strategy

Investing in internet development

Synonyms:
Promoting investment in computer based information and communication technologies
Financing internet development projects
Context:
Since 1993 the European IT Observatory (EITO) annual reports have tracked relative investment in information and communication technologies (ICTs). Europe approximately matches Japan, but the USA has consistently shown a much higher propensity to buy and use ICTs. In 1998 Europe invested about 2.5% of GDP in ICTs, compared with 4.5% in the USA. Because average local costs for computers and telecommunications have usually been lower in the USA than in Europe, while per capita GDP is higher, the gap in acquisition and use of technologies is even larger than the percentage spend suggests. Annual ICT spending per capita shows a similar gap.

Shortage of venture capital in the EU means there are fewer European start-up companies and fewer services and web sites oriented to the demands of European users. One reason is that Europe has a higher proportion of capital held by institutions going for safe long term investments whereas in the US individuals tend to have a greater say in their portfolios and are more easily able to change the balance of funds and prepared to take risks. This impedes the flourishing of new ideas and new companies that can benefit from the new economy.

Claim:
1. It is no coincidence that the USA, which spends twice as much per capita on ICTs compared with Europe, also has enjoyed since the onset of the Internet era almost twice the rate of economic growth. That the USA, with a population only seven tenths that of the EU, now has almost the same total gross domestic product as Europe. Nor is it a coincidence that for a company anywhere in Europe it is now cheaper to phone a business partner in the USA than it is to phone one in any European country.
Subjects:
Information
Internet
Communication
Promotion
Finance
Investment
Informatics
Technology
Development
Type Classification:
F: Exceptional strategies