A March 2014 report by the consultancy firm Dalberg is a first attempt to better understand the economic impact of Internet openness.  The report, which is a comprehensive effort to define the core attributes of an open Internet, describes different types of restrictions that inhibit its openness and analyzes how Internet openness benefits the economy in terms of the ICT sector, commerce, investment, innovation and social gains.

On the benefits of Internet openness, the report concludes that: “higher levels of Internet openness are associated with larger and more dynamic Internet economies which, in turn, contribute more to the overall economy – regardless of a country’s level of income.”

One aspect of a dynamic Internet economy is online commerce. The report finds that Internet openness indeed supports the use by both consumers and firms of online commerce.  Research conducted by eBay on international trade contributed to Dahlberg’s conclusion that an open Internet supports online commerce activities.

As the report explains, online commerce can create new economic activity as well as enhance firm-level productivity and growth. Indeed, the research that economists from Geneva University and Sidley Austin have carried out based on eBay data shows significant gains from moving international trade to online marketplaces, in particular for developing countries (see e.g. this article). In our recent study on India, you find an assessment of gains accrued by country moving towards online commerce (see figure 10 on page 20).

This report is a timely reminder about the importance of standing up for an open Internet. It validates the European Parliament in its decision to protect an open Internet and it puts the spotlight on the different forms that Internet restrictions can take and the range of harmful effects they may have on economic performance.

Read the Dalberg report “Open for Business? The Economic Impact of Internet Openness.”