Socio-Economic Impact of Internet in Emerging and Developing Economies

Towards a Connected World

Properly harnessed, the Internet can be a powerful tool with which to address important social concerns in Serbia, such as high unemployment rates and disparity between urban and rural areas. The study shows that increasing Internet adoption should drive an increase in the number of new business activities by up to 17,000 per year by 2020, including the establishment of new independent businesses as well as new departments, units and business areas within existing firms


By MARKO ANDREJIĆ (marko.andrejic@wavemagazine.net)
from Belgrade, SERBIA


By 2020, provision and usage of the Internet could contribute 5.2% of total GDP in Serbia, generate 94,000 new jobs, and boost government revenues by RSD 54 billion. Provided the right conditions, 81% of households and 95% of businesses in Serbia could have at least one Internet subscription within ten years time.

The study also offers a negative scenario in case taxation of the telecommunicatons industry remains heavy and the 10% government tax on Mobile Phone Usage is not revoked. This would result in a reduction of the volume of investment in infrastructure and consequently in a slow-down and poorer quality of Internet services.

These are some of the key findings of a new study conducted by the Boston Consulting Group (BCG) for Telenor Group, which analyzes the social and economic impact of Internet in emerging economies. The report is based on multiple sources of data, ranging from expert interviews, case studies, internal data from Telenor Serbia, and external benchmarks. It is presented at the end of September.

Internet potential in Serbia

- The results clearly show that Serbia has a lot to gain from the Internet, both economically and socially - said Kjell Morten Johnsen, CEO Telenor Serbia. - Internet growth has been fast in Serbia during the last couple of years, but these findings show that only a small part of this potential has been realized. We hope that this information will help emphasize the important ways in which the Internet can improve social and economic conditions of a country - he added.

Properly harnessed, the Internet can be a powerful tool with which to address important social concerns in Serbia, such as high unemployment rates and disparity between urban and rural areas. The study shows that increasing Internet adoption should drive an increase in the number of new business activities by up to 17,000 per year by 2020, including the establishment of new independent businesses as well as new departments, units and business areas within existing firms.

94,000 jobs in new business

In combination, these new business activities will create 94,000 new jobs, which correspond to a job for 1 out of 5 of the 500,000 Serbians who are unemployed today. These will all be generated organically through greater Internet penetration, without the need for any government stimulus or expenditure to support their development.

The Internet could also help addressing another key issue facing Serbia today, which is the concern surrounding the aspirations of its youth. By providing access to information on both professional and leisurely opportunities, the Internet has the potential to encourage young people and give them a more positive vision of the world from a Serbian point of view.

Growth driven by wireless access

Up until now, the growing Internet penetration in Serbia has been fuelled by increasing competition amongst an increasing pool of providers. However, the limitations of Serbia's fixed line infrastructure pose a threat to continued growth.

- In line of the fixed line constraints, the next wave of Internet growth in Serbia is likely to be driven by wireless access technologies - said Knut Haanaes, Managing Partner of BCG in Oslo, who is responsible for the analysis. - Although the download speeds are limited relative to fixed line technologies, wireless compensates for this with its lower construction cost, shorter timeline for rollout, and lower costs for end users", he added.


(Published: 11.10.2009.)