The Big Chill: Don’t Let Cybersecurity Threats Slow Productivity & Economic Growth

Trust is an essential underpinning of life in the digital age. We trust our friends on Facebook not to share our private family photos. We trust our email clients and antivirus software to keep viruses and spam at bay. But for many people, the risks of using the internet are scary enough to curb their online activities.

Earlier this year, the U.S. Department of Commerce’s National Telecommunications & Information Administration (NTIA) looked at the results of a survey by the U.S. Census Bureau in 2015. Out of 41,000 U.S. households, 19% reported security breaches, identity theft, or other malicious activity in the previous 12 months. Among households with mobile data plans, 22% had experienced an online security breach. The most pressing concern, cited by 63% of online households, was identity theft, followed by credit card or banking fraud, and various forms of data collection.

What’s of greater concern is the chilling effect this has had on online activities. Nearly half of online households said that their worries had stopped them from engaging in financial transactions, buying goods or services, posting on social networks, or commenting on political issues online; 30% refrained from at least two of these activities. It’s not surprising that if users were concerned about a particular risk, they would avoid a related activity. Thus, 35% of households worried about identity theft had decided not to conduct financial transactions in the 12 months prior to the survey.


“Privacy and security concerns deterred each of these important activities in millions of households,” the NTIA’s Rafi Goldberg wrote. “In addition to being a problem of great concern to many Americans, privacy and security issues may reduce economic activity and hamper the free exchange of ideas online.”

This is a disturbing finding; imagine if larger groups of people or even entire business sectors curtailed their online activities so significantly. The importance of information and communication technologies (ICT) to economic prosperity cannot be overstated. ICT accounted for some two-thirds of U.S. total factor productivity growth between 1995 and 2004 and about one-third since then, according to the Information Technology and Innovation Foundation (ITIF), a nonpartisan think tank in Washington. Here in Japan, companies, universities and R&D centers have developed advanced technologies but many firms still use outmoded, inefficient means of communication such as fax machines. Japan hasn’t been among the top 10 most developed ICT nations since 2012, according to an International Telecommunication Union ranking. It’s no wonder that the country has lagged its G7 peers in productivity growth, and its service sector is only half as productive as that of the U.S. Japan should be looking at ICT and cybersecurity as a business enabler, a topic I took up earlier this month.


. . . . . . . .

Leave a Reply