Elkin: Political & Economic Instability Stall IT Growth

Thursday, April 12, 2001

Political and economic instability in Peru and Ecuador are obstructing foreign direct investment in the countries, which in turns slows down growth in the country's already struggling Internet and technology sector, stated Noah Elkin, analyst with US market research firm Emarketer (www.emarketer.com).

According to the International Telecommunications Union (ITU), Peru and Ecuador have among the fewest telephone lines and PCs per 100 inhabitants in the region. In addition, the International Monetary Fund predicts that these countries will have among the lowest GDP per capita in Latin America in 2001, with US$2,253 and with US$1,344 respectively. The wealthiest 20% of the population controls around 50% of national income, according to the World Bank's 2000 World Development Report.

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Elkin referred to research by Ecuadorian e-consultancy Yage, which estimates that Ecuador, with 13.2 million inhabitants, will have 390,000 Internet users by the end of 2001, while 790,000 of Peru's 27.5 million inhabitants will be connected. In Peru, low-cost internet access booths have emerged as an alternative for people who do not own PCs, making the Internet more accessible for the less affluent part of the population.

As for online habits, Yage found that both Ecuadorians and Peruvians prefer portals, news and banking sites. The consultancy predicted online advertising spending to reach some US$1mn in Ecuador and US$2.5mn in Peru this year.