Approaches to Defining and Measuring Russia’s Internet Economy
28 Pages Posted: 4 Jun 2016
Date Written: June 3, 2016
Our study object is the Russian Internet economy, i.e. economic activities of companies relying on the Russian-language segment of the World Wide Web. The purpose of this study is to classify businesses engaged in the national Internet economy and measure its size (as a share of GDP) using official statistics.
The analysis of international approaches used for such studies allowed us to classify these according to the following criteria: the direct impact of the Internet on the economy, indirect economic impact of the Internet, and its indirect impact on the social sphere.
To assess the size of the Russian Internet economy we used the approaches applied by international organizations (OECD, BCG, McKinsey) for the analysis of the direct impact of the Internet on the economy [BCG (2014), McKinsey (2011), OECD (2014), etc.].
The authors singled out three sectors within the Internet economy: the sector of ICT infrastructure and its maintenance; the sector of companies doing business purely on the Internet, and the sector of companies combining an online and offline business. To assess the share of the Internet economy in GDP using the production approach we first defined the above sectors in accordance with All-Russian Classification of Economic Activities (OKVED) Rev. 1.1 and subsequently calculated gross value added (GVA) for each sector. For this purpose, the GVA data calculated by Federal Service of State Statistics (Rosstat) was disaggregated while the share of the GVA contributed by the third sector companies (i.e. combining an online and offline business) was assessed using the results of special surveys and Rosstat data.
To measure the size of the Internet economy using the expenditure approach we focused on consumer spending on goods bought through the Internet, ICT equipment and Internet access as well as institutions’ expenditure for ICT equipment, fixed capital investment of enterprises engaged in Internet activities, public sector ICT spending, net exports of ICT goods and services.
According to our estimates obtained by two methods such as the production approach and expenditure approach, the share of the Internet economy in GDP in 2014 amounted to 2.7 and 2.6%, respectively.
Future studies would require a more detailed definition and description of the Internet-related economic activities on the basis of OKVED2 with subsequent calculation of GVA for appropriate companies as well as development of statistical tools for collecting data on household spending.
Keywords: Internet economy, online and offline business, Internet, System of National Accounts
JEL Classification: C80, F62, E01, L16, L81, M21, O14
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