INFORMATION ECONOMY REPORT 2009 Trends and Outlook in Turbulent Times Torbjörn Fredriksson (torbjorn.fredriksson@unctad.org) Manchester, 23 October 2009

Content of the Report Chapter I: Monitoring Connectivity for Development Digital divide continues to narrow except in the case of braodband Chapter II: Making Use of ICTs in the Business Sector Huge gaps in ICT use, both between and within countries Chapter III: Evolving Patterns in ICT Trade ICT goods exports fall sharply in crisis while ICT services are resilient

Fixed telephony stagnant or declining Fixed telephone lines per 100 inhabitants, 2003-2008, by country group

Mobile growth continues Worldwide subscriptions surpassed 4 billion in 2008 Mobile subscriptions per 100 inhabitants, 2003-2008, by country group

The top 20 most dynamic economies by increased levels of mobile penetration 2003-2008 UK : 122 (up from 89 in 2003) * 2003-2007

Implications of the Economic Crisis Mobile telecoms resilient Continued growth in emerging economies India: almost 100 million new subscribers Jan-July 2009 Mobile has become the most preferred ICT tool Africa: 20 times more mobile subs. than fixed lines New mobile applications emerging Investors in North and South see growth prospects Strong interest in expanding mobile broadband ITU’s forecast for 2009: 4.6 billion subscriptions Outlook remains positive

Internet users keep expanding Now 1 Internet users keep expanding Now 1.4 billion users; highest growth in the South Internet users per 100 inhabitants, 2003-2008, by country group

The top 20 most dynamic economies by increased levels of Internet penetration 2003-2008 UK : 56 (up from 45 in 2007) * 2003-2007

Widening divide in broadband connectivity 400 million fixed broadband subscribers Broadband subscriptions per 100 inhabitants, 2003-2008, by country group 8 times higher penetration in developed than in developing economies… … 200 times higher than in LDCs!

The top 20 most dynamic economies in terms of increased broadband penetration 2003-2008 UK no 11 * 2003-2007

ICT diffusion is improving in LDCs Tenfold increase in mobile subscriptions, 2003-2008 Subscriptions or users per 100 inhabitants, 2003-2008 Logarithmic scale

Africa lags behind in broadband connectivity High concentration: five African countries account for 90% of all broadband subscriptions. Slow: broadband speeds often low in existing networks. Costly: 14 of the world’s 20 highest access fees in Sub-Saharan Africa.

…and has the least international bandwidth Bits per capita, 2008 Source: UNCTAD, based on World Bank and national data

Limited broadband access hampers development Sufficient national and international bandwidth needed for many applications that promote development Telehealth Distance learning Disaster management E-government applications E-commerce Exports of IT and ICT-enabled services

Implications of the Economic Crisis ICT goods badly affected Some network upgrades have been postponed General decline in ICT spending Semiconductors and consumer electronics in particular Smart phones the main bright spot Sharp declines in ICT goods trade Medium to long term prospects: companies will continue to upgrade their ICT systems, as this is essential for their competitiveness.

China shows biggest recovery Sharp declines in ICT goods trade Monthly ICT goods exports by top 6 exporters (Aug-07: 100) China shows biggest recovery

Further increase in Asia’s role as a result Further increase in Asia’s role as a result? Largest gains/losses in market shares of ICT goods exports, 1998–2007 Developing Asia’s share up from 35% to 54% China’s: 3% to 20% US’ share: 16.6% to 9.5% Europe’s: 31% to 25% UK share: 5.9% to 2.2% Missing trader fraud New EU members: 1.2% to 3.7%

Exports of IT and ICT-enabled services More resilient in crisis Offshoring of services a way for firms to reduce costs and enhance competitiveness Short-term decline in offshoring by financial institutions Others will offshore new and more services Medium to long term prospects: as global economy recovers, offshoring of services set to widen geographically, sectorally and across business functions Room for more countries to develop sizeable export-oriented services industries

Top exporters of IT and ICT-enabled services 2007, US$ billions UK also among top gainers 2000-2007 in exports of IT and ICT-enabled services Source: UNCTAD, based on IMF BOP data.

Greater geographical diversification Share of market for business process offshoring, 2004–2008 Source: UNCTAD, based on data from the Everest Research Institute.

India dominates market for ITO Share of market for information technology offshoring, 2008 Source: UNCTAD, based on data from the Everest Research Institute.

Policy Implications ICTs important part of economic stimulus packages Create enabling environment for ICT use More efforts needed to narrow remaining gaps Urban-rural; large-small firms; by industries; by language Bridging the broadband divide Consider both fixed and mobile solutions Infrastructure sharing Exposing operators to competition Universal access service funds Promote public Internet access points or telecentres

Thank You! The Information Economy Report 2009 can be downloaded free of charge at www.unctad.org.