Keynote Address at Inter-American Development Bank
Deputy Assistant Secretary and U.S. Coordinator for International Communications and Information Policy, Bureau of Economic and Business Affairs
Thank you so much for inviting me to speak to you today. The digital economy is the backbone of the modern economy. That is true from every sector, from manufacturers relying on communications for managing supply chains to companies connecting with customers, to producers analyzing and creating new markets. Ensuring that we develop the right policy environment for the digital economy to flourish is absolutely critical for global economic growth and for realizing the full benefit of ICTs for our societies.
More than three billion people and billions of devices are connected to the internet today. That connectivity is revolutionizing how we live, work, and govern ourselves. It has shrunk the world, made information more accessible to more people, and disrupted incumbent power in politics and business alike.
Today, the importance of the internet for economic and social progress is beyond debate, with those connected growing and those left behind falling further and further behind. The good news is that the internet economy is growing fastest in developing markets. A 10 percent increase in broadband penetration is estimated to result in approximately a 1.4 percent increase in GDP, so the potential is huge; however, the growth and promise that we know the internet can deliver is not a foregone conclusion, nor will it reach those in low income or rural communities without public-private partnerships.
Overall, the internet contributes 5 to 9 percent to total GDP in developed markets; and in developing markets, the internet economy is growing at 15 to 25 percent per year. That is good for all firms, not just those in the ICT sector. Unlike technologies built for a single purpose, the internet is a general-purpose technology that adds value to many other industries. A 2011 McKinsey & Co. report predicts that soon 75% of the internet’s value added will actually be in traditional industries.
Continued growth, innovation, development, and deployment of ICTs will depend on how the digital economy is accessed and governed. This is why the United States considers the promotion of an open, interoperable, secure, and reliable internet a key component of our foreign policy.
Open markets experienced 1% in additional GDP growth when governments chose to reduce friction in the digital economy, according to a Boston Consulting Group (BCG) study. Simply put, closed countries, those who deny their people the freedom to engage in commerce and discourse, are falling behind.
But before we can begin to debate its use, we still have to focus on getting everyone connected. The internet can only be an engine for growth if it is available. Roughly three out of every five people in the world remain without internet access, and in the poorest countries that figure can top 95 percent.
Countries such as Colombia recognized the importance of increased connectivity early on. In 2010, President Santos and then-ICT Minister, Diego Molano, spearheaded Plan Vive Digital to promote broadband connectivity throughout Colombia particularly in the remote and underserved areas. They recognized the economic and societal benefits that the internet and its services can bring to the rural population.
Now we see Argentina under President Macri’s new administration working on how to best open up the telecommunications and ICT sector there, both to encourage foreign investment and to extend the benefits of ICTs to its rural population. We will be sending a team, including the Federal Communications Commission and Commerce’s Commercial Law Development Program under our Technology Leadership Program (TLP), to Buenos Aires in early June to begin the discussion with the Ministry of Communications and offer our assistance. Chairman Wheeler and I expect to then meet with Argentine officials later in the summer.
And Cuba provides us with an interesting case study. I have seen firsthand through our discussions in Havana with the Ministry of Communications and ETECSA, the Cuba telecommunications operator, their interest in increased telecommunications infrastructure and services deployment throughout their country. The technical staff and agencies completely understand the economic benefits, but it will be up to the political leadership to make the ultimate decisions as to how far and how fast Cuba improves its telecom and ICT sector. Obviously, the Government of Cuba should “seize the day” now while interest in Cuba remains high.
Beyond those countries named, there are many other countries calling out for assistance and collaboration in achieving the promise of the internet.
That is why the United States recently created The Global Connect Initiative and effort to bring online the next 1.5 billion people by 2020. I am glad that IDB was able to participate in our recent Global Connect event at the World Bank.
Global Connect seeks to promote the following objectives:
(1) encouraging all countries to integrate Internet connectivity as a key part of their national development strategy;
(2) encouraging international development institutions, such as multilateral development banks and development agencies, to promote digital access; and
(3) promoting dialogue and action on how to harness, deploy, and enable innovative technologies to support affordable and sustainable connectivity for the unconnected, particularly in power-deficient communities.
Overall, Global Connect also aims to create the policy environments around the world to encourage investment in infrastructure and innovative technical solutions that expand connectivity.
The Global Connect Initiative is building a broad network of countries, institutions, and private stakeholders who will work together to promote and support global broadband connectivity. It was first previewed by Secretary Kerry almost a year ago and launched by Under Secretary Novelli last fall. Since that time, the Global Connect initiative has highlighted over 65 new and existing connectivity initiatives totaling over $20 billion.
Connecting an additional 1.5 billion people to the internet is an ambitious goal with profound economic and development implications for the world. That is why IDB’s continuing participation in Global Connect is so important to helping us to make this goal a reality. We very much appreciate the partnership and collaboration.
The internet has served us well as a platform to provide anyone connected to it with an opportunity to contribute to political, economic, and social discourse. The creativity and innovation that has generated is furthering the global public good. It is an honorable effort and one on which our hemisphere can and should unite.
I appreciate your time and look forward to discussing with you how the United States, other countries, the development banks, and the private sector can work together to strengthen the digital economy, extend the benefits to the rest of the world, and preserve the internet as we know it for the future.