IT security costs countries more than gained: Report

ICT may contribute to a country's gains in terms of gross domestic product, but the associated security issues may be wiping out any net benefit according to a new report.
Written by Michael Lee, Contributor

The internet brings plenty of benefits to the world, including gross domestic product (GDP) growth via broadband, e-banking, online collaborative platforms and the promise of a global supply chain. However, according to Hathaway Global Strategies president Melissa Hathaway, few are considering the negative impacts that ICT investments have on GDP.

In a media briefing for the launch of a study into how prepared countries are to respond to online threats (PDF), Hathaway said that the negative impacts of issues such as intellectual property (IP) theft, denial of service attacks and identity theft were causing GDP degradation sometimes in excess of the gains experienced.

The Netherlands, for example, experienced a 1.6 percent growth in GDP in 2010 due to investments in ICT, however, IP theft accounted for a 2 percent degradation totalling 10 billion Euros.

The US saw a 2.2 percent growth in GDP in 2012, but a 1 percent or US$300 billion loss due to IP theft alone.

Likewise, despite Germany experiencing significant growth from ICT investment in 2010 at 4.2 percent, it lost 24 billion Euros, or 1.5 percent of its GDP due to IP theft.

(Image: Hathaway Global Strategies)

Only IP theft was examined for each of the three cases, leading Hathaway to speculate that the total loss of GDP could be significantly higher. She also said that it was likely that Australia was experiencing the same.

"The US is losing 1 percent, Germany is losing 1.5 percent just in intellectual property theft, and the Netherlands is losing 2 percent ... it stands to reason given that Australia is more connected than [the US] that she is also losing, at minimum, 1 percent GDP to intellectual property theft."

Although IP theft alone paints a dire picture for these countries, the true value of total GDP degradation due to online threats is not clear. According to Hathaway, this is because countries aren't focusing on online security threats as a priority.

"Not many countries are actually measuring what is going on. They don't want to bring transparency to it necessarily because then you have to start asking the tough questions."

She said that if governments began measuring the declining gains, it could force them to realign their ICT strategies with their security strategies. Each of the countries examined in the report typically do have some form of cyber security strategy, but Hathaway called for greater attention to the negative aspects, especially given more countries are becoming more connected.

For Australia in particular, Hathaway said focusing on doing something about security to minimise GDP degradation would become increasingly important once the National Broadband Network is more widely adopted and the nation's policies are revised.

"As Australia's working on its national cyber security centre and working on the refresh of its cyber security strategy, it will be important to identify the key industries that will need to be leveraged and mobilised to restore central services in the event of a crisis."

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