What is Network Effects

The economic impact of e-commerce in Singapore is measured via three channels: (1) aggregate demand stimulative effect of capital investment, (2) the productivity effect resulting from capital investment, and (3) of the price and cost reduction effect associated with the productive use of e-commerce transactions. Using input-output technique pioneered by Nobel laureate W. Leontief, and econometric analysis, it finds that e-commerce in Singapore accounts for S$35.5 billion of output (or sales revenue) and S$7.9 billion of value-added in 2018. These are respectively equivalent to 2.8% of the nation gross output and 1.7% of the annual GDP. E-commerce has supported more than 68,500 jobs and stimulated the formation of about 758 new company formation in the year. The value-added contribution by e-commerce is projected to grow from S$7.9 billion in 2018 to S$10.1 billion in 2020 and further to S$28.1 billion in 2030. As a percentage of GDP, e-commerce accounts for about 1.7% of GDP in 2018, and this proportion is expected to increase to 1.9% in 2020 and further to 3.5% in 2030.