1 WTO Information Technology Symposium Impacts of globalisation on the IT Sector Growth and market...

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WTO Information Technology Symposium

Impacts of globalisation on the IT Sector

Growth and market dynamics in OECD countries, China and India

Graham Vickery OECD

www.oecd.org/sti/ito

[email protected]

Wednesday, 28 March 2007

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Overview – ongoing restructuring Growth in the ICT supply side is sustained and

expected to continue across all segments

Growth more balanced across OECD. ICT supply growth more sustainable than late 1990s. Highest in Internet-related applications and support systems

Non-OECD and Eastern Europe supply and markets growing much faster and taking larger share

Drivers are shifting from technology push => commercial applications and new uses. User-driven applications increasingly important

Challenges for ICT policy to build competitiveness

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IT industry - developments and outlook

Recent developments – Output and markets robust in the US. Now stronger in

Japan and Europe. Other Asian countries growing rapidly – ICT markets: OECD share down 2000 89% => 2006 83%– Non-OECD countries (incl. Russia, India and China) took

13 of top 15 market growth positions 2000-2005 Top 250 ICT firms (over ½ of global ICT industry)

– Growth across the board. Revenue growth 2000-2005:Total 250 firms 23.5%, OECD 20%, India 680%, Chinese Taipei 200%, Singapore 132%, Hong Kong-China 100%, South Korea 28%

– China and India increasingly important. Their growth currently driven by foreign investment and sourcing

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Structural change and adjustment Structural change in the ICT sector

– Late 1990s 20-30% annual OECD growth– 2000s slower. Many products => commodities– Rapid growth: new / niche products, software and

services, and Emerging Markets (E. Europe, Asia)– ICT R&D dynamic although signs of slow-down

Major adjustment pressures– Open source (the “Linux effect”)– Online delivery of IT services (the “Google” effect)

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ICT sector increasing share of GDPShare of ICT valued added in business sector

1995 and 2003, percentages

Source: OECD Information Technology Outlook 2006, SNA compatible

0

2

4

6

8

10

12

14

16

18

Finlan

d

Korea

(7)

Irelan

d (7

)

United

King

dom

United

Sta

tes

New Z

ealan

d (1

,4,6

)

Hunga

ry

Nethe

rland

s

Sweden

OECD 25

Austri

a

Norway

Denm

ark

Franc

e

Portu

gal (

1,7)

EU 14

Belgium

(7)

Austra

lia (2

,3)

Canad

a

Japa

n (5

)

Germ

any (

5,7)

Italy

Spain

Czech

Rep

ublic

(5,7

)

Greec

e (5

,6,7

)

Slovak

Rep

ublic

(5,7

)

Mex

ico

2003 1995%

6

Top 250 firms reboundPerformance trends 2000-05

Current USD, index 2000 = 100

Source: OECD Information Technology Outlook 2006

80

85

90

95

100

105

110

115

120

125

2000 2001 2002 2003 2004 2005

Revenue Employment R&D Spending

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And they increase R&D intensityTop 250 ICT firm R&D intensity by sector, 2000-05

R&D spending as a share of revenue, percentages


0 2 4 6 8 10 12 14 16

Telecommunications

Services

IT equipment

Electronics & components

Comms equipment

Software

2000 2005

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The shift to AsiaWorld semiconductor market 1990-2005

USD billion, current prices

0

50

100

150

200

250

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

North America Japan Europe Rest of Asia


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ICT globalisation and trade

New wave of global restructuring of ICT production– Global restructuring of ICT production– ICT sector a leader in international trade and M&As

9% of business VA, 13% of goods trade, 20% of M&As Trade in ICT goods: new highs Trade in ICT services: growing strongly

– Ireland leader in computer and information services exports(still number 3 in packaged software)

ICT FDI and M&As high: Business cycle effect M&As: ICT and comms services continued high share

– Some shift to Eastern Europe and non-OECD

10

ICT goods trade has tended to increaseShare of ICT goods in total goods exports, 1996-2004 Percentages


0%

5%

10%

15%

20%

25%

30%

35%

Korea

Hunga

ry

Irelan

d

Mex

ico

Japa

n

Nethe

rland

s

Finlan

d

United

Sta

tes

Czech

Rep

ublic

United

King

dom

Sweden

Luxe

mbo

urg

Germ

any

Portu

gal

Franc

e

Denm

ark

Austri

a

Slovak

Rep

ublic

Turke

y

Poland

Spain

Canad

a

Belgium Ita

ly

Switzer

land

Greec

e

Austra

lia

New Z

ealan

d

Norway

Icelan

d

1996 2004

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And grow in all segmentsOECD trade in ICT goods, 1996-2004


USD billion, current prices

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

1996 1997 1998 1999 2000 2001 2002 2003 2004

Communication equipment IT & related equipment Electronic componentsAudio & Video equipment Other ICT related goods

12

With new trade competitionICT goods exports 1996-2004

Current USD, 1996 = 100


100

200

300

400

500

600

700

800

900

1 000

1996 1997 1998 1999 2000 2001 2002 2003 2004

China Mexico and Eastern Europe Other OECD

13

New sources of trade – ICT-enabled servicesExports of computer and information services and business services

Percentage of world totals

0

2

4

6

8

10

12

14

1995 2004%

exports


14

Exports of computer and information services and business services

Billion current USD and share of GDP

0

10

20

30

40

50

60

70

80

90

1995 2004bns current USD

0

2

4

6

8

10

12

14

16

18

1995 2004% of GDP


15

Employment potentially affected by ICT-enabled services offshoring

Share of employment 1995-2004

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

EU15 USA CAN AUS%


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China and ICTs

China increasingly important in production and trade in ICT goods and services

Strategy: Host foreign ICT firms or third-party contract manufacturers (unlike Japan and Korea)

Chinese ICT firms developing rapidly despite relatively limited size and technological know-how. Investing overseas to obtain technology, brands and distribution

ICT industry must make transition from low-cost manufacturing to higher value-added products

Services high potential, but not yet

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China biggest ICT goods exporter in 2004, and increasing

Imports and exports, billion current USD

Imports of ICT goods

0

50

100

150

200

250

300

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

United States EU-15China (excluding Hong Kong) JapanKorea

Exports of ICT goods

0

50

100

150

200

250

300

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

United States China (excluding Hong Kong)EU-15 JapanKorea


18

China imports components and exports computers, telecoms, audiovisual equipment

Trade balances, billion current USD

-100

-80

-60

-40

-20

0

20

40

60

80T

elec

om

mu

nic

atio

neq

uip

men

t

Co

mp

ute

r&re

late

deq

uip

men

t

Ele

ctro

nic

com

po

nen

ts

Au

dio

&vi

deo

equ

ipm

ent

Oth

er IC

T g

oo

ds

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005


19

China deficits with Asia, surpluses everywhere elseTrade balances, billion current USD

-25

-15

-5

5

15

25

35

45

55

Bill

ions


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Rising to the challenge?IT policies for growth and competitiveness Co-ordination and priority setting

Promoting ICT R&D and innovation

Increasing business use (and improving government efficiency via e-government)

Expanding ICT skills and employment (education)

Digital content

Enhancing network infrastructure (broadband)

ICT business environment (IPRs)

1 WTO Information Technology Symposium Impacts of globalisation on the IT Sector Growth and market...

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