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Economic and Social Impact of E-Commerce

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Economic and Social Impact of E-Commerce Please cite this paper as: OECD (1999-01-01), “Economic and Social Impact of E- commerce: Preliminary Findings and Research Agenda”, OECD Digital Economy Papers, No. 40, OECD Publishing, Paris. http://dx.doi.org/10.1787/236588526334 OECD Digital Economy Papers No. 40 Economic and Social Impact of E-commerce PRELIMINARY FINDINGS AND RESEARCH AGENDA OECD Though only three years old, electronic commerce over the Internet has the The Economic and Social Impact of Electronic Commerce potential to transform the marketplace. E-commerce will change the way business is conducted. Traditional intermediary functions will be replaced, new products and markets will be developed, and new relationships will be created between business and consumers. It will alter the way work is organised and open new channels of knowledge diffusion and human interactivity in the workplace. Workers will need to be more flexible as their functions and skills are redefined. he Economic The changes e-commerce will bring are far-reaching. They require new T frameworks for doing business and a re-examination of government policies relating to commerce and skills. What is electronic commerce? What is the and current state and likely future direction of e-commerce? What are the drivers and what are the inhibitors? What is its impact on costs, prices, and ultimately on economic efficiency? How is it affecting intermediaries? How do firms compete Social Impact in the electronic environment? What market structure is likely to emerge? What is the impact on jobs? What types of skills will be needed? What major societal transformations will it entail? of Electronic The full impact of e-commerce remains to be seen. This book begins to address these questions and provides a ground-breaking assessment of the Commerce economic and social impacts of electronic commerce and its effects on jobs by drawing on existing qualitative and quantitative evidence. This early analysis of Preliminary Findings an extremely dynamic activity identifies a number of areas where research is and Research Agenda urgently needed and serves as the basis for an informed policy debate. OECD 9:HSTCQE=V[^\WW: (93 1999 01 1 P) FF 135 ISBN 92-64-16972-5 -99 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT FOR ECONOMIC CO-OPERATION ORGANISATION 00_Foreword.fm Page 1 Thursday, January 28, 1999 12:28 PM THE ECONOMIC AND SOCIAL IMPACT OF ELECTRONIC COMMERCE Preliminary Findings and Research Agenda ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT 00_Foreword.fm Page 2 Thursday, January 28, 1999 12:28 PM ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: ± to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining ®nancial stability, and thus to contribute to the development of the world economy; ± to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and ± to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations. The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became Members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996) and Korea (12th Decem- ber 1996). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention). PubliÂe en franËcais sous le titre : LES INCIDENCES ECONOMIQUESÂ ET SOCIALES DU COMMERCE ELECTRONIQUEÂ OECD 1999 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre franËcais d'exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, Tel. (33-1) 44 07 47 70, Fax (33-1) 46 34 67 19, for every country except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: http://www.copyright.com/. All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue AndrÂe-Pascal, 75775 Paris Cedex 16, France. 00_Foreword.fm Page 3 Thursday, January 28, 1999 12:28 PM Foreword This book was prepared as a background document for the OECD Ministerial Conference on “A Borderless World: Realising the Potential of Global Electronic Commerce”, held in Ottawa, Canada, in October 1998. It represents one of the very first analyses of the role of electronic commerce in the broader economy, and addresses such issues as the impact of e-commerce on employment and on society as a whole, as well as its contribution to economic growth and efficiency. The book presents a significant amount of data to provide policy makers with a picture of the current state and likely future direction of electronic commerce. The preliminary findings and broad policy implications constitute an initial anal- ytical basis for understanding electronic commerce, how it may evolve and how it may transform our economies and societies. As with any analytical report which examines a phenomenon as young and com- plex as electronic commerce, it generates as many questions as it answers. These questions form the basis of a potential future research agenda which is outlined in the book. The book is divided into chap- ters organised according to major areas of impact – economic growth, economic efficiency, organisational change, employment, and broader social issues. The OECD has been studying issues associated with the “Information Society” for nearly two decades. This book builds on that work, but represents a significant departure from those earlier studies as the focus has broadened to embrace an economy-wide perspective. To support this extension, advisory groups were created, and the book has benefited from significant review, both internally within the OECD, in Member countries, and from a group of private experts who attended a workshop where the book was discussed (Ottawa, 28-30 June 1998). In particular, the OECD would like to thank the following experts for their valuable contributions: Dr. Richard Hawkins Lynn Margherio Fellow – Information, Business strategy consultant, United States Networks & Knowledge (INK) Michael McCracken Science Policy Research Unit (SPRU) Chairman and CEO University of Sussex, United Kingdom Informetrica Limited, Canada Johan Helsingius Professor Dr. Luc L.G. Soete Director of Product Development Director MERIT, Faculty of Economics and Marketing and Business Administration EUnet International BV University of Maastricht, The Netherlands Prof. Jiro Kokuryo Philip Swan Associate Professor Director of Economics Keio University Graduate School of Business IBM Corporation, United States Administration, Japan Prof. Robin Mansell Director – Information, Networks & Knowledge (INK) Science Policy Research Unit (SPRU) University of Sussex, United Kingdom 3 00_Foreword.fm Page 4 Thursday, January 28, 1999 12:28 PM The Economic and Social Impact of Electronic Commerce The book, written by Andrew Wyckoff and Alessandra Colecchia of the Information, Computer and Communications Policy Division at the OECD, has also benefited from both substantive and financial con- tributions made by the Government of Canada. Canada’s Electronic Commerce Task Force assisted in the drafting of some portions, particularly the chapter on the societal implications, hosted and financed the workshop where the book was discussed, and provided the French translation. The OECD would like to express its appreciation to Richard Simpson, Director General for Policy Coordination, and his team for their efforts in support of this work. At the OECD, substantive contributions by Anthony Rottier of the Secretary-General’s Private Office, Dirk Pilat of the Science and Technology Policy Division, Muriel Faverie, consultant, Doranne Lecercle for the editing, and Pierre Montagnier for statistical assis- tance, are gratefully acknowledged. Nevertheless, none of these individuals or organisations are accountable for the findings and conclusions of the book. The book is published on my responsibility as Secretary-General of the OECD. 4 00_Foreword.fm Page 5 Thursday, January 28, 1999 12:28 PM Table of contents Executive summary . 9 Chapter 1. Growth of electronic commerce: present and potential . 27 Chapter 2. The impact of electronic commerce on the efficiency of the economy . 55 Chapter 3. The impact of electronic commerce on firms’ business models, sectoral organisation and market structure 79 Chapter 4. Electronic commerce, jobs and skills . 105 Chapter 5. Societal implications of electronic commerce . 143 References . 157 List of tables 1. Estimates of e-commerce sales compared to various benchmarks . 12 2. E-commerce impact on various distribution costs . 14 3. IT jobs unfilled owing to skill shortages . 17 1.1. Comparisons of various total e-commerce estimates . 27 1.2. Selected individual firm e-commerce revenues by activity . 30 1.3. Estimates of e-commerce sales compared to various benchmarks . 30 1.4. Geographic breakdown of e-commerce, various years . 32 1.5. Comparison of various e-commerce estimates by country . 33 1.6. Location of top 100 WWW sites by category, June 1997 . 33 1.7. E-commerce broken down into major segments and products . 35 1.8. E-commerce estimated to be business-to-business . 36 1.9. Top 10 retail shopping sites based on usage, February 1997 . 39 2.1. OECD trends in collection charges . 59 2.2.
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