Analysts predict major economic impact from Internet ‘doomsday’ scenario

  • 17 March 2008

Economists worldwide say that a one day “blackout” of the Internet would have a major impact on the global economy, according to a survey conducted by ICC and the Ifo Institute for Economic Research and released today.

The survey asked economists to predict the impact on their country’s economy if the Internet completely shut down for a day worldwide. A total of 1,004 responses from economists in 90 countries were received.

In almost all regions of the world the economists polled said businesses would suffer major losses and costly damage which would have huge and lasting effects.

Concerns were especially pronounced in places where Internet penetration is highest, including the US and Western Europe, particularly in Denmark, Sweden, Finland and Switzerland, and in several Asian countries, including Japan, Taiwan, Thailand, India and Pakistan. In contrast, in the CIS countries covered by the survey – Russia, Ukraine, Kyrgyzstan and Kazakhstan – the majority of polled economists stated that a day-long shut down of the Internet would lead to short-term delays but that the economy would not be considerably damaged.

“Business, governments and people depend on the Internet for such a large number of their activities today. We must prioritize the secure and stable functioning of the Internet. Ensuring there  are appropriate policy, legal and regulatory frameworks is essential to preventing economic loss, and disruption of peoples’ lives while still maximizing the opportunities the Internet represents,“ said Herbert Heitmann, Chair of the ICC’s Commission on Electronic Business, IT and Telecoms (EBITT). Mr Heitmann is also Chief Communications Officer for business software maker SAP AG.

Four undersea communication cables were cut during a one week period at the end of January, providing real-life examples of the massive losses which can occur when Internet service is interrupted. The cuts caused a dramatic breakdown in Internet access in much of the Middle East, with India, the US and Europe also experiencing slowdowns. The cuts wreaked major damage to the Internet backbone despite back-up routers and raised questions about the safety of the oceanic network that handles most of the world’s Internet and telephone traffic.

More than 80% of economists who participated in the ICC/Ifo survey also agreed that Internet related policies should be crafted with the input of all concerned stakeholders – business, government, civil society and technical experts.

“It takes adherence to good practices. It takes the experience of all stakeholders to develop and implement policies and frameworks that are put in place nationally. It must be a collaborative effort on policy and in practice,” Mr Heitmann said.

The EBITT Commission is made up of business leaders and experts from many sectors and geographies. The Commission develops policy positions and practical tools on e-business and information and communications technologies that provide valuable guidance for governments and businesses to use when formulating policies and regulations.