HighLevel Seminar on ECommunications

1
High-Level Seminar on E-Communications

• The development of the ICT sector during the
  crisis International comparisons
• Information Technology Outlook
• Graham Vickery, OECD
• Prague16 April 2009

2
Outline

• What is the impact of the crisis on the ICT
  sector?
• How does it compare with other sectors?
• How does the crisis (so far) compare with the
  previous ones?
• What are economic implications?
• What are implications for policy?

3
Global overview ICT supply side

• Rapid drop in ICT production linked with Q3-Q4
  financial markets meltdown and global recession.
  But 2008 positive overall due to Q1-Q3 growth.
  Negative for 2009
• Goods US and Europe down. Asian countries
  collapsed.
• Services Slowing but not collapsing. Questions
  for 2009, e.g. India services sourcing
• Turbulence with recession IT investment is very
  cyclical (accelerator effect
  telecommunications and business CAPEX dropping),
  personal consumption including services hit by
  wealth effect, unemployment
• 2007 mid-2008. Growth balanced in OECD
  countries. E. Europe and non-OECD have grown much
  faster
• ICT markets Non-OECD countries (Russia, India,
  China) took 23 of top 25 market growth positions
  2000-2007. OECD share down 2003 85 gt 2007 78
• Drivers shifted from technology push gt
  commercial and user-driven applications pull

4
ICT sector opportunities and threats
5
Semiconductors falling. Asia gaining
shareSemiconductor market by region, 1990-2009.
Current USD billionUSD billions, current prices
Source Information Technology Outlook 2008. 2008
partly estimated, 2009 projected from SIA data.
6
Utilisation semiconductor manufacturing
7
The challenge ICT goods plunging with the
economic crisis JapanDecember 1999January
2009. Year-on-year change, volume index,
seasonally adjusted, 3-month moving average
Source Information Technology Outlook database.
8
but ICT services holding up -
JapanYear-on-year change, production indices,
seasonally adjusted, 3-month moving average
Source Information Technology Outlook database.
9
Collapse is worse in automobiles - France
December 1995 December 2008. Year on year
change, volume index, seasonally adjusted,
3-month moving average
Source Information Technology Outlook database.
10
and in the United States employmentDecember
2001January 2009. Year-on-year change, number
of employees, seasonally adj. 3-month moving
average
Source Information Technology Outlook database.
11
Global firms crisis tough for IT equipment
Quarterly revenue growth (year-on-year) , Top-10
IT equipment
Revenues grew most of the year, Q4 decline
greater than revenue declines in 2001 for same
companies. Overall revenue drops same in both
periods. Source OECD calculations for top-10 IT
equipment firms from OECD top-250 ICT firms.
12
Still relatively good for IT services ..
Top firms maintained growth through 2008, Q4
slowed a little. Driven by IT and Business
Process Outsourcing (ITO/BPO) but financial
market crisis slowing demand. Outsourcing revenue
growth to decline in 2009? Source OECD
calculations for top-10 IT services firms from
OECD top 250 ICT firms.
13
.. and software
Top software firms high growth Q1-Q2, dropped in
Q3-Q4. Driven by business and consumer
investment. Source OECD calculations for top 10
software firms from OECD top 250 ICT firms.
14
Chinas lead in ICT goods exports By region
1996-2007, USD current prices billions
Source OECD Information Technology Outlook, 2008.
15
Services trade and cross-border investment

• Trade in ICT services growing strongly
• IT services growing 15-20 p.a.
• Ireland by far largest OECD exporter 2007 USD 21
  billion, surplus USD 20 billion
• UK, US and Germany each around USD 10 billion
  exports
• India largest world exporter 2006 USD 30
  billion, surplusUSD 27 billion 2007 and 2008
  around USD 40 billion 2009?
• High ICT and comms services share of FDI and
  MAs Business cycle collapse
• Shift to E. Europe and non-OECD. Non-OECD MA
  investment has been up in numbers, less in values
• 2008 down sharply. 2009 even more

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ICT specialists growing rapidly in most
countriesShare of ICT specialist occupations in
total employment,1995 and 2007
Classifications not harmonised shares for
European and non-European countries are not
directly comparable.
Source OECD Information Technology Outlook, 2008.
17
Government ICT policy priorities 2008The right
policies for crisis and recovery?

• 1. Government online, government as model users
• 2. Broadband
• 3. ICT RD programmes
• 4. Promoting IT education
• 5. Technology diffusion to businesses
• 6. Technology diffusion to households
• 7. Industry-based and on-the-job training
• 8. General digital content development
• 9. Public sector information and content
• 10. ICT innovation support
• Source Information Technology Outlook 2008.