce and Development Report 2001" that improvements in productivity have traditionally been linked to improvements in living standards.

However, UNCTAD warned, developing countries that fail to catch up to the industrialized world could see no growth in productivity.

Despite the so-called dot-com crash, UNCTAD said, many of the gains for businesses in the U.S. since 1995 have been "structural and attributable to changes induced by ICT and the Internet, through improvements in all aspects of corporate organization, production, finance, marketing and logistics."

What's more, UNCTAD said, change isn't complete even in the U.S., where many business are "still learning how to reorganize themselves in order to benefit fully from the Internet."

"Even if productivity growth does not maintain its recent phenomenal pace in the United states, the rest of the world has a lot of catching up to do in the application of ICT to business," the report said.

UNCTAD said it attempted to measure what could happen if developing nations don't attempt to keep pace with technology.

Based on estimates of cost savings available for economies increasingly based on e-commerce and related productivity fallout, UNCTAD estimated that the developed world would see welfareimprovements of $117 billion while a developing world (excluding Asia) that fails to keep pace would see a $726 million downside.

In that scenario, UNCTAD said, the Asian region would see welfare gains of $802 million, "largely attributable to the transport services sector."

However, UNCTAD said, "if developing countries were to catch up with developed countries in productivity, they would increase output, wages and welfare."

"A 1 percent productivity growth in the services sector in Asia, for example, would result in welfare gains of $12 billion, GDP growth of 0.4 percent, a wage increase of 0.4 percent and 2-percent to 3-percent growth in services exports," the report said.

Said UNCTAD, "A look at the list of the fallen and the survivors of the dot-com crisis shows that the value of ICT for development lies not so much in the share of the global economy that this sector may come to represent (undoubtedly a sizeable one), but in the changes that ICT will introduce in the functioning of enterprises across the economies that assimilate them."

The report is at www.unctad.org/en/pub/ps1ecdr01.en.htm .

--Reported By Steven Bonisteel, Newsbytes.com, http://www.newsbytes.com .

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