Net Economy’s Impact Under Scrutiny

The term “Internet economy” has been bandied around so frequently it
probably should have lost its effectiveness as an economic adjective by now.
But as some may aim to incorporate it into their daily speech with investors
and customers, a research team from Monash University’s Centre of Policy
Studies and the Allen Consulting Group is seeking to understand and map the
real impact of this part of the economy on Australia.

The independent study project, claimed to be a first of its kind in
Australia and one that Cisco Systems has stepped in to support, will attempt
to meet three core objectives: to measure the size of the Internet economy,
the revenues and productivity it generates and the value it adds to the
larger economy.

“We are attempting to measure the take up of Internet technologies, and
their impact on, the industries which drive the Australian economy,” said
The Allen Consulting Group9s director, Kerry Barwise.

The study has been structured to report on a variety of indicators of the
Internet economy’s impact, such as the number and nature of businesses in
this side of the economy, their contribution to economic activity and the
employment base of firms in the Internet economy.

The study also aims to investigate growth trends and the size of
productivity gains expected from Internet economy participants, and assess
any barriers to engaging in the Internet economy.

The study’s methodology is based around interviews with more than 600
businesses of various sizes and across nine major so-called traditional
economic sectors, including tourism, finance, communications, agriculture
and mining, manufacturing and transport.

The study is modelled after similar studies that have been conducted in the
US, undertaken by the University of Texas in recent years from 1998, again
with Cisco’s assistance.

The University of Texas study has been updated four times, with the most
recent version released in January 2001 indicating that the Internet economy
has generated more than $US830 billion in revenues in the US during 2000, up
156 per cent since 1998.

“Those studies continue to show the impact of the Internet economy in the US
is immense and it is getting larger,” said Terry Walsh, Cisco Australia and New Zealand
managing director.

“Less is known qualitatively or quantitatively about the size of the
Internet economy in Australia,” Walsh added of the reason an Internet
economy study is now being conducted on a local plane.

Barwise said there has been a deliberate emphasis on adapting the study
criteria to Australian industry conditions, and to ensure it measures
activities across a spectrum of organisations in the old9 and the new9
economy.

“We were concerned that this survey should not be confined to the IT
industry or the so-called ‘dot coms’,” said Barwise. “It is essential to
look deeper into the use of the Internet economy, to examine how business in
general is using the Internet to make purchases to reduce their costs or
increase their choice of inputs.”

The research team expects to have preliminary results from the study in
early April.

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