The Internet’s contribution to the GDP

The Internet’s contribution to the GDP

One of the world’s leading consultancy firms, McKinsey, has researched the effect of the Internet on the economy. McKinsey’s research, published last week, includes a special section on Turkey as well as 13 other developed and developing countries. 

McKinsey’s Turkey representative, Bengi Korkmaz, has shared information from this research with us that provides significant clues about the Internet’s contribution to the Turkish economy. If we start with the Internet’s contribution of to the GDP, Turkey is behind. While in a developed country such as Sweden, the Internet contributes 6.3 percent of the GDP, and the world average is 3.4 percent, the rate in Turkey is only 0.9 percent.

“Turkey is at the bottom among developing countries in terms of the Internet’s contribution to the GDP. The Internet is not made use of in our economy. Turkey’s situation resembles that of Morocco, Nigeria and Russia,” Korkmaz said.

I should point out that our strong neighbor Russia also does not benefit fully from the advantages the Internet could confer upon its economy. It is even behind Turkey, with the Internet contributing only 0.8 percent of GDP. Last year, e-commerce in Turkey totaled nearly 9 billion Turkish Liras, but that only makes up 1 percent of retail sales in Turkey. When Korkmaz says, “There is a very long road ahead of Turkey in terms of e-commerce,” she is certainly correct, because this figure varies between 4 percent and 9 percent even in most developing countries. 

According to the McKinsey research, one of the important reasons why the Turkish consumer is not kindly disposed toward e-commerce is “distrust.” Human resources and exports seem to be the problematic areas in the relationship between the Internet and the economy. According to the figures Korkmaz shared with us, in Turkey, which is rightfully proud of its exports, the share of total exports made up of information and communication technology (ICT) products is only 2.3 percent. 

Now, let’s see how the small and medium-sized enterprises (SME), which are considered the backbone of the Turkish economy, are doing. McKinsey’s research reveals that those SMEs that have adopted web technologies, or those that invest in them, grow much faster than those who invest in them only slightly or not at all.

Those SMEs that have adopted the Internet have increased their productivity by 6.9 percent. However, there is a critical question on the topic of the SMEs: at what rate do SMEs adopt the Internet? I will refer to some research conducted about two years ago by the Turkish Informatics Industry Association (TÜBİSAD) in order to answer this question. One out of every three SMEs in Turkey does not know how to use ICT. Out of every four SMEs, only one has a website. More than half of SMEs do not use e-mail.

The priorities of SME managers for the future of their companies are as follows: Financial power, human resources, value of branded goods, and, at the bottom of the list, technological infrastructure. 

How much can this list have changed in two years? According to Google Turkey Director Bülent Hiçsönmez, the SMEs are slowly warming up to the Internet. “It is an indispensable factor today that the SMEs move their sales and marketing channels to the Internet to be able to advance in competition,” Hiçsönmez said. Google Turkey has a guiding mission to encourage SMEs to open up to the Internet, he said, giving examples of a few SMEs that have been able to make major leaps. Increasing the effect of the Internet on Turkey’s GDP is in the hands of the SMEs.