The Internet and Economic Growth By: Fanele Chester (Communications Intern)

One of the factors which got me hired as the Communications intern at the Federation of Swaziland Employers & Chamber of Commerce is my informal but extensive knowledge and understanding of computers in general. Whilst an Economics & French major at the University of Chicago, as well as a student intern on the Apple Campus Store, I started and ran a relatively successful blog, Fashion Et Al: Promoting African Creativity on www.fanelelove.com, which focused on all things art related in and from Africa. Depending on who is posing the questions, when describing the success of the blog, Fashion Et Al, the focus can be on the technical or the creative end of the spectrum. For the latter, visitors come and return to the blog for its well-written and well-researched features. For the former, the story is more interesting and is an illustration of a global conversation: how the internet is transforming the global economic landscape. Fashion Et Al is hosted on Blogger, a free Google platform for blogs. A blog (web log) is an online platform which allows one to be the writer, editor, and publisher of information. When I create and publish a post on Fashion Et Al, within seconds it immediately updates on my Twitter account, Facebook wall, as well as the blogs fan page on Facebook, and on a separate blog on Tumblr (another hosting site for blogs). The fan page automatically retweets this same message on my Twitter. Finally, a Networked Blogs application enabled on my Facebook account extracts the same blog and posts it on the wall. In the end, one blog post is circulated on social media three times on Twitter reaching about 70 followers each time, four times on Facebook reaching about 1600 friends and 400 fans each time, and once on Tumblr reaching 7 followers. This is excluding the 60 individuals who have directly subscribed on the blog itself via the Gmail accounts, who get updates either through email or on their Google Reader. All of this mileage is completely free! The beautiful thing about this interconnectivity is that it was engineered through the authors own innovation. The linkages between all the social media sites are not default settings on the template provided by Google. In Swaziland, when we talk about advertising and marketing mileage, the most economical and effective tool is the radio, followed by print media and television. The internet does not play a significant role in economic landscape of the country, and contributes a negligible percentage in the total economic growth of the country. This is despite the fact that the United Nations, in its Millennium Development Goals, lists internet penetration as a key metric in efforts to reduce poverty and encourage national development.

A study was conducted by the McKinsey Global Institute (published May 2011) on the contribution of the internet to GDP and economic growth in the G8 countries and other five key countries at various level of development (Brazil, China, India, South Korea, and Sweden). Entitled Internet Matters: The Nets Sweeping Impact on Growth, Jobs and Prosperity, was structured on Consumption & Expenditure on one hand, and Supply on the other.

The main findings of the study were that internet consumption and expenditure contributes significantly to the economy, and that countries with a strong internet ecosystem also have a high contribution to GDP. In fact, the internets global contribution to GDP is bigger than the GDP of Spain or Canada, and growing faster than Brazil! This is despite the fact that, although available in all countries around the world, the internet is still in its infancy stage and its influence is still expanding. As recently as at the eG8 Forum held in Paris last week, leaders upheld the internet as a revolutionary force changing everything. A surprising and little known detail about the potential for economic growth held by the internet is that it derives its power through the economic modernization of traditional activities. Although its a new world phenomenon, the backbone of the entire internet ecosystem is (telecom) infrastructure. This infrastructure is the platform upon which users and organizations experience the internet, and upon which entrepreneurs and businesses innovate (Internet Matters, MGI, May 2011). Renowned Harvard Business School professor Rosabeth Moss Kanter concluded in an article published on Harvard Business Review last Thursday, ...telecoms are capturing most of the wealth being generated from the internet. For all the new world hype, the world still has a major role to play.

In conclusion, the benefits of the internet, especially for developing countries, and in particular for Swaziland as we face an economic crisis, are unmistakable and must be taken into consideration as we forge forward with a new strategy for growth. That being said, the success of assimilating internet as a performance booster for the country depends on the current infrastructure. It is imperative that such infrastructure, which propagated the country from low income to low middle-income status are further improved, as these will be the platforms upon which the necessary innovations for economic growth provided by the internet will be created.

Full sources are available upon request. Please email Fanele Chester at fanelec@businessswaziland.com. Produced by the Communications Office at the Federation of Swaziland Employers & Chamber of Commerce.