WTO Information Technology Symposium

1

• 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
• graham.vickery_at_oecd.org
• Wednesday, 28 March 2007

2
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 gt
  commercial applications and new uses. User-driven
  applications increasingly important
• Challenges for ICT policy to build competitiveness

3
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 gt 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

4
Structural change and adjustment

• Structural change in the ICT sector
• Late 1990s 20-30 annual OECD growth
• 2000s slower. Many products gt commodities
• Rapid growth new / niche products, software and
  services, and Emerging Markets (E. Europe, Asia)
• ICT RD dynamic although signs of slow-down
• Major adjustment pressures
• Open source (the Linux effect)
• Online delivery of IT services (the Google
  effect)

5
ICT sector increasing share of GDPShare of ICT
valued added in business sector1995 and 2003,
percentages
Source OECD Information Technology Outlook 2006,
SNA compatible
6
Top 250 firms reboundPerformance trends
2000-05Current USD, index 2000 100
Source OECD Information Technology Outlook 2006
7
And they increase RD intensityTop 250 ICT firm
RD intensity by sector, 2000-05 RD spending as
a share of revenue, percentages
2000
2005
Software
Comms equipment
Electronics components
IT equipment
Services
Telecommunications
0
2
4
6
8
10
12
14
16
Source OECD Information Technology Outlook 2006
8
The shift to AsiaWorld semiconductor market
1990-2005USD billion, current prices
Source OECD Information Technology Outlook 2006
9
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
  MAs9 of business VA, 13 of goods trade, 20
  of MAs
• 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 MAs high Business cycle effect
• MAs 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
Source OECD Information Technology Outlook 2006
11
And grow in all segmentsOECD trade in ICT goods,
1996-2004
USD billion, current prices
Communication equipment
IT related equipment
Electronic components
Audio Video equipment
Other ICT related goods
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
Source OECD Information Technology Outlook 2006
12
With new trade competitionICT goods exports
1996-2004Current USD, 1996 100
China
Mexico and Eastern Europe
Other OECD
1 000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
Source OECD Information Technology Outlook 2006
13
New sources of trade ICT-enabled
servicesExports of computer and information
services and business servicesPercentage of
world totals
Source OECD Information Technology Outlook 2006
14
Exports of computer and information services and
business servicesBillion current USD and share
of GDP
Source OECD Information Technology Outlook 2006
15
Employment potentially affected by ICT-enabled
services offshoringShare of employment 1995-2004
Source OECD Information Technology Outlook 2006
16
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

17
China biggest ICT goods exporter in 2004, and
increasingImports and exports, billion current
USD
Source OECD Information Technology Outlook 2006
18
China imports components and exports computers,
telecoms, audiovisual equipmentTrade balances,
billion current USD
80
60
1996
1997
40
1998
20
1999
0
2000
2001
-20
Audiovideo
2002
equipment
-40
Other ICT goods
equipment
Computerrelated
2003
Telecommunication
equipment
-60
2004
Electronic
components
-80
2005
-100
Source OECD Information Technology Outlook 2006
19
China deficits with Asia, surpluses everywhere
elseTrade balances, billion current USD
Source OECD Information Technology Outlook 2006
20
Rising to the challenge?IT policies for growth
and competitiveness

• Co-ordination and priority setting
• Promoting ICT RD 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)