Saturday, 15 September 2007

Why India has the Online Advantage

Internet economy offers new opportunities to developing economies

Access to the internet is picking up in some large developing countries. The internet offers low risk possibilities to earn money. Citizens of developing countries have a very low income in USD, and thus have relatively more to gain from the internet.

When someone lives in the United States or in Europe, he has to earn a high income in absolute USD to live a decent live. In the U.S., the average GDP per head lays around 44,000 USD per year. In some European countries, this number lays even higher, for example Luxemburg with 88,000 USD and Norway with 72,000 USD. For citizens in these countries, earning a living through the internet is quite difficult. Their internet activities have to yield over 100 USD to even approach the U.S. average income, and even over 240 USD to get the Luxembourgian average. This basically means that only the people who are really good at something can ever dream of making enough money online to not need another source of income.

How different it is for inhabitants of countries with a much lower price level. For a set of products that costs you 10USD in the US, you will have to pay a lot less in a developing country, if you look at the actual price level and the exchange rate. This means that a citizen of the U.S. or Europe can buy a lot less for a dollar than a citizen of a developing country.

On the internet, the location of a person does not influence his opportunities for profit as it does in the physical world. Creating a website and earning money through advertisement can be done from New York or from New Deli without a difference in income for the same effort. Because the relative revenue is much higher for the person in India than it is for the person in the U.S., it is much more attractive for the Indian to earn online than it is for the American.

What does one need for earning money online?

First of all, one would need an internet connection. Currently, this is still quite a rare commodity in many developing countries, but this is changing fast, especially in the larger cities. Looking at the big picture, estimates are that in Asia, internet penetration is 11.8%, and in Latin America 19.8%. This means that in these regions, internet connectivity is sufficient to connect millions of people with the internet. [World Internet Usage by Internetworldstats]

Secondly, one would have to be able to communicate in a useful language. Currently, English is the main internet language, with 260 million English speaking users. Furthermore, the majority of websites are written in this language [Global Internet Statistics by UNESCO]. Most of the advertisement revenue possibilities prefer English usage, so writing in English is highly beneficial. Other useful languages are Chinese (120 million users), Japanese (80 million users) and Spanish (60 million users). This means that anyone with the proficiency in English, Spanish, Chinese or Japanese has a good starting position for earning some money online.

Considering that English is the most useful language, and considering that there are just a few low-wage countries where English is spoken, India has a really high potential starting position. The country has an internet penetration of only 3.7%, but this equals a total number of users of 42 million people. This number can be expected to grow fast in the near future. Because in India the average yearly GDP per capita lies at around 800 USD, only around 2.30 has to be earned daily to reach this average income. This is a number that is very easily achievable online through the use of advertisement programs and article writing websites. This means that the internet opens up a lot of new opportunities for Indian citizens to improve their income position.

To make use of this, I recommend the use of a website like Xomba, which allows a user to write content (articles, stories, news, opinions, observations, anything), and shares its ad revenue with its users. This works much more efficient than creating a stand-alone website, because the xomba site generates traffic to the content, and achieving an income of a couple of dollars a day becomes fairly easy, does not have any start-up costs and requires very little time.

More about making money with Xomba can be found here.

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