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The demand for information and communication is being reshaped around the globe, especially in countries with a growing middle class such as the Russia, India and China and some N-11 (Bangladesh, Egypt, Indonesia, Iran, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam) economies. Recent projections from the International Monetary Fund indicate that over the next five years, growth in real Gross Domestic Product (GDP) in emerging markets will be substantially higher than in developed economies.
Notably, the large BRIC economies are expected to expand by four to five percentage points more each year from 2010-2015 than the established markets of G-7 nations including the U.S., U.K., France, Germany, Italy, Canada and Japan.
New Markets, New Models Market players in media, telecommunications, consumer products and financial services seeking to reach the rising middle class in forming markets will need to re-think standard market development approaches. The key to success lies in understanding the unique ways in which the demand for information and communication will evolve, and how those patterns differ from established countries.
A simple way to think about the demand for information and communication is to examine Internet and mobile phone penetration for every 100 people in a country. Analyzing the relationship of those two technology penetration levels with other variables such as income and time provides a good forward looking window into demand evolution.
Defying Classic Economic Models The difference in Internet (information) and mobile phone (communication) patterns and trends between developing and emerging economies is striking. Internet penetration for established economies follows a fairly typical pattern, rising with income levels, and requiring a threshold of around $20,000 of per capita GDP to achieve 50% penetration.
Not so for mobile communication, for many reasons, several of which are raised here. First, mobile penetration often exceeds 100% because people own multiple mobile phones. Second, while mobile phone penetration also rises with per capita GDP, it happens earlier, and faster, than Internet adoption. Instead of a $20,000 threshold, in many countries mobile phone penetration exceeds 50% with a per capita GDP as low as $5,000. In middle income countries such as Russia and Saudi Arabia, mobile phone penetration rates are even higher than those of more advanced economies such as the U.S. and Canada because mobile is an affordable, accessible alternative to the Internet. Altogether, the analysis on every dimension suggests that mobile communication is a truly disruptive phenomenon, acting on a global scale.
Read the full article here.
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