Slide 24 of 26
It is also comforting that we have a window of time in which to address these issues if we do not proceed at the glacial pace at which international agreements have commonly proceeded. The reason for the window is that the most difficult problems arise on the retail level, and, although transactions on the retail level are expanding very rapidly, they remain at a very low level. A recent report (July 19, 1999) prepared by The Boston Consulting Group indicates that revenues from online retailing in North America are expected to exceed $36 billion by the end of 1999, a projected growth rate of 145% from 1998. Total 1998 online revenues across all categories reached $14.9 billion, representing 0.5 % of all retail sales. Online orders in 1998 were up 200% and the number of online shoppers was up 300%.
Inefficiencies in the legal infrastructure will therefore have their usual negative effects on price and volume and lost opportunities. However, it is now becoming clear that these inefficiencies will have the more profound effect in the e-commerce market of reducing power of a strong multiplier that appears to be at work. A recent report (“The Emerging Digital Economy II”, dated June 22, 1999) from the US Commerce Department indicates that information technology industries contributed more than one-third of U.S. economic growth between 1995 and 1998, even though they account for just 8 percent of gross domestic product.