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![Page 1: High-Level Seminar on E- Communications The development of the ICT sector during the crisis: International comparisons Information Technology Outlook Graham.](https://reader038.fdocuments.in/reader038/viewer/2022110319/56649c785503460f9492ce7c/html5/thumbnails/1.jpg)
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
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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?
![Page 3: High-Level Seminar on E- Communications The development of the ICT sector during the crisis: International comparisons Information Technology Outlook Graham.](https://reader038.fdocuments.in/reader038/viewer/2022110319/56649c785503460f9492ce7c/html5/thumbnails/3.jpg)
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% => 2007 78%
• Drivers shifted from technology push => commercial and user-driven applications pull
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ICT sector opportunities and threatsOpportunities Threats
Short- medium-term
Restructuring and efficiencies
ICT budgets hard to compress
Restructuring in other sectors - more use of ICTs / outsourcing
Public sector and emerging economies continue to invest
Economic stimulus packages
Declines in R&D and innovation
Decreasing access to capital / VC
IT budgets plunge all sectors / regions
Consumer ICT spending plummets
Fall in demand from emerging economies
Longer-term
R&D and innovation priorities
Growth in digital content
Green IT, health & aging drivers
Consolidation / globalisation of back-office / information management
Spending on ICT security up
Long term stimulus packages
Dropping R&D / innovation priorities
Prolonged financing problems
Slow development new business models
Slow supply of ICT professionals skills
Business / consumer spending falls
Prolonged infrastructure underinvestment
Effects on low-cost locations
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Semiconductors falling. Asia gaining shareSemiconductor market by region, 1990-2009. Current USD billion
USD billions, current prices
Source: Information Technology Outlook 2008. 2008 partly estimated, 2009 projected from SIA data.
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1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Americas Japan Europe Asia Pacific
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Utilisation rate of semiconductor manufacturing facilities In percentages
Utilisation semiconductor manufacturing
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The challenge: ICT goods plunging with the economic crisis – Japan
December 1999–January 2009. Year-on-year % change, volume index, seasonally adjusted, 3-month moving average
Source: Information Technology Outlook database.
-50
-40
-30
-20
-10
0
10
20
30
40
50
Dec-99
Jun-00
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Manufacturing Inform and Comm Electron. equip Electronics parts Motor Vehicles Chemicals
IT equipment
Electronics parts
Motor Vehicles
Chemicals
Manufacturing
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… but ICT services holding up - JapanYear-on-year % change, production indices, seasonally adjusted, 3-month moving average
Source: Information Technology Outlook database.
-10
-5
0
5
10
15
20
De
c-98
Jun-9
9
De
c-99
Jun-0
0
De
c-00
Jun-0
1
De
c-01
Jun-0
2
De
c-02
Jun-0
3
De
c-03
Jun-0
4
De
c-04
Jun-0
5
De
c-05
Jun-0
6
De
c-06
Jun-0
7
De
c-07
Jun-0
8
De
c-08
IT services Telecomms Computer related activities
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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.
-50
-40
-30
-20
-10
0
10
20
30
40
50
De
c-95
Jun
-96
De
c-96
Jun
-97
De
c-97
Jun
-98
De
c-98
Jun
-99
De
c-99
Jun
-00
De
c-00
Jun
-01
De
c-01
Jun
-02
De
c-02
Jun
-03
De
c-03
Jun
-04
De
c-04
Jun
-05
De
c-05
Jun
-06
De
c-06
Jun
-07
De
c-07
Jun
-08
De
c-08
Computer and Office Machinery Electronic components Motor vehicles & parts
Chemicals, plastic, rubber Manufacturing
Chemicals
Motor vehicles
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… and in the United States – employmentDecember 2001–January 2009. Year-on-year % change, number of employees,
seasonally adj. 3-month moving average
Source: Information Technology Outlook database.
-25
-20
-15
-10
-5
0
5
10
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Manufacturing Computer & electronics Motor vehicles Chemicals
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Global firms: crisis tough for IT equipment Quarterly revenue growth (year-on-year) , Top-10 “IT equipment”
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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.
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Still relatively good for IT services ..
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Quarterly revenue growth (year on year), Top-10 “IT services”
Note: Average growth refers to non-weighted average of firms’ annual growth rates.
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.
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.. and software
13
Quarterly revenue growth (year on year), Top-10 “Software”
Note: Average growth refers to non-weighted average of firms’ annual growth rates.
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.
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China’s lead in ICT goods exports By region 1996-2007, USD current prices billions
Source: OECD Information Technology Outlook, 2008. 14
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1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Imports of ICT goods
United States EU-15 China Japan Korea
0
50
100
150
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250
300
350
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Exports of ICT goods
United States EU-15 China Japan Korea
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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, surplus
USD 27 billion; 2007 and 2008 around USD 40 billion; 2009?
• High ICT and comms services share of FDI and M&As: Business cycle collapse– Shift to E. Europe and non-OECD. Non-OECD M&A 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
Source: OECD Information Technology Outlook, 2008.
Classifications not harmonised: shares for European and non-European countries are not directly comparable.16
0
1
2
3
4
5
1995 2007%
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Government ICT policy priorities 2008:The right policies for crisis and recovery?
1. Government online, government as model users
2. Broadband
3. ICT R&D 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.