Positive Effects of Internet Use on Economy

There are a number of potential mechanisms through which Internet use positively affects economic outcomes. Access to the Internet increases information flow which reduces distances between people, firms and nations which in turn reduces transactions and transportation costs. Technological progress depends on the exchange of is a composite measure of ideas and information. Social networks have strong effects on economic outcomes especially in fostering innovation, and one of the fastest growing forms of Internet communication are websites providing social networking facilities such as Facebook. With increased information availability, provided by access to the Internet, institutions may become more efficient and transparent leading to better governance. Internet use can increase effective governance can lead to positive economic outcomes.

In the context of this investigation, investing in Internet use can be seen as complementing both investment in human capital, as it makes workers more efficient by providing access to skills enhancing knowledge and more rapid ways to create, disseminate and assimilate information, and physical capital since it increases the productivity of physical capital. While this dissertation does not offer a growth story per se, it does provide evidence that Internet use positively impacts economic growth and other measures of development outcomes.

Internet use affects economic development outcomes differently depending on the country’s income level, the policy recommendations must also vary according to the income level of the country. Additional Internet use has a significant positive effect on per capita GDP and on overall welfare as measured by the HDI on average in low-income countries. As well, foreign direct investment can be directed toward developing the necessary infrastructure to allow greater Internet deployment while encouraging foreign aid to address health and education programs To the extent that Internet openness can boost firms’ participation in GVCs, this could have a significant positive impact on national productivity performance. Participation in GVCs also helps boost an economy’s ability to learn from the global productivity frontier.

When we have a more-connected population, graduating students and adults alike have more tools with which to enter the job market, find original and creative ways to make money or start their own business, and become consumers of online goods and services. All this grows a stronger, more prosperous economy. Internet intermediaries provide increasing social and economic benefits; whether it be through information, e-commerce, communication/social networks, participative networks, or web services. Internet intermediaries provide economic growth with new businesses and productivity gains through their contribution to the wider ICT sector as well as through their key role within the Internet ecosystem. They operate and maintain most of the Internet infrastructure, which now underpins economic and social activity at a global level, and are needed to help ensure there is continued sufficient investment in both physical and logical infrastructure to meet the network capacity demands of new applications and of an expanding base of users.