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Web, mobile phones drive economic growth

By Michelle Remo
Philippine Daily Inquirer
First Posted 01:21:00 07/27/2009
Study says technology leads to higher GDP

MANILA, Philippines - The Internet and mobile phones have definitely made life much easier.But technology is not only good for improving people’s lifestyles.

The extensive use of the Internet and mobile phones also contributes significantly to economic growth of the Philippines and many other countries all over the world.

According to a report by the World Bank, Internet users in developing countries increased tenfold from 2000 to 2007.

Currently, there over 4 billion mobile phone subscribers in developing countries alone, Mohsen Khalil, World Bank group director for global information and communication technologies, said in the report.

Direct impact

The World Bank estimates that, for every 10-percent increase in the number of high-speed Internet connections, the economy is expected to grow by 1.3 percentage points.

This means that, without the contribution of IT and IT-related services sectors, the effects of the crisis on the Philippine economy would have been worse.

In the first quarter, the local economy grew by 0.4 percent—the slowest in 10 years.

Still, without the boost from the services sector, which includes the so-called sunshine industry of business process outsourcing (BPO) and other IT-enabled services, the economy would have contracted.

Wider base

The World Bank also said the Internet and mobile phones had given businesses a much wider customer base, translating into higher profits.

The Philippines, tagged as the “texting” capital of the world, is one of the top investment sites for firms engaged in IT (information technology) and IT-enabled services. Revenue generated by IT firms reached $6 billion last year, a substantial leap from the $100 million seen in 2001, World Bank said.

More jobs are also being created by the two sectors. As of mid-2008, the report added, the two industries employed 345,000 people in the Philippines, up by more than three times from 100,000 in 2004.

Citing a study by the Business Processing Association of the Philippines (BPAP), World Bank said IT and IT-enabled service companies in the country would see an increase in their annual revenue to $13 billion by 2010.

“High-speed Internet and mobile phones are key to economic growth and job creation in developing countries ... These technologies offer tremendous opportunities,” World Bank said in the report.

Heavy promotion

The World Bank has thus urged governments, especially in developing countries, to further promote these sectors.

“Governments should proactively encourage the development of local IT services industries through policies and incentives directed at entrepreneurs and the private sector, and through investments in skills and infrastructure,” World Bank economist Christine Zhen-Wei Qiang, editor of the report, said in the statement.

One way of helping boost the industries is for governments themselves to spur demand for IT products.

World Bank likewise said that governments of developing countries should also adopt more technology to improve the delivery of public services.

Governments that have more sophisticated technology are more efficient in service delivery and more transparent in their operations, the lender said.

Even if the world is in a crisis, people’s use of the Internet and mobile phones will hardly shrink as both have become part of people’s lifestyle.

The World Bank said IT and IT-enabled services are “the tide that lifts the boat.”

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