The OECD Information Technology Outlook 2010 has been prepared by the OECD under the guidance of the OECD Committee for Information, Computer and Communications Policy (ICCP), and in particular the Working Party on the Information Economy. This edition is the tenth in a biennial series designed to provide members with a broad overview of trends and near-term prospects in the information technology (IT) industry, analysis of the growing impact of IT on the economy and society, developments and emerging applications in selected areas of information technology and a review of IT policies and new policy directions. The 2010 edition builds on previous editions to further extend the economic and policy analysis. This edition has focused extensively on the economic crisis and recovery and their impacts on the ICT supply side.
The outlook for ICT production and markets is brighter than in the past two years. The macroeconomic situation has improved since mid-2009, although recovery in OECD countries is slow and uneven. Previously very gloomy projections for the ICT sector and in general have been successively revised upwards.
Recent Developments and Outlook
The outlook for ICT production and markets is much better than at the time of the 2008 OECD Information Technology Outlook. The macroeconomic outlook has improved since the middle of 2009, although prospects are for a slow and uneven recovery in OECD countries. Projections, both in general and for the ICT sector in particular, have been successively revised upwards. However, unemployment will remain high in 2010, putting pressure on consumer confidence and expenditures, and government budget deficits are at historically high levels. Macroeconomic forecasts combined with business and consumer sentiment suggest that ICT growth in OECD countries will be slow in 2010 at around 3-4%. It is likely to strengthen in 2011 as business investment picks up sharply, unemployment begins to decline and government and private balance sheets start to improve, but with very different performances across segments and markets. As in the last downturn, there is pressure on OECD ICT employment. ICT markets are also shifting to emerging economies which now have one-quarter of global markets, and the top 250 ICT firms include increasing numbers of non-OECD firms. The long-term global performance of the ICT sector will depend on whether businesses and consumers continue to invest in new ICT goods and services and on the extent to which emerging economies remain decoupled from OECD countries and maintain dynamic growth.
Globalisation of the ICT Sector
Worldwide trade in information and communications technology (ICT) has returned to growth following a very sharp slump in the last half of 2008, continuing into the first quarter of 2009. Before the economic crisis, global ICT trade expanded very strongly and grew until 2008 in value terms. Global ICT trade has tripled since 1996 to approach USD 4 trillion in 2008, with the OECD share dropping from 71% in 1996 to 53% in 2008. Global restructuring of ICT production continues, with Eastern Europe, Mexico and non-member developing economies increasingly important as both producers and new growth markets. Operations of multinationals, international sourcing, and intra-firm and intra-industry trade have had major impacts on the global ICT value chain, and are an increasing source of growth. China is by far the largest exporter of ICT goods, and is now the largest importer, largely driven by foreign investment and sourcing arrangements. India is by far the largest exporter of computer and information services, fuelled by the growth of domestic firms.
ICT Skills and Employment
This chapter analyses ICT-related employment, focusing on the impacts of the financial and economic crisis and the recovery. Almost 16 million people are employed in the ICT sector in OECD countries, and they represent close to 6% of total OECD business sector employment. Growth in the sector has been somewhat higher than in business overall. Employment dropped in ICT goods sectors during the crisis and has mostly remained flat in ICT services. However, despite year-on-year falls of 6-7% in ICT manufacturing employment, the large declines in the downturn around 2002-03 have not occurred, and ICT-related vacancy rates were growing month on month in early 2010. ICT specialists make up around 3-4% of total employment in most OECD countries, a share that has risen consistently with demand for ICT specialist skills across the economy. ICT-using occupations make up over 20% of total employment in most countries, and have remained quite stable. This chapter highlights some areas that promise to develop new ICT employment – green ICT, "smart" applications and cloud computing – but job generation has generally tended to be slow. It is suggested that the ICT sector will continue to be a more important contributor to value added and growth than to employment, but that wider applications, for example in "smart" energy systems, buildings and transport, will begin to provide jobs throughout the economy.
The Internet Economy in the Post-crisis Era and Recovery
Growth of the Internet economy is driven by innovation in the ICT sector. ICT firms continue to play a dominant role in the top group of R&D-performing firms, a role that has not diminished despite revenue and employment declines during the recession. If anything, ICT R&D is more tightly linked with changes in revenue, an indication that ICT firms are well positioned for renewed technology-driven growth as sector performance improves. The most dynamic growth comes from Internet firms and increasingly Asian firms, and semiconductor R&D underpins development of new applications.
Greener and Smarter: ICTs, the Environment and Climate Change
Smart ICT and Internet applications have the potential to improve the environment and tackle climate change. Top application areas include manufacturing, energy, transport and buildings. Information and communication also foster sustainable consumption and greener lifestyles. At the same time, direct and systemic impacts related to the production, use and end of life of ICTs require careful study in order to comprehensively assess "net" environmental impacts. A better understanding of smart ICTs provides policy makers options for encouraging clean innovation for greener economic growth.
Smart Sensor Networks for Green Growth
Sensor and sensor network applications can contribute significantly to more efficient use of resources, tackle environmental challenges and reduce the impacts of climate change. In smart buildings, minimum standards of energy efficiency coupled with the use of sensor technology can be a major factor in reducing electricity use and greenhouse gas emissions. However, rebound effects have to be taken into account, particularly in transport. Increased efficiency due to the use of sensor technology should be accompanied by demand-side management to internalise environmental costs, for example by raising CO2 – intensive energy and fuel prices, and encouraging systemic change in consumer and user behaviour. Government policies and initiatives are crucial for fostering the positive environmental effects of the use of sensors and sensor networks. Government programmes that demonstrate and promote the use of sensor technology beyond pilot projects and offer support for the development of open standards can contribute to tapping the potential of sensor technology.
ICT Policy Developments from Crisis to Recovery
Information and communication technology (ICT) policies have helped shape the economic recovery, but they have also been shaped by the recession and the hesitant recovery. Weak macroeconomic conditions mean that government ICT policies will be scrutinised for their necessity, their efficiency, and their impact on growth, employment and public sector budgets. Most government responses to the economic crisis include measures targeting the ICT sector and promoting ICT-based innovation, diffusion and uptake of Internet technologies. Most OECD countries have increased the priority of at least one ICT policy area for overall economic recovery. The recent ICT policy emphasis on areas that contribute directly to shortand long-term growth – ICT jobs, broadband, R&D, venture finance and smart ICTs for the environment – provides evidence of the key roles that ICT policy must play in ensuring a long-term sustainable recovery. ICT policies are now mainstream policies to underpin growth and jobs, increase productivity, enhance delivery of public and private services, and achieve broader socio-economic objectives in government, health care, education and the environment.
Annex A. Methodology and Definitions
This annex describes the definitions and classifications adopted in this edition of the OECD Information Technology Outlook. These definitions and classifications, and the data collected on the basis of these definitions and classifications, draw wherever possible on work by the OECD Working Party on Indicators for the Information Society (WPIIS) which seeks to improve the international comparability and collection of statistics and data on the information economy and the information society.
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