Econ 203 - the Evolving Economic Power of the Internet

The Evolving Economic Power of the Internet

The Ever Evolving Economic Power of the Internet

It can be agreed upon by many, that the internet is considered one of the most significance advances man has offered to economics. Using the internet, we have connected the entire world into one global economy. Businesses are now capable of conducting transactions with businesses in any location in the world. A firm can reach out to potentially millions of customers in other countries, thousands of miles away. This would all be impossible without the internet. Now why has the development of the internet become an important economic phenomenon?

To answer this question, I feel it is best to take a look into the past, before the age of the internet. If I was to try and explain our reality of the internet in today's world, to the average someone of just twenty five years ago, they would have most likely thought this was a story out of a science fiction novel. The possibilities of the internet are limitless. It has become a priceless tool in the markets today and it is something that continues to evolve the way we live, interact, and conduct business with others on a daily basis. The internet has increased productivity and efficiency to levels thought impossible not long ago. The internet affects every person in the world, whether they realize it or not. I am here to explain how this development of the internet is an economic phenomenon and how it has changed product markets in yesterdays world to product markets in today's world.

Why has the internet become an economic phenomenon? To answer this question I feel you need to look at the world before the internet and how the world of economics was conducted during those times. Before the internet, Businesses were limited to the number of people they could advertise their product to. This limited the total revenue of a business. There are only so many customers available in a local area. A businesses market was relatively small. If a business wanted to advertise their product, then they would have to resort to using radio advertisements, news paper articles, and handing out flyers by hand to customers. This way of marketing is time consuming. It requires hard work and it increases your businesses operating costs. This was the old way your parents and grandparents remember doing business.

Now imagine the world changes. You hear of a new invention called the internet. All of a sudden you could advertise your businesses products to anyone in the world with an internet connection. Now the amount of potential customers a business could attract went from a mere few thousand to millions! Just how many possible customers are their online? According to Intelligent Positioning (2010), "Internet usage has not even scratched the surface. Three quarters of the world's population of 7 billion people do not have internet access." That is about five billion people who do not have access to the internet! That leaves only two billion people who do have internet access. This means the worlds internet market is still in its infancy and these data figures are from 2010. The graph I provided at the end of this paper, illustrates the amount of internet users by population in major countries from 1990 to 2008. After observing this data you will see we still have many years to come, until we fully see the impact of our worlds growing internet consumer base.

Business online is the future, it is here to stay. As a result of the internet's ever growing market base, a business's potential income can increase astronomically. A businesses growth is only limited to the amount of customers they can sell their product to. Market competition is exploding and will continue to explode in today's online world. Businesses half a world away start competing with each other. The operating costs of businesses is reduced dramatically. Time spent conducting countless hours of advertising with word of mouth is a thing of the past. Your businesses advertisements can now be broadcasted to the entire world.

With the invention of the internet came many worldwide changes.