Executive Summary ........................................................................................................................ 1I.

II.

Introduction .............................................................................................................................. 5A.

What is the metaverse? .................................................................................................................5

B.

Uses of metaverse technologies around the world ........................................................................8

C.

Challenges of measuring the economic impact of the metaverse ...............................................11

Economics of Innovation....................................................................................................... 12A.

Theories of innovation..................................................................................................................12

B.

Economic impact of innovation ....................................................................................................17

C.

Examples of breakthrough technologies......................................................................................19

III. Mobile Technology ................................................................................................................. 22
A.

Focus on mobile technology ........................................................................................................22

B.

Literature on the economic impacts of mobile technology...........................................................24

IV. Empirical Analysis of the Economic Impact of Mobile Technology .................................. 27V.

A.

Model ...........................................................................................................................................28

B.

Data..............................................................................................................................................29

C.

Summary statistics .......................................................................................................................31

D.

Regression results .......................................................................................................................34

E.

Robustness ..................................................................................................................................36

Analysis of the Potential Economic Impact of the Metaverse ........................................... 37
A.

Quantification of the potential impact of the metaverse on GDP .................................................38

B.

Challenges and opportunities for metaverse adoption ................................................................41

VI. Conclusion .............................................................................................................................. 44
About the Authors ......................................................................................................................... 45

THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Executive Summary
This study investigates the potential contribution of the metaverse to global economic activity. The metaverse asconceived today is considered by many a “successor” of the Internet and is sometimes referred to as an“embodied Internet.” One way to think about the metaverse is as a set of interconnected digital spaces, including
immersive XR experiences that combine the digital and physical words, in which individuals can easily move
between different spaces and experiences as well as interact and collaborate with other people who are not in thesame physical space. Some of the early components of the metaverse and the experiences and activities it isenvisioned to support or enable are already in exhibit, such as augmented reality, virtual reality, mixed reality,
blockchain, and non-fungible tokens. These technologies, which are expected to be the backbone of themetaverse and its offerings, are already being used around the world by businesses and creators. As users
continue to adopt these technologies, their potential to transform society in unpredictable ways will only accelerate.
Estimating the economic impact of the metaverse presents substantial challenges. Economic theories provide
some insights into how new innovations can be expected to evolve and impact economies, but as with all
innovations, it is impossible to predict all of the areas in which metaverse technologies will be used, the extent andtiming of their adoption, the innovations that will be developed that build upon the metaverse, and all of theirassociated economic impacts. Put simply, there is no “metaverse” to measure as of today. Yet, rather than wait forsome point in the future, we can apply existing tools and data from related sectors, technologies, and consumer
behaviors to create a potential analogue for the metaverse. In identifying such an analogue, our goal is not tocompare the metaverse to another technology—after all, if the metaverse were similar to an existing technology
then it would not be an innovation—but rather, our goal is to learn from the adoption process and economic impactof an existing technology to draw inferences about the potential adoption process and economic impact of themetaverse.
We draw from the deployment and innovation impact of mobile technology to estimate the potential impact of themetaverse. We could in theory use any breakthrough technological innovation as an analogue for the metaverse,
but we view mobile technology—which we define to include mobile devices enabled with the Internet and theirassociated infrastructure and ecosystem1—as particularly well suited for a number of reasons. The way mobile
technology combined existing technologies such as phones, the Internet, cameras, and mp3 players and evolved
to change how we use the Internet is reminiscent of the path the metaverse appears poised to follow. Combining
existing technologies such as phones, the Internet, cameras, and mp3 players into a single mobile device
fundamentally altered how we connect with the Internet by overcoming limitations of geography. Existing
conceptions of the metaverse have a similar flavor of combining existing technologies, such as AR/VR,
videoconferencing, multi-player gaming, and digital currency, and turning them into something new. While mobile

1

We measure mobile technology adoption as the number of active mobile broadband subscriptions per 100 people, sourced from theInternational Telecommunication Union (ITU). ITU’s definition of active mobile broadband subscriptions is as follows: “Active mobile‐
broadband subscriptions refers to the sum of active handset‐based and computer‐based (USB/dongles) mobile‐broadband subscriptions to
the public Internet. It covers actual subscribers, not potential subscribers, even though the latter may have broadband‐enabled handsets.
Subscriptions must include a recurring subscription fee or pass a usage requirement – users must have accessed the Internet in the last
three months. It includes subscriptions to mobile‐broadband networks that provide download speeds of at least 256 kbit/s (e.g. WCDMA[(3G)], HSPA [(3G)], CDMA2000 1x EV‐ DO [(3G)], WiMAX IEEE 802.16e [(4G-level)] and LTE [(4G)]), and excludes subscriptions that
only have access to GPRS, EDGE and CDMA 1xRTT.” See ITU, “WTI Indicators with Definitions,” p. 12, available athttps://www.itu.int/en/ITU-D/Regional-Presence/AsiaPacific/Documents/Events/2017/Augaspstat2017/WTI_Indicators_with_Definitions_14Aug2017_final.pdf

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

devices untethered the Internet from desktop computers, the metaverse is expected to further break down location
barriers and transform a wide range of industries by enabling more seamless and immersive experiences as wellas creating a sense of presence without the need to be physically present in a location. Similar to mobile
technology, the range of expected applications for the metaverse is far-reaching, including the communications,entertainment, education, healthcare, manufacturing, and retail sectors.
Existing research studies define and measure mobile technology in different ways, but collectively they indicatethat in a wide range of contexts and across various definitions and measures, mobile technology has had asubstantial and beneficial impact on global and local economies, as summarized in Figure 1.

Figure 1. Key Findings from Research on the Economic Impacts of Mobile Technology▪

Mobile technology is associated with a large share of global GDP, accounting for an estimated $4.4
trillion (5.1%) of global GDP in 2020, including direct contributions from mobile operators and the“rest of [the] mobile ecosystem” as well as “[a]dditional indirect and productivity benefits.” Themobile ecosystem, as defined by GSMA, includes “handset and device makers, software
companies, equipment providers and internet companies, as well as organisations in adjacentindustry sectors.” Mobile technology’s contribution to GDP can be attributed at least partially to new
growth in GDP.

▪

The mobile technology sector directly employed about 12 million people globally—including, forexample, direct employment by mobile operators, distributors, and retailers—and indirectly
employed another 13 million people globally in adjacent industries in 2020.

▪

By increasing access to information, mobile technology has reduced price dispersion of agricultural
goods and increased welfare in developing countries. Mobile technology has also increased
financial inclusion in certain African countries. Here, “mobile technology” refers to mobile phones.

▪

In addition to creating new jobs and increasing access to information, mobile technology may drive
economic growth in undeveloped economies by improving firms’ productive efficiency; reducing
households’ risk by improving communication within their social network; and delivering financial,
agriculture, health, and education services via mobile apps and platforms. Here, “mobile technology”
refers to mobile phones.

▪

While many studies indicate that mobile technology has had a net positive economic impact, newtechnology has the potential to amplify existing inequalities. To mitigate this, research suggests thattechnological innovations should aim to “amplify already successful development efforts or positively
inclined intent” in developing economies.

While it is possible that, like many other previously “hyped” technological innovations, the metaverse never comesto fruition as it is currently envisioned, the goal of our analysis is not to predict whether the metaverse will be
successful. Rather, we focus on measuring the potential economic impact of the metaverse if it were to evolve likeprior successful technologies in terms of the level and rate of adoption by users and the impact on GDP. The
existing research on the economic impacts of mobile technology indicates that if the metaverse were to evolve in asimilar way as mobile technology, it could have substantial and beneficial impacts on global and local economies.
To develop empirical estimates of the potential economic impact of the metaverse, we first build on existing
literature and estimate the impact of mobile technology on GDP growth using country-level, annual data on: (1)PAGE 2

THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

mobile broadband adoption from the International Telecommunication Union and (2) GDP and a set of control
variables from the World Bank, both for the period 2007-2019. Our regression results indicate that a 10% increasein mobile broadband adoption is associated with a 0.087 percentage point increase in GDP growth.
We then apply the same estimated impact of adoption on GDP and the same compound annual growth rate ofmobile adoption to obtain an estimate of the metaverse’s contribution to GDP after the first 10 years of its
adoption. Our main result is that if the metaverse were to be adopted and grow in a similar way as mobile
technology, then we would expect it to be associated with a 2.8% contribution to global GDP after 10 years. These
numbers represent incremental growth in GDP associated with the metaverse and do not account for any potential
displacement of GDP from other industries and sectors that may also occur over time. Regional results are shownin Figure 2 below.2

Figure 2. Summary of Results

RegionAPAC
CanadaEurope
India
LATAM
MENAT
SSA
United States
GlobalCompound Annual Assumed
Metaverse’s
Metaverse’s Total
SecularGrowth Rate ofShare of 10th Contribution to GDP
Mobile Adoption GDP Growth Year GDP
in 2031 ($ Trillions)

31.2%
12.2%
22.6%
63.1%
66.9%
83.9%
23.5%
29.7%
23.3%

4.3%
1.1%
1.5%
5.4%
1.1%
1.9%
1.0%
1.6%
2.0%

2.3%
0.9%
1.7%
4.6%
5.0%
6.2%
1.8%
2.3%
2.8%

$1.04
$0.02
$0.44
$0.24
$0.32
$0.36
$0.04
$0.56
$3.01

If we assume that metaverse adoption were to begin today, in 2022, then we can also estimate the metaverse’s
potential contribution to GDP in dollars and compare it to industry projections of the potential size of themetaverse. Our model implies that if metaverse adoption began today, it would have a contribution to global GDP
of $3.01 trillion (measured in 2015 U.S. dollars) in 2031. This estimate lies within the range of existing industry
projections, which include estimates ranging from $800 billion to $2 trillion over the next few years, which tend to
focus on near-term impacts on gaming, social media, ecommerce, and live entertainment, for example, to longterm estimates ranging from approximately $3 trillion to over $80 trillion.
The extent to which our mobile technology model provides a good estimate of the economic potential of themetaverse depends on how similar the rate and extent of metaverse adoption and its impact ultimately are relative
to the rate and extent of mobile technology adoption and its impact. It is impossible to know today whether theseassumptions will hold, but we can identify some factors that may contribute to future outcomes. For example,
development of the infrastructure and technology required for the metaverse is expected to take time, and building
an accessible, inclusive, and safe metaverse is also going to play a vital role in accelerating metaverse adoption

2

For Canada, the compound annual growth rate of mobile adoption and the metaverse’s share of 10th year GDP and total contribution to
GDP in 2031 are likely understated due to limited data availability. See Sections IV–V.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

and enabling further development of its innovative technologies. How exactly these types of challenges andopportunities unfold in the coming years will determine the rate of adoption and economic impact of the metaverse.
Furthermore, while our empirical analysis suggests that the metaverse, if successful, has the potential to have asubstantial and beneficial impact on the economy in aggregate, the impacts of the metaverse are likely to be felt
differently in different sectors of the economy, in different regions, at different points in time, and for different
people. Further research is needed to quantify these heterogeneous impacts and to measure the potential
displacement of industries and restructuring of local economies that may also accompany the growth of themetaverse.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

I.

Introduction

This study investigates the potential contribution of the metaverse to global economic activity. We employ several
methods to estimate the metaverse’s economic contribution, including econometric analyses, economic literature
review, and public sources review.

A. What is the metaverse?
The metaverse as conceived today is considered by many as a “successor” of the Internet.3 While there is noagreed upon definition of the metaverse, one way to think about it is as an expansive network of digital spaces,
including immersive 3D experiences in augmented, virtual, and mixed reality, that are interconnected andinteroperable so you can easily move between them, and in which you can create and explore with other people
who aren’t in the same physical space as you.4 Some have referred to the metaverse as an “embodied internet” inwhich individuals will feel as if they are actually “present” in experiences and not simply looking at experiences
through their screens.5 This means that interacting with the Internet (and the devices that provide access to the3See, e.g., Ball, Matthew, “Framework for the Metaverse,” matthewball.vc, June 29, 2021, available athttps://www.matthewball.vc/all/forwardtothemetaverseprimer (“The Metaverse is best understood as ‘a quasi-successor state to the mobileinternet’.”); Facebook, Inc., “Second Quarter 2021 Results Conference Call,” July 28, 2021, pp. 3-4 (“[Mark Zuckerberg, CEO]: So what is
the metaverse? It's a virtual environment where you can be present with people in digital spaces. You can kind of think about this as anembodied internet that you're inside of rather than just looking at. We believe that this is going to be the successor to the mobileinternet…[W]e also need to make sure we’re helping to build ecosystems so millions of other people can participate in the upside andopportunity of what we're all creating…In order for the metaverse to fulfill its potential, we believe that it should be built in a way that isopen for everyone to participate.”); Meta, “Founder’s Letter, 2021,” October 28, 2021, available athttps://about.fb.com/news/2021/10/founders-letter/.

4

See, e.g., Meta, “Building the Metaverse Responsibly,” September 27, 2021, available at https://about.fb.com/news/2021/09/building-themetaverse-responsibly/ (“The “metaverse” is a set of virtual spaces where you can create and explore with other people who aren’t in thesame physical space as you. You’ll be able to hang out with friends, work, play, learn, shop, create and more.”); Design at Meta,“Designing our new company brand: Meta,” October 28, 2021, available at https://design.facebook.com/stories/designing-our-newcompany-brand-meta/ (“The metaverse is the next evolution of social technology — where you can share immersive experiences withpeople even when you can't be together in person, and do things together you couldn't do in the physical world.”); Ball, Matthew,“Framework for the Metaverse,” matthewball.vc, June 29, 2021, available at https://www.matthewball.vc/all/forwardtothemetaverseprimer(“The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced
synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of
data, such as identity, history, entitlements, objects, communications, and payments.”); Herrman, John and K. Browning, “Are We in the
Metaverse Yet?” The New York Times, October 29, 2021, available at https://www.nytimes.com/2021/07/10/style/metaverse-virtualworlds.html ([Tim Sweeney:] “In the metaverse, you and your friends and your appearance and cosmetics can go from place to place andhave different experiences while remaining connected to each other socially.”); Cook, John, “We asked seven venture capitalists if themetaverse is the next big thing or just a lot of hype,” GeekWire, November 23, 2021, available at https://www.geekwire.com/2021/weasked-seven-venture-capitalists-if-the-metaverse-is-the-next-big-thing-or-just-a-lot-of-hype/; ter Weijde, Rens, “Understanding The
Metaverse,” Forbes, March 3, 2022, available at https://www.forbes.com/sites/forbestechcouncil/2022/03/03/understanding-themetaverse/.

5Ball, Matthew, “Framework for the Metaverse,” matthewball.vc, June 29, 2021, available athttps://www.matthewball.vc/all/forwardtothemetaverseprimer (“Metaverse iterates further by placing everyone inside an ‘embodied’, or‘virtual’ or ‘3D’ version of the internet and on a nearly unending basis. In other words, we will constantly be ‘within’ the internet, rather thanhave access to it, and within the billions of interconnected computers around us, rather than occasionally reach for them, and alongside allother users and real-time. […] The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds
which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence,
and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”). See also Facebook, Inc.,“Second Quarter 2021 Results Conference Call,” July 28, 2021, pp. 3-4 (“[Mark Zuckerberg, CEO]: So what is the metaverse? It's a virtualenvironment where you can be present with people in digital spaces. You can kind of think about this as an embodied internet that you're
inside of rather than just looking at. We believe that this is going to be the successor to the mobile internet…[W]e also need to make sure
we’re helping to build ecosystems so millions of other people can participate in the upside and opportunity of what we're all creating…Inorder for the metaverse to fulfill its potential, we believe that it should be built in a way that is open for everyone to participate.”). See alsoMeta, “Founder’s Letter, 2021,” October 28, 2021, available at https://about.fb.com/news/2021/10/founders-letter/ (“The next platform will
be even more immersive — an embodied internet where you’re in the experience, not just looking at it. We call this the metaverse, and it
will touch every product we build. The defining quality of the metaverse will be a feeling of presence — like you are right there with anotherperson or in another place.”).

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Internet) has the potential to be much more natural, incorporating modes of communication that include gestureand voice, such that individuals are not limited to typing or tapping.6 In addition, the metaverse is envisioned to beable to host almost all the activities we currently take part in (e.g., socializing, work, learning, entertainment,
shopping, content creation, etc.) and make new types of activities possible as well.7
According to Matthew Ball, a technology expert and venture capitalist, the concept of the metaverse has several
characteristics. First, the metaverse is expected to be a continuous experience without pauses and delays,
including an unlimited number of users. Second, the metaverse is expected to be an open market, wherebusinesses and individuals would freely engage in activities and generate content and experiences. Third, themetaverse is expected to encompass both the digital and physical worlds and offer an extraordinary“interoperability of data, digital items/assets, content, and so on.”8
The vision of the future seamless interoperability of the metaverse is very different from what we have now. Today,
the digital world remains incompatible. For example, a user is required to have an individual account to access asocial media app such as Twitter or TikTok and an individual account to access a gaming console such as Xbox or
PlayStation. But in the metaverse a user would be empowered to consume digital goods and services seamlessly.9
Time Magazine’s Andrew Chow supports this vision and writes, “Instead of having separate Facebook and Twitter
accounts in which everything you post is owned by those corporations, you will be able to own your digital
personhood and all of your ideas and digital belongings wherever you go.”10 For example, an individual could
purchase a digital piece of clothing or accessory from a platform and still “wear” it when they visit another platform,
as opposed to that digital good being restricted for usage within the platform from which the individual initiallypurchased it.11 Evonne Heyning, Co-Chair of the Open Metaverse Interoperability Group, echoes that

6

Meta, “The Metaverse and How We’ll Build It Together -- Connect 2021,” [YouTube video], available athttps://www.youtube.com/watch?v=Uvufun6xer8, 9:54-10:18.

7

Meta, “The Metaverse and How We’ll Build It Together -- Connect 2021,” [YouTube video], available athttps://www.youtube.com/watch?v=Uvufun6xer8, 1:09-1:33; Ball, Matthew, “Framework for the Metaverse,” matthewball.vc, June 29, 2021,
available at https://www.matthewball.vc/all/forwardtothemetaverseprimer (“Overall, The Metaverse will significantly broaden the number ofvirtual experiences used in everyday life (i.e. well beyond video games, which have existed for decades) and in turn, expand the number ofpeople who participate in them.”).

8

Ball, Matthew, “The Metaverse: What It Is, Where to Find it, and Who Will Build It,” matthewball.vc, January 13, 2020, available athttps://www.matthewball.vc/all/themetaverse.

9Ball, Matthew, “The Metaverse: What It Is, Where to Find it, and Who Will Build It,” matthewball.vc, January 13, 2020, available athttps://www.matthewball.vc/all/themetaverse. See also Radoff, Jon, “Web3, Interoperability and the Metaverse,” Medium, November 22,
2021, available at https://medium.com/building-the-metaverse/web3-interoperability-and-the-metaverse-5b252dc39da (“Right now, youprobably use Facebook Login or Google Login to interact with a large number of online applications. … An important part of Web3 isinverting this model: instead of having a company own your identity and then granting you access to other applications — you will own youridentity and choose which applications to interact with. This is accomplished by using a digital wallet such as Metamask (for Ethereum andETH-compatible blockchains) or Phantom (used on the Solana blockchain). Your wallet becomes your identity, which can then allow you touse various decentralized applications on the internet that need to interact with your currencies and property. This includes decentralized
finance applications — as well as metaverse experiences that will draw upon interoperable avatars, items for self-expression, game items,etc.”).

10

Chow, Andrew R., “Why TIME Is Launching a New Newsletter on the Metaverse,” Time, November 18, 2021, available athttps://time.com/6118513/into-the-metaverse-time-newsletter/.

11

See, e.g., Meta, “The Metaverse and How We’ll Build It Together -- Connect 2021,” [YouTube video], available athttps://www.youtube.com/watch?v=Uvufun6xer8, 6:32-7:17 (“Importantly, you should be able to bring your avatar and digital items acrossdifferent apps and experiences in the metaverse.”); 37:48-37:55 (“And most importantly, there’ll be a real sense of continuity, where thethings you buy are always available to you”).

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

interoperability is what sets the metaverse apart: “the metaverse isn’t a single firm or organization’s product orspace, or even all of them together — it’s the way they’re connected.”12
In addition to collaboration and technological advances on a massive scale, the metaverse is going to requireelevated user experience, sophisticated telecoms infrastructure, and human-machine interfaces. Some of thesecomponents are well advanced already, while others still need to be created and developed. Augmented reality(AR),13 virtual reality (VR),14 mixed reality (MR),15 extended reality (XR),16 blockchain,17 and non-fungible tokens(NFTs or “tokens”)18 are fledgling technologies of today that are expected to be the backbone of the metaverse orof social and economic activity within the metaverse—for example, blockchain and NFTs are expected to play acentral role in the exchange of digital goods within the metaverse.19 Figure 3 previews some examples of how
these component technologies are in use today. Additional examples of use cases for regions around the world
are described in the next section.

12Herrman, John, and Browning, Kellen, “Are We in the Metaverse Yet?” The New York Times, October 29, 2021, available athttps://www.nytimes.com/2021/07/10/style/metaverse-virtual-worlds.html/.

13

Augmented reality (“AR”) is a real‐world environment combined with computer‐generated sensory input such as sound, video, andgraphics, and is designed to enhance a person’s perception of reality by overlaying the real world with additional information. See, e.g., IGI
Global, ’What is Augmented Reality,” available at https://www.igi-global.com/dictionary/augmented-reality/1858.

14

Virtual reality (“VR”) describes a three‐dimensional, computer‐generated environment in which a person can become immersed andexplore and interact with their surroundings. See, e.g., Virtual Reality Society, “What is Virtual Reality?” available athttps://www.vrs.org.uk/virtual-reality/what-is-virtual-reality.html.

15

Mixed reality (“MR”) is a blend of physical and digital worlds, unlocking natural and intuitive 3D human, computer, and environmental
interactions. This new reality is based on advancements in computer vision, graphical processing, display technologies, input systems, andcloud computing. See, e.g., SeniorCare2Share, "What is Mixed Reality," available at https://www.seniorcare2share.com/what-is-mixedreality/; CaesarVR, “What is Mixed Reality?” available at https://www.caesarvr.com/vr-ar-news/what-is-mixed-reality.

16

Extended reality (“XR”) is an umbrella term that combines VR, AR, and MR. See, e.g., Gerencer, Tom, “What is Extended Reality (XR) andHow Is it Changing the Future?” hp, April 3, 2021, available at https://www.hp.com/us-en/shop/tech-takes/what-is-xr-changing-world; Northof 41, “What really is the difference between AR/MR/VR/XR?” Medium, March 20, 2018, available at https://medium.com/@northof41/whatreally-is-the-difference-between-ar-mr-vr-xr-35bed1da1a4e.

17

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.
Assets transacted and tracked in blockchain can be tangible—such as a house, car, cash, or land—or intangible—such as intellectual
property, patents, copyrights, or branding. Virtually anything of value can be tracked and traded on a blockchain network, reducing risk andcutting costs for all involved. See, e.g., IBM, “What is blockchain technology?” available at https://www.ibm.com/topics/what-is-blockchain.

18

Non-Fungible Tokens (NFTs) are an example of a digital good that has real-world value. NFTs represent real-life assets and are not
duplicable, unlike other digital assets such as a .jpg file, where a copy is indistinguishable from the original. NFTs are stored on publicfacing digital ledgers called blockchain. See, e.g., Kaczynski, Steve and S. D. Kominers, “How NFTs Create Value,” Harvard Business
Review, November 10, 2021, available at https://hbr.org/2021/11/how-nfts-create-value; Conti, Robyn and J. Schmidt, “What Is An NFT?
Non-Fungible Tokens Explained,” Forbes Advisor, February 15, 2022, available at https://www.forbes.com/advisor/investing/nft-nonfungible-token/.

19

Blockchain, along with the variety of cryptocurrencies it can support, is already being used to purchase digital goods and assets in existing
virtual platforms and could continue supporting digital goods transactions in the metaverse. Beyond individual purchases, the decentralized
nature of blockchain-based finance is believed to be well suited for economic activity within a metaverse that is envisioned as adecentralized, interoperable network of virtual worlds and environments. NFTs, built upon blockchain, are envisioned to assign value todigital objects as well as represent and/or prove rights of ownership, usage, etc. to a digital environment or asset. See Marr, Bernard, “TheImportant Links Between NFTs, Blockchain, And The Metaverse,” Bernard Marr & Co, November 30, 2021, available athttps://bernardmarr.com/the-important-links-between-nfts-blockchain-and-the-metaverse/. In addition, community-driven content and usergenerated content, in which NFTs currently play prominent roles, are expected to become more important in the metaverse. See Radoff,Jon, “The Metaverse Value-Chain,” April 7, 2021, available at https://medium.com/building-the-metaverse/the-metaverse-value-chainafcf9e09e3a7; Herrman, John, and Browning, Kellen, “Are We in the Metaverse Yet?” The New York Times, October 29, 2021, available athttps://www.nytimes.com/2021/07/10/style/metaverse-virtual-worlds.html/. See also, Ball, Matthew, “Framework for the Metaverse,”
matthewball.vc, June 29, 2021, available at https://www.matthewball.vc/all/forwardtothemetaverseprimer (“Personally, I’m tracking the
emergence of the Metaverse around eight core categories […] You’ll note ‘crypto’ or ‘blockchain technologies’ are not a category. Rather,
they span and/or drive several categories, most notably compute, interchange tools and standards, and payments — potentially others as
well.”).

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Figure 3. Example Uses of Metaverse-Related Technologies20▪

The popular mobile app Nintendo’s Pokémon Go, where users catch their favorite Pokémon bylooking through their phones at the real world but with superimposed images, reflected mass
adoption of AR technologies.

▪

VR headset Oculus Quest 2 enables users to play games such as Beat Saber and exercise insimulated sports like virtual boxing.

▪

Japan Airlines has trained flight engineers remotely using Microsoft HoloLens, MR smartglasses
developed and manufactured by Microsoft, which has reduced training and travel time, as engineers
do not need to wait for an available plane or travel to the hangar.

▪

XR technologies in the form of Google Maps and interactive Zoom backgrounds are improving how
millions of people navigate streets and communicate at work every day.

▪

NFTs empower creators to monetize their unique products—for example, a work of art called“Everydays: The First 5000 Days” was sold for a record $69 million at Christie’s Auction House as a
non-fungible token in March of 2021.

▪

Cryptocurrencies based on blockchain technology, such as Bitcoin and Ethereum, andcryptocurrency transfer apps, such as Coinbase Commerce and Electroneum, are changing global
payment ecosystems.

So, some of the early components of the metaverse are already in exhibit – but in bits and pieces. And thesecomponents are already having significant societal, commercial, and business impacts. As users continue to adopt
these technologies, their potential to transform society in unpredictable ways will only accelerate. In the long run,the metaverse’s reach could extend well beyond things we can conceive of today, becoming integrated withtraditional businesses, creating new jobs, and affecting consumers in new ways.

B. Uses of metaverse technologies around the world
An anticipated benefit of the metaverse is the creation of new markets and broader economic and social impacts.
As with the Internet and other technologies, the form and shape of the metaverse will materialize slowly at first,
and only after a critical mass of adoption is achieved, will its full potential begin to take more concrete shape.21 In

20Robertson, Adi, “Oculus Quest 2 Review: Better, Cheaper VR,” The Verge, available at https://www.theverge.com/21437674/oculus-quest2-review-features-photos; Microsoft, “Japan Airlines creates yet another first-class experience, this time using Microsoft HoloLens,”
available at https://news.microsoft.com/transform/japan-airlines-creates-yet-another-first-class-experience-this-time-using-microsofthololens/; Gerencer, Tom, “What Is Extended Reality (XR) and How Is it Changing the Future?” HP Tech Takes, April 3, 2021, available athttps://www.hp.com/us-en/shop/tech-takes/what-is-xr-changing-world/; Kaczynski, Steve, and Kominers, Scott Duke, “How NFTs Create
Value,” Harvard Business Review, November 10, 2021, available at https://hbr.org/2021/11/how-nfts-create-value/.

21

As an illustration of the time it can take to achieve widespread adoption of a new technology, in 2011 only 35% of adult Americans owned
a smartphone; whereas, ten years later in 2021, 85% of adult Americans now own a smartphone. See Pew Research Center, “Mobile Fact
Sheet,” April 7, 2021, available at https://www.pewresearch.org/internet/fact-sheet/mobile/. See also Van Slyke et al., “Perceived criticalmass and the adoption of a communication technology,” European Journal of Information Systems, Vol. 16, No. 3, July 2007, pp. 270-283(“Critical mass influences the adoption and diffusion of interactive communication innovations, both through network externalities andthrough sustainability of the innovation.”).

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

this section, we look at a few use cases around the globe that illustrate the potential broader impacts themetaverse could have on society.
In the United States, metaverse technologies are currently expanding access to sports, helping combat biases via
simulations, and merging physical and virtual worlds in gaming. For example, iGYM is an AR system for inclusive
play that was created to give young people with mobility disabilities access to physical play activities with their nondisabled peers.22 In bias training, the Lab for Applied Social Science Research (LASSR) at the University of
Maryland created a training program for law enforcement personnel that includes immersive VR simulations inwhich police officers interact with civilians in different policing situations.23 LASSR uses the simulator to measure
how officers’ decisions and the content of their speech vary by civilian demographics, such as race and gender.
And in gaming, Roblox, founded in 2004, accommodates thousands of games and experiences such as Bloxburg
and Brookhaven, where users can build homes, work, and play out scenarios.24 Additionally, in November 2021,
Roblox and Nike announced a partnership to host “Nikeland,” which comprises a selection of product showrooms
and play areas on Roblox in which users can outfit their avatar in classic Nike products like the Air Force 1 andNike Blazer.25
In Canada, AR and VR technologies are changing the way people view and experience art. Toronto-based
company Nextech AR partnered with Culture Mile and Brookfield Properties in London to build “the Harmony at
London Wall Place,” a major AR virtual experience featuring visuals and music from the Guildhall School of Musicand Drama as well as the London Symphony Orchestra.26 Visitors can open a camera on their phones and hearmusic compositions and see an AR art installation featuring 3D animation overlaid onto the feed of the camera.
In Europe, industrial companies are adopting XR technologies to simplify and streamline prototyping, training,
remote guidance, and customer relationship processes. Siemens, a German industrial manufacturing company,
offers a VR product for product design and prototyping called Teamcenter VR.27 The ability to change the designand characteristics of the prototype in 3D has the potential to bring significant time and cost savings, as iterating in
3D reduces both raw materials and production time. Professional industrial training also stands to benefit from VR
applications—BMW, Peugeot, and Audi are among the early adopters of industrial VR training, which has beenshown to reduce training budgets without reducing quality.28 Employees are more engaged, while training is safer

22

iGYM resembles a life-size air hockey field. When players enter the field, an overhead computer vision camera detects each player andsurrounds them with a “peripersonal circle,” which players use to hit a projected ball. Players can widen their circle to hit the ball by moving
their arms, physically kicking, or by pressing a “kick-button” mounted on their body, allowing for an equitable play experience for kids withmobility disabilities and their peers without disabilities. See iGYM, “Building a future where play and exercise are inclusive and fun forpeople of all abilities,” available at https://www.igym.solutions/.

23

Lab for Applied Social Science Research, “Train the Trainer,” p. 7.

24

Snider, Mark, and Molina, Brett, “Everyone wants to own the metaverse including Facebook and Microsoft. But what exactly is it?” USA
Today, December 22, 2021, available at https://www.usatoday.com/story/tech/2021/11/10/metaverse-what-is-it-explained-facebookmicrosoft-meta-vr/6337635001/.

25

Greener, Rory, “Nike, Roblox Debut ‘NIKELAND’ Metaverse,” XRToday, November 22, 2021, available at https://www.xrtoday.com/mixedreality/nike-roblox-debut-nikeland-metaverse/e; Nike, “Nike Creates NIKELAND on Roblox,” November 18, 2021, available athttps://news.nike.com/news/five-things-to-know-roblox.

26

Cureton, Demond, “Nextech AR Rebrands as Metaverse Company,” XR Today, November 16, 2021, available athttps://www.xrtoday.com/augmented-reality/nextech-ar-rebrands-as-metaverse-company/.

27

Siemens, “Go VR for Fully Immersive Design Experience Virtual Reality with PLM,” available athttps://www.plm.automation.siemens.com/global/en/products/collaboration/virtual-reality.html/.

28

VR Owl, “The 22 best examples of how companies use virtual reality for training,” available at https://www.vrowl.io/news/the-22-bestexamples-of-how-companies-use-virtual-reality-for-training/.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

and more effective, as it is possible to conduct safety drills in VR without compromising on the experience while
avoiding potentially dangerous conditions.
In the Middle East, Dubai, a host for the 2020 World Expo,29 has embraced metaverse technologies and opened
its doors to virtual visitors from all over the world through the Expo Dubai Xplorer multiplayer experience.30 The
Expo Dubai Xplorer allows virtual visitors to enjoy views of an interactive “digital twin” of the Expo site via AR
spectacles synchronized with the real-world locations within the physical Expo through March 2022. According to
Magnopus, a content-focused technology company, Expo Dubai Xplorer sets a new standard for accessibility andinclusivity in large events.31
In Africa, Africarare—referred to as “the first South African metaverse”—launched in October 2021.32 Africarare
represents a digital land, Ubuntuland, and offers immersive VR experiences including a marketplace for art.
Africarare featured the premiere NFT art collection from the well-known South African artist Norman Catherine.33
After his debut NFT art collection sold out, the artist commented, “NFTs have opened up a whole new medium forartists to explore. This is a new era of investment art.”34 Africarare users can purchase land via $UBU Coin, createavatars, and engage in social, gaming or art experiences, and new Africarare NFT collections will continue to befeatured.35 Notably, Africa’s largest mobile network operator, MTN Group, announced in February 2022 that it had
purchased 144 plots of virtual land in Ubuntuland and that MTN was the first African company to invest in the
metaverse.36
In Latin America, Brazilian company MondoDX created the first XR platform for online retail shopping, VYRCH.37
VYRCH allows customers to visit a virtual store where they can walk around, pick-up items, try them on, speak to a
shopping assistant, and more.38 VYRCH has experienced a higher customer conversion rate than standard online
stores, which is attracting a lot of interest from retailers. Quipu Market, an e-commerce platform registered in
Colombia and the U.S., provides an online, mobile platform that allows individuals and microbusinesses in low-

29

Bureau International des Expositions, “What is Expo?” available at https://www.bie-paris.org/site/en/what-is-an-expo/. (“Expos are global
events dedicated to finding solutions to fundamental challenges facing humanity by offering a journey inside a chosen theme throughengaging and immersive activities. Organised and facilitated by governments and bringing together countries and internationalorganisations (Official Participants), these major public events are unrivalled in their ability to gather millions of visitors, create new
dynamics and catalyse change in their host cities.”).

30

NewsDirect, “Expo 2020 Dubai Enters The Metaverse World Connecting Millions Across The Physical & Digital Globally,” December 7,
2021, available at https://newsdirect.com/news/expo-2020-dubai-enters-the-metaverse-world-connecting-millions-across-the-physical-anddigital-globally-652848762/ (“Expo 2020 Dubai”).

31

Expo 2020 Dubai.

32

Africa.com, “First African Metaverse Launches,” October 11, 2021, available at https://www.africa.com/first-african-metaverse-launches/.

33

Africa.com, “First African Metaverse Launches,” October 11, 2021, available at https://www.africa.com/first-african-metaverse-launches/.

34

Moloi, Thabiso, “Africarare Is Now The First Sold Out African Metaverse Collection,” BWTH Blog, available athttps://bandwidthblog.co.za/2021/10/25/africarare-is-now-the-first-sold-out-african-metaverse-collection/.

35

Africa.com, “First African Metaverse Launches,” October 11, 2021, available at https://www.africa.com/first-african-metaverse-launches/.

36

See, e.g., Oluwole, Victor, “Africa’s largest mobile network operator MTN Group buys 144 plots of virtual land in the metaverse,” Business
Insider Africa, March 1, 2022, available at https://africa.businessinsider.com/local/markets/africas-largest-mobile-network-operator-mtngroup-buys-144-plots-of-virtual-land-in/1plhh70; Roberts, Lillian, “Africa Launching Into The Metaverse,” Forbes Africa, March 2022,
available at https://www.forbesafrica.com/technology/nft/2022/03/10/africa-launching-into-the-metaverse/.

37

Tayler, Victoria, “Latin American developers of the innovative AR/VR VYRCH shopping platform join the Nonvoice Agency,” June 21, 2021,
available at https://www.nonvoice.com/vyrch-shopping-platform-join-the-nonvoice-agency/ (“AR/VR VYRCH”).

38

AR/VR VYRCH.

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income communities to conduct business and perform transactions using virtual tokens, thereby helping thesebusinesses build creditworthiness despite lack of access to formal banking.39
In East Asia, the metaverse is drawing attention and investment from major digital platform and gaming
companies, the entertainment industry, and even governments. In South Korea, major gaming company Krafton
and internet conglomerate Naver are partnering to jointly develop a “user-generated NFT metaverse platform.”40
Naver has already developed Zepeto, a social gathering and digital good shopping platform that boasts over 200
million users globally. Zepeto is reminiscent of Roblox and features virtual stores and user-generated content, as
well as partnerships with celebrities. The K-pop industry is involved with metaverse-related platforms including
Zepeto and Fortnite, with popular K-pop groups utilizing these platforms to launch songs and interact with fans.41
Seoul’s government also announced in late 2021 that it plans to develop its own metaverse-related platform by theend of 2022 and have the platform be fully operational in 2026.42
In India, TardiVerse, a Chennai-based startup, is making headlines for enabling India’s first metaverse marriage.43
Developed based on Polygon Technology Blockchain and led by Vignesh Selvaraj, TardiVerse announced in
January 2022 that they are planning to host a couple’s wedding reception in the metaverse.44 The digital reception
will be Hogwarts-themed, and accessible to friends and family of the couple from around the world, and the guests
will be able to choose their avatars. According to XROM, a Mumbai-based Extended Reality venture, there areover 2,000 AR/VR startups in India that will drive economic growth in the near future.45

C. Challenges of measuring the economic impact of the metaverse
The many use cases of existing technologies that are expected to transfer to the metaverse give us someindication of the potential reach of the metaverse. However, estimating the economic impact of the metaverse
presents substantial challenges.
Researchers commonly measure economic impacts of various technologies by collecting data on measurable
outcomes that have already occurred and can be analyzed using economic models. However, assessing the
economic impact of an emerging technology like the metaverse is much more difficult because outcomes have notyet been realized and cannot be observed in data. It is impossible to predict, a priori, all of the areas in which
metaverse technologies will be used, the extent of adoption of the metaverse, the innovations that will be

39Bluestein, Adam, “The 10 most innovative companies in Latin America in 2022,” Fast Company, March 8, 2022, available athttps://www.fastcompany.com/90724423/most-innovative-companies-latin-america-2022; Quipu Market, [LinkedIn profile], available athttps://www.linkedin.com/company/quipumarket/.

40

Lam, Eunice, “South Korean Game Maker Krafton Joins Metaverse, NFT Craze,” Forbes, February 9, 2022, available athttps://www.forbes.com/sites/eunicelam/2022/02/09/south-korean-game-maker-krafton-joins-metaverse-nft-craze/?sh=77b814816052.

41

Kim, Sang, “South Korea’s Approach to the Metaverse,” The Diplomat, November 2, 2021, available athttps://thediplomat.com/2021/11/south-koreas-approach-to-the-metaverse/.

42

Squires, Camille, “Seoul will be the first city government to join the metaverse,” Quartz, November 9, 2021, available athttps://qz.com/2086353/seoul-is-developing-a-metaverse-government-platform/.

43

Brabus, Paul, “India’s First Metaverse Marriage Scheduled on February 6th in TardiWorld,” The VR Soldier, January 20, 2022, available athttps://thevrsoldier.com/first-metaverse-marriage-scheduled-in-tardiworld/.

44

Raju, Chithira N., “Tamil Nadu couple to host India’s first wedding reception in Metaverse,” The Indian Express, January 18, 2022,
available at https://indianexpress.com/article/trending/trending-in-india/tamil-nadu-couple-to-host-wedding-reception-in-metaverse7728255/.

45

Avil, Eddie, “Virtual Reality Startups in India Everyone Needs to Know About - Top 10 XR Startups from India,” XROM, March 21, 2021,
available at https://www.xrom.in/post/virtual-reality-startups-in-india-everyone-needs-to-know-about-top-10-xr-startups-from-india (“Back in2015 India had less then 10 virtual reality startups, today we have over 2000 + AR/VR Startups in the country […]”).

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developed that build upon the metaverse, and all of their associated economic impacts. Similarly, it is not possible
to quantify all of the displacement effects of the metaverse to derive the net economic impact.
Put simply, there is no “metaverse” to measure as of today. Rather than wait for some point in the future, we canapply existing tools and data, such as related sectors, technologies, and consumer behaviors to create a potential
analogue for the metaverse’s impact. While imperfect, this provides a transparent framework by which to grasp the
potential impact and reach of the metaverse.
To measure the potential economic impact of the metaverse, we use mobile technology as a plausible analogue
for our exercise. While there are a number of possible existing technologies to draw from, we focus on mobile
technology in part due to its maturity, global reach, and especially its transformative impact on businesses, people
and society. In Section III we provide further details about the benefits of relying on mobile technology to draw
comparisons for the metaverse.
We examine the existing economic literature on the impacts of mobile technology on GDP, employment, economic
inequality, and other economic indicators, and we present an empirical approach to measure the economic impact
associated with mobile technology for different regions over time. We then use insights from this analysis toquantify the potential economic impact of the metaverse. Our main result is that if the metaverse were to be
adopted and grow in a similar way as mobile technology, then we would expect it to be associated with a 2.8%
contribution to global GDP after 10 years.
The rest of this paper is organized as follows. Section II discusses certain theoretical underpinnings in theeconomics of innovation and examines a range of breakthrough technologies of the past century and theireconomic impacts. Section III discusses why we focus on mobile technology as an analogue for the metaverse
and reviews existing research on the economic impacts of mobile technology. Section IV develops our empiricalmodel of the relationship between mobile technology adoption and GDP growth, and Section V applies the mobile
technology model to estimate the potential impact of the metaverse on GDP. Section VI concludes the paper andinvites future research regarding the potential economic opportunity of the metaverse.

II. Economics of Innovation
Measuring the impact of any technological innovation is hard, and especially so during its early stages ofdevelopment. As with all innovations before, the metaverse will likely have multiple phases of evolution, making
predictions about its economic impact particularly difficult and complex. While the future is inherently uncertain,
economic theories related to the diffusion and impacts of new technologies can provide helpful insights to guideinferences about how the metaverse may evolve, even at this early stage in its development.

A. Theories of innovation
Two concepts related to technological innovation—hype cycles and S-curves—provide a helpful starting point forthinking about the potential success and diffusion of a new technology. These concepts are also useful forestablishing the building blocks for ongoing research and conversations, rather than being final or definitive.

1. Hype cycles

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The research and advisory company Gartner publishes yearly “Hype Cycles and Priority Matrices” reports that
attempt to categorize new technologies in terms of their promise in coming to market.46 An analysis of these hypecycles from 2000 to 2016 shows that the majority of “hyped” technologies never successfully land in the market,
illustrating a mismatch between initial expectations and ultimate market adaptation. Furthermore, even fortechnologies that do successfully land in the market, retrospective analysis shows that they tend to go throughmultiple phases of expectations of success from consumers, producers, and other market participants.

Figure 4. The Hype Cycle

Source: Gartner.

Figure 4 illustrates the phases of a hype cycle for a successful technology.47 An innovation’s hype cycle starts withan “Innovation Trigger” that provokes development and interest in the innovation. As the “buzz” around theinnovation builds, it becomes a central topic of discussion, and the market is flooded with overlapping, competing,and complementary offerings. This leads to overly high expectations around the innovation’s capabilities and canlead to the formation of an investment bubble. At this point, the innovation has reached the “Peak of Inflated
Expectations.” However, as people become impatient for results, the innovation fails to meet these expectations
and reaches the “Trough of Disillusionment.” Performance issues, slow adoption, or inability to produce financial
benefits in the anticipated time frame leads to disillusionment with the innovation, and producers may fail orconsolidate due to insufficient demand growth. After the trough, the innovation matures as producers continue
iterating on and improving products and best practices for innovation adoption become more widely known. As theinnovation progresses through this “Slope of Enlightenment” phase, its market penetration grows from around 5%
to approximately 20% to 30%. Adoption of the innovation becomes mainstream as the innovation reaches the46

Blosch, Marcus and Jackie Fenn, “Understanding Gartner’s Hype Cycles,” Gartner Research, August 20, 2018, (“Gartner”), available athttps://www.gartner.com/en/documents/3887767.

47

Gartner.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE“Plateau of Productivity.” At this stage, hype around the now-mature innovation has been replaced by welldeveloped application and deployment knowledge and experiences. In addition, an “ecosystem” of products andservices may develop around the innovation, which can trigger additional spin-off hype cycles for the components
themselves.
The hype cycle framework has a couple implications for our analysis. First, it is possible that, like many otherpreviously “hyped” technological innovations, the metaverse never comes to fruition as it is currently envisioned.
But our goal is not to predict whether the metaverse will be successful. Rather, we focus on measuring thepotential economic impact of the metaverse if it were to evolve like prior successful technologies. Second, thehype cycle suggests that marketplace expectations at any given point in time are not a good proxy for the
economic impact of the metaverse in the long-run. If successful, the metaverse stands to be overhyped at first,
followed by an over-negative correction, before finding its niche in productivity and utility. Pinpointing where in thecycle we currently are is inherently difficult, if not impossible. Third, even if the metaverse succeeds, the hypecycle framework does not predict the time periods for the various stages of the hype cycle. Our approach istherefore based on an analysis of prior technologies that have already gone through the phases of the hype cycle
and have reached the stable “plateau of productivity,” at which point we can start to assess their long-run impacts
based on observed outcomes.

2. S-curves
The S-curve is another useful tool that helps us understand how a given technology evolves and how it iseventually overtaken by newer innovations, such as the shift from desktop to mobile devices.48
Each new technology tends to follow an S-shaped curve that reflects an initial period of seemingly slow innovation
and adoption, followed by a period of rapid change, and then a leveling off as the market matures, as shown ineach of the solid lines in Figure 5 below.49 Over time, as new innovations are developed, the S-curves of different
technologies tend to build on top of each other, allowing for continued improvement in performance, shown by thedotted line in Figure 5. For example, personal computers, the Internet, and smartphones each have their own Scurves, but when viewed together over time, they have tended to continually increase the performance of productsin the information and communications technology (ICT) sector. On a recent episode of “The Indicator” from NPR’s
Planet Money podcast, independent tech industry analyst Benedict Evans discussed that artificial intelligence, AR,
VR, and cryptocurrencies are some of the next potential candidates that may be at the early stages of their Scurves.50

48

See, e.g., Gal’s Insights, “The Innovation S-Curve,” July 25, 2015, available at http://www.galsinsights.com/the-innovation-s-curve/.

49

See, e.g., Benedict Evans, “The end of smartphone innovation,” available at https://www.ben-evans.com/benedictevans/2017/3/22/theend-of-smartphone-innovation.

50

NPR, “Technology brought to you by the s-curve,” Podcast, October 6, 2021, available athttps://www.npr.org/2021/10/06/1043822817/technology-brought-to-you-by-the-s-curve.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Figure 5. S-Curves

Source: Clayton M. Christensen, “Exploring the Limits of the Technology S-Curve. Part 1: Component Technologies,” Production and Operations
Management, Vol. 1(4), 1992.

Although society experiences ongoing innovation (the dotted line in Figure 5), S-curves reflect how individual
products and technologies go through their own lifecycles, eventually becoming obsolete as they are replaced by
new products and technologies. The transition from one curve to the next relies on innovations that are compatible
with existing technologies, but over time newer innovations tend to make previous technologies obsolete—for
example, CDs cannot be played on iPhones. Soren Kaplan, Managing Principal of boutique innovation consulting
firm InnovationPoint, writes, “S-curves are usually connected to ‘market adoption’ since the beginning of a curve
relates to the birth of a new market opportunity, while the end of the curve represents the death, or obsolescenceof the product, service, or technology in the market. Usually the end of one S-curve marks the emergence of a new
S-curve – the one that displaces it (e.g., video cassette tapes versus DVDs, word processors versus computers,etc.).”51
While Figure 5 suggests potentially unbounded growth in performance associated with continued innovation, theconcept of the S-curve may also apply on a very large scale. Carlota Perez, a scholar who specializes intechnology and socio-economic development, argues that large-scale technological revolutions over the past 250
years—including those associated with the Industrial Revolution (1771–1829), steam and railways (1829–1873),
steel and heavy engineering (1875–1918), oil, automobiles and mass production (1908–1974), and ICT (1971–
present)—all share similar patterns, with every technological revolution experiencing an “Installation Period,” a51

Kaplan, Soren, “Leveraging market, technology, and organizational S-curves to drive breakthrough growth,” InnovationPoint, available athttps://www.innovation-point.com/wp-content/uploads/2017/02/Innovation_Lifecycles.pdf.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE“Turning Point,” and a “Deployment Period” that together follow the shape of an S-curve over a very long time
horizon.52
Figure 6 illustrates Perez’s theory. According to Perez, the Installation period is “the time when the newtechnologies irrupt in a maturing economy and advance like a bulldozer disrupting the established fabric andarticulating new industrial networks, setting up new infrastructures and spreading new and superior ways of doing
things.”53 During the Turning Point, the financial bubble associated with the “Frenzy” of the latter part of the
Installation period collapses, causing a recession or even a depression, which leads to institutional restructuring
and innovation in policy as institutions begin regulating behavior that led to the formation of the bubble. The“Synergy” phase is then characterized by increased technological stability, fewer business failures, higher andmore prolonged employment, and less economic inequality as products become cheaper and more user friendly
and the technology begins to reach more of the population. Finally, the Maturity phase is characterized by astagnation in innovation, and investors begin seeking opportunities to invest in new technological systems andparadigms, setting off the next technological revolution.

Figure 6. Technological Revolution: Degrees of Diffusion

Source: The Death and Birth of Technological Revolutions.

Perez believes that we are in the Turning Point of the ICT revolution—the most recent technological revolution,
which has been enabled by semiconductors, integrated circuits, computers, software, computer networking, and52

Neumann, Jerry, “The Deployment Age,” Reaction Wheel, October 14, 2015, (“The Deployment Age”), available at
http://reactionwheel.net/2015/10/the-deployment-age.html; Thompson, Ben, “The Death and Birth of Technological Revolutions,”
Stratechery, October 12, 2021, (“The Death and Birth of Technological Revolutions”), available at https://stratechery.com/2021/the-deathand-birth-of-technological-revolutions/.

53

The Death and Birth of Technological Revolutions.

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mobile phones.54 In 2019, Perez tweeted: “I see the present as the 1930s, the turning point of the IT surge. We
have had 2 frenzies and we have not yet had a golden age. The power of AI, IoT, 3D, robots, blockchain is there to
be shaped.”55
S-curves have a couple implications for our analysis. First, if the metaverse is successful, we can be reasonably
certain that it will follow an S-shaped curve of innovation and adoption. We therefore look to prior technologies to
get a sense of the levels and time periods over which those technologies diffused and were adopted to serve as apotential analogue for diffusion and adoption of the metaverse. Second, it is less clear where the metaverse’s
place may lie in terms of its contribution to a large-scale technological revolution—would it be the second act in the
ICT revolution, or the next great technological surge? Although there is no guarantee that what happens next will
mirror what happened previously, we must rely on the tools and data currently available. This suggests we look at
related sectors, technologies, and consumer behaviors as a benchmark for the potential reach of the metaverse,
recognizing that this approach—as with any approach to measuring the future—requires making use of the data
and tools currently at our disposal, and then making transparent methodological choices to arrive at an answer.

B. Economic impact of innovation
Having discussed theories of the diffusion and adoption of new technologies, we now turn to understanding thepotential economic impacts of successful technological innovations. In particular, economic growth models areuseful in our goal to link technological innovation to how economies can be expected to benefit. Though it is
impossible to summarize generations’ worth of such research, it is still useful to provide an overview of how themetaverse would be expected to impact the global economy.56

1. Production possibilities frontier
Economic theory tells us that successful technological innovation leads to a more efficient allocation of scarce
resources. Innovation changes the level and shape of what economists call the “production possibilities frontier”(PPF). The PPF represents the various output combinations (bundles of products and services) that can beachieved using all resources and inputs available to society. Adoption of a technological innovation can be
represented by changes in the PPF.

54

See, e.g., Perez, Carlota, “Harnessing the technological revolution,” Financial Times Tech Tonic Podcast, November 2, 2016, available athttps://www.ft.com/content/bf568bd3-e515-4784-8257-8a34eb2a93c4; The Deployment Age; The Death and Birth of Technological
Revolutions.

55

Perez, Carlota (@CarlotaPrzPerez), “I respect your view. Theories belong to the public. But I see the present as the 1930s, the turning
point…” [Twitter post], March 31, 2019, available athttps://twitter.com/CarlotaPrzPerez/status/1112397085729533958?ref_src=twsrc%5Etfw. Perez also discusses this view in greater depthon the Financial Times’ Tech Tonic podcast, stating that the present and the 1930s both exhibit(ed) “enormous technological potential
which is not being used,” with insufficient investment going into innovations because of insufficient demand—demand that is usually
generated by “policies that are adequate for that particular revolution.” For example, Perez discusses how suburbanization-favoring
inventions and policies, such as the automobile and government welfare state, “tilt[ed] the playing field” to support home ownership andconsumerism, which in turn supported and drove the revolution of mass production and relevant innovations. She discusses her view that“the most effective way of [tilting the playing field] today is tilting it towards ‘green’”—not just investing in renewable energy, but in newlifestyles that are less energy and materials intensive. See Perez, Perez, Carlota, “Harnessing the technological revolution,” Financial
Times Tech Tonic Podcast, November 2, 2016, available at https://www.ft.com/content/bf568bd3-e515-4784-8257-8a34eb2a93c4; The
Deployment Age; The Death and Birth of Technological Revolutions.

56

For a review of economic growth models, see Sharipov, Ilkhom, “Contemporary Economic Growth Models and Theories: A Literature
Review,” CES Working Papers, ISSN 2067-7693, Alexandru Ioan Cuza University of Iasi, Centre for European Studies, Iasi, Vol. 7, Iss. 3,
pp. 759-773.

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Figure 7 illustrates the PPF and how it may change with technological innovation. Technological innovation canmake inputs more productive, meaning that higher levels of output can be produced from the same level of inputs.
In the figure, this may be reflected in a simple outward shift in the PPF from the solid line (PPF) to the dashed line
(PPF’), indicating that all inputs become equally more productive. Alternatively, technological innovation may
cause the comparative advantage between capital, labor, and other resources to change, affecting the way those
inputs can be combined to produce goods and services. As the comparative advantage of different inputs
changes, it may become easier to achieve higher levels of output of some goods than others. In the figure, thismay be reflected in a change in both the level and shape of the PPF—for example, from the solid line (PPF) to thedotted line (PPF’’), indicating that inputs used more heavily in the production of computers have become relatively
more productive as a consequence of the technological innovation, and society therefore can now achieve output
bundles with a relatively higher level of computers given a fixed set of resources.

Figure 7. Production Possibilities Frontier

2. Direct, indirect, and catalytic effects
It is inherently difficult to determine exactly which industries will be affected by the metaverse and in what ways.
However, we can think about the potential impacts of the metaverse in terms of direct effects, indirect effects, andcatalytic effects.
Direct effects. We can be reasonably certain that the metaverse will first affect the industries that will create its
infrastructure, including hardware, software, payment systems, and broadband providers. In particular, there will
be significant changes in, for example, graphics processors, hardware used to interface with the metaverse (e.g.,
AR/VR), development of common software platforms that allow for movement through the metaverse, andblockchain technologies to establish ownership and payments. These “direct” economic impacts will accrue within
industries involved in the development of infrastructure and ongoing provision of technology required to support
the metaverse, similar to how Internet service providers reap direct economic benefits from the Internet.
Indirect effects. After the metaverse infrastructure is built out, industries that are likely to be affected early in the
adoption process include: gaming, social networking, online retail, and education. These and other industries havepotential to benefit from “indirect” economic impacts of the metaverse, such as through the creation of new jobs or

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

products that are supported and made possible by the existence of the metaverse, similar to how the Internet“indirectly generates economic activity” in sectors of the economy outside of the direct provision of Internet
services.
For example, gaming already accounts for the largest share of consumer spending on AR/VR, with over $3 billionin spending worldwide in 2020,57 and according to the CEO of Microsoft Gaming, Phil Spencer, “video games in a
way have been building what people are now defining as the metaverse for many, many years.”58 However, as
illustrated by the use cases discussed in Section I, the potential of the metaverse is not limited to gaming. The
metaverse is expected to drive significant incremental economic growth in remote work, health, education, andmanufacturing. Advancement in technologies is already allowing manufacturing companies to create “digital twins”
of manufacturing floors,59 which can reduce the use of time, energy, and raw materials.60 Manufacturing
companies are also expected to use automation and simulation to design factory layouts and design components
to be manufactured.61
Catalytic effects. Finally, similar to how computers, mobile phones, and the Internet have had wide-reachingeffects on businesses and consumers that were impossible to predict with any precision, the metaverse could have“catalytic” effects on the economy, accelerating growth and productivity and creating impact that extends wellbeyond the businesses and industries directly involved with the infrastructure and early adoption of the metaverse,
becoming integrated with traditional businesses, creating new jobs, and affecting consumers in new ways. We cansee glimpses of this in novel uses of AR/VR in bias training, mental health treatment, and inclusive sports.

C. Examples of breakthrough technologies
The economic theories of innovation we have discussed provide useful frameworks for understanding the diffusion
and impact of prior technological innovations and thinking about the potential diffusion and impact of a newtechnological innovation like the metaverse.
Some of the most successful technological innovations of the 19th and 20th centuries include the steam engine,radio and television, personal computers, wireless Internet technology, and mobile technology, among others. We
briefly discuss some of the impacts of these breakthrough technologies before turning in Section III to an in-depth
analysis of mobile technology as a useful analogue—for now at least—for the metaverse.

57

Marketing Dive, “AR/VR spending will soar 79% to $18.8B next year, study predicts,” December 2, 2019, available athttps://www.marketingdive.com/news/arvr-spending-will-soar-79-to-188b-next-year-study-predicts/568224 (“Consumer spending on AR/VR
next year will reach $7 billion, and the biggest categories of VR expenditures by consumers will be gaming at $3.3 billion and features at$1.4 billion as VR headsets become more affordable, IDC forecast.”).

58

Thompson, Ben, “Microsoft Acquires Activision Blizzard, Notes on the Acquisition, An Interview With Microsoft Gaming CEO Phil Spencer,”
Stratechery, January 19, 2022, available athttps://stratechery.com/2022/microsoft-acquires-activision-blizzard-notes-on-theacquisition-an-interview-with-microsoft-gaming-ceo-phil-spencer/.

59“A digital twin is a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and uses simulation,
machine learning and reasoning to help decision-making.” Armstrong, Maggie Mae, “Cheat sheet: What is Digital Twin?” IBM, December 4,
2020, available at https://www.ibm.com/blogs/internet-of-things/iot-cheat-sheet-digital-twin/.

60

Armstrong, Maggie Mae, “Cheat sheet: What is Digital Twin?” IBM, December 4, 2020, available at https://www.ibm.com/blogs/internet-ofthings/iot-cheat-sheet-digital-twin/.

61

Rogers, David L., “A Sketch of the Industrial Metaverse,” Exponential Industry, November 21, 2021, available athttps://www.doclrogers.com/blog/2021-11-21-sketch-industrial-metaverse-nvidia-unity-meta-digital-twin-blockchain-extended-reality.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Steam engines. Steam engines signified one of the most consequential technological leaps in human history,
powering the factories, trains, and ships that made the Industrial Revolution possible and serving as a launch pad
for later innovations, such as internal combustion engines and jet turbines.62 Economists have found that the
Corliss steam engine, which represented a significant innovation in steam engine technology in the 19th century,“served as a catalyst for the industry’s massive relocation into large urban centers, thus fueling agglomeration
economies and further population growth” in the United States.63 Using data from the 1870 census, the study
found that the population of “counties with ten Corliss-driven establishments … grew at an annual rate 0.4 percent
higher than counties with none.”64 A study focused on Britain also found that the peak impact of steam engines
occurred after mid-19th century innovations in steam technology, with steam’s total contribution to British laborproductivity growth reaching 0.38% per year between 1850 and 1870.65 However, put in context, recent estimatesof the impact of the ICT industry on labor productivity, which range from 0.68% to 1.79% per year, suggest thatsteam engines’ impact on economic growth in Britain was comparatively modest.66
Radio and television. The mid-20th century saw the invention and rise of radio and television broadcasting. By
1934, 60% of U.S. households had radios, while an additional 1.5 million units were installed in cars.67 Sales ofradio equipment in the United States reached $843 million by 1929,68 and radio advertising reached $215.6 million
by 1940.69 However, radio was quickly supplanted by the emergence of television (TV). The adoption rate of
televisions in the United States was remarkable, growing from 9% of households in 1950 to 86% of households
just nine years later in 1959.70 TV gave rise to popular sitcoms, Hollywood movies, political talk shows, educational
programs, and reality shows, and it had immense economic, cultural, and political effects.71
Personal computers. In the second half of the 20th century, innovations in semiconductor technology enabled thewidespread adoption of personal computers.72 A body of academic literature from the late 1990s and early 2000s
indicates that computers contributed significantly to economic growth over the past 50 years.73 For example, Oliner

62

The steam engine (external combustion engine) was invented by Thomas Savery in 1698, but its mass adoption didn’t kick off until almosta century later when James Watt improved the technology. See Andrews, Evan, “11 Innovations That Changed History,” History, February
18, 2021, available at https://www.history.com/news/11-innovations-that-changed-history.

63

Rosenberg, Nathan and Manuel Trajtenberg, “A General-Purpose Technology at Work: The Corliss Steam Engine in the Late-NineteenthCentury United States.” The Journal of Economic History, Vol. 64 (1), 2004, pp. 61–99.

64

Rosenberg, Nathan and Manuel Trajtenberg, “A General-Purpose Technology at Work: The Corliss Steam Engine in the Late-NineteenthCentury United States.” The Journal of Economic History, Vol. 64 (1), 2004, pp. 61–99.

65

Nicholas Crafts, “Steam as a General Purpose Technology: A Growth Accounting Perspective,” The Economic Journal, Vol. 114, No. 495,
April 2004, pp. 338–351

66

Nicholas Crafts, “Steam as a General Purpose Technology: A Growth Accounting Perspective,” The Economic Journal, Vol. 114, No. 495,
April 2004, pp. 338–351.

67

Scott, Carole E., “The History of the Radio Industry in the United States to 1940,” Economic History, available athttps://eh.net/encyclopedia/the-history-of-the-radio-industry-in-the-united-states-to-1940/.

68

Douglas, George H., “The Early Years of Radio Broadcasting,” p. 75, Jefferson, NC: McFarland, 1987.

69

Sterling, Christopher H. and John M. Kittross, “Stay Tuned,” p. 510, Belmont, CA: Wadsworth, 1978.

70

TV History. “Number of TV Households in America: 1950-1978,” available at http://www.tvhistory.tv/Annual_TV_Households_50-78.JPG.

71

Stacker, Seth Berkman, “A Brief History of Television, By Decade,” Culture at Newsweek, July 12, 2021, available athttps://www.newsweek.com/brief-history-television-decade-1608854/.

72

Langlois, Richard, “Computers and Semiconductors. Technological Innovation and Economic Performance,” 2002.

73

See, e.g., Brynjolfsson, Erik and Lorin M. Hitt, “Computing Productivity: Firm-Level Evidence,” The Review of Economics and Statistics,
Vol. 85, No. 4, November 2003, available at https://repository.upenn.edu/cgi/viewcontent.cgi?article=1040&context=oid_papers, p. 793(“[…] the productivity and output contributions associated with computerization are up to 5 times greater over long periods […]”); Oliner,
Stephen D. and Daniel E. Sichel, “The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?” Journal of
Economic Perspectives, Vol. 14, No. 4, Fall 2000, p. 21, available at https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.14.4.3 (The growth oflabor productivity rebounded in the second half of the 1990s […] we estimate that information technology accounted for about two-thirds ofthe step-up in labor productivity growth between the first and second halves of the decade.”); Brynjolfsson, Erik and Lorin Hitt, “Computers

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

and Sichel (2000) found that information technology (computer hardware, software, and communicationequipment) accounted for 68 percent (0.71 percentage points) of the acceleration in labor productivity during the
1990s, with the “rapidly improving technology for producing computers” contributing 0.26 percentage points to thisacceleration.74 Jorgenson and Vu (2005) found that, over the 1995-2003 period, information technology capital
accounted for about 15 percent (0.53 percentage points) of world GDP growth.75
Internet. Further advancements in semiconductor technology, in parallel with other advances, enabled widespread
adoption of the Internet beginning at the end of the 20th century.76 A number of studies have estimated theeconomic impacts associated with the Internet, establishing positive relationships between Internet access andtrade, employment, and productivity. The Internet’s share of total U.S. GDP is estimated to have ranged fromabout 2% to 6% between 1998 and 2017.77,78 Furthermore, one study estimates that 34% of total U.S. export value(a component of GDP) was from “digitally-deliverable services” in 2011.79 The Internet allows more countries toparticipate in the global value chain and learn from the global productivity frontier. Based on a sample of 56
countries, Freund and Weinhold (2004) find that a 10 percentage point increase in the growth of web hosts in aand Economic Growth: Firm-Level Evidence,” MIT Sloan Working Papers, August 1994, p. 23, available athttps://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.698.2765&rep=rep1&type=pdf (“We found [that computer capital] and[information system labor] made large and statistically significant contributions to the output of the firms in our sample.”); Jorgenson, Dale
W. and Kevin J. Stiroh, “Productivity Growth: Current Recovery and Longer-Term Trends,” American Economic Review, Vol. 89, No. 2,
May 1999, p. 109, available at https://www.aeaweb.org/articles?id=10.1257/aer.89.2.109 (“This substitution [of IT equipment for otherforms of capital and labor] generates substantial returns for the economic agents who undertake IT investments […]”).
74

Oliner and Sichel 2000, pp. 18-19 (“[W]e attribute 0.45 percentage point of the pickup to the growing use of information technology capitalthroughout the nonfarm business sector. The rapidly improving technology for producing computers […] contributed another 0.26
percentage point to the acceleration.”).

75

Jorgenson, Dale W. and Khuong Vu, “Information Technology and the World Economy,” Proceedings, Federal Reserve Bank of San
Francisco, 2005, p. 21, available at https://www.frbsf.org/economic-research/files/6_ITAndWorldEconomy.pdf. See also Harris et al.,“Impact of Computing on the World Economy: A Position Paper,” Proceedings of the ISCA 24th International Conference on Computers
and Their Applications - CATA 2009, April 8-10, 2009, New Orleans, Louisiana, pp. 271-272, available athttps://www.cse.unr.edu/~fredh/papers/conf/074-iocotweapp/paper.pdf (“According to [...] Jorgenson and Vu, [… t]he contribution of IT
capital deployment [to world GDP growth] almost doubled from 0.27% to 0.53% during these periods [1989-1995 and 1995-2003,
respectively].”).

76

Heaven, Douglas, “The humble mineral that transformed the world,” Made On Earth, BBC, available athttps://www.bbc.com/future/bespoke/made-on-earth/how-the-chip-changed-everything/.

77

The earliest study estimated that approximately $300 billion in revenue and 1.2 million jobs could be directly attributed to the Internet in
1998. The revenue estimate includes sales of business-to-business goods and services, which are not included in GDP; however, as apoint of reference, the $300 billion in revenue would have amounted to about 3 to 4 percent of GDP in 1998. See The Internet Economy
Indicators, “Q&A on the Internet Economy,” available at
http://anciensdefcr.eu/histoire/ASE_web_janv2000/alertes/actualites/economie_internet/web_etude/qa.html. See also DePrince Jr., Albert
E. and William F. Ford, “A primer on internet economics: macro and micro impact of the internet on the economy,” Business Economics,
Vol. 34, No. 4, October 1999, available athttps://link.gale.com/apps/doc/A56973857/AONE?u=mlin_oweb&sid=googleScholar&xid=44507bb8.

78

A series of recent studies commissioned by the Interactive Advertising Bureau and conducted by researchers at Harvard Business School
measured the impact of the Internet in terms of total wages for Internet-related jobs and jobs supported by the Internet elsewhere in theeconomy. These studies have found that the Internet’s contribution to U.S. GDP increased over time: $300 billion (2.1% of GDP) in 2008;$530 billion (3.7% of GDP) in 2011; and $1,121 billion (6.0% of GDP) in 2016. See Quelch, John, “Quantifying the Economic Impact of theInternet,” Harvard Business School, August 17, 2009, available at https://hbswk.hbs.edu/item/quantifying-the-economic-impact-of-theinternet (“The Internet employs 1.2 million people directly […] Each Internet job supports approximately 1.54 additional jobs elsewhere in
the economy, for a total of 3.05 million, or roughly 2 percent, of employed Americans. The dollar value of their wages is about $300 billion,
or around 2 percent of U.S. GDP.”); Deighton, John and Leora D. Kornfeld, “Economic Value of the Advertising-Supported Internet
Ecosystem,” Interactive Advertising Bureau, September 2012, p. 81, available athttps://www.hbs.edu/ris/Publication%20Files/EVASIE_2012_September_9d78c1c2-51be-4431-9a11-e19e26f71b80.pdf (“By this method,
the advertising-supported Internet ecosystem contributes about $530 billion to the U.S. GDP in 2011.”); Deighton, John, Leora Kornfeld,
and Marlon Gerra, “Economic Value of the Advertising-Supported Internet Ecosystem,” Interactive Advertising Bureau, January 2017, p. 7,
available at https://www.iab.com/wp-content/uploads/2017/03/Economic-Value-Study-2017-FINAL2.pdf (“[T]he advertising-supported
internet ecosystem contributes about $1,121 billion to the U.S. GDP in 2016.”).

79

Digitally deliverable services include business, professional and technical services, royalties and license fees, insurance, finance, andtelecommunications. See Nicholson, Jessica R. and Ryan Noonan, “Digital Economy and Cross-Border Trade: The Value of DigitallyDeliverable Services,” U.S. Department of Commerce Economics and Statistics Administration Issue Brief 01-14, January 2014, p. 2.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

country leads to a 0.2 percentage point increase in goods export growth by cutting the fixed costs of market
entry.80 Focusing on countries in Africa, Hjort and Poulsen (2019) find that submarine cable arrival (signaling theavailability of fast Internet) increased the employment rate by 4.6 percentage points (6.9%) and 7.7 percentage
points (13.2%) in two groups of African countries—and that increased firm entry, productivity, and exporting
contributed to higher net job creation in those African countries.81 With data from the EU, Brazil, China, Vietnam,
Indonesia, Korea, Russia, and India, Van der Marel et al. (2015) estimate that barriers that regulate data flows
dampen total factor productivity by almost 3.9%.82
In summary, existing academic literature and industry studies indicate that many breakthrough technologies have
had substantial economic impacts on countries all around the world. In the next section, we turn to existing
research on mobile technology to contextualize our decision to focus on mobile technology to help quantify the
economic potential of the metaverse.

III. Mobile Technology
In this section, we discuss our reasoning for focusing on mobile technology as an analogue for the metaverse, andwe review existing research that has measured the direct, indirect, and catalytic effects that mobile technology has
had on global and local economies.

A. Focus on mobile technology
We define mobile technology for the purpose of our analysis as mobile devices enabled with Internet access—such as smartphones and tablets—and the infrastructure and related ecosystems that support the use of mobile
devices.83 While mobile devices can be viewed more broadly to include early cellular phone models and handheld
devices, we focus on the revolutionary changes brought about by combining such devices with access to theInternet and data, as discussed further below. Figure 8 provides illustrative examples to show the evolution in thedesign of mobile phones from the first Motorola cell phone introduced in 1983 to the first iPhone introduced in
2007.

80

Freund, Caroline, and Diana Weinhold, “The Effect of the Internet on International Trade,” Journal of International Economics, Vol. 62,
2004, p. 184.

81

Hjort, Jonas, and Jonas Poulsen, “The Arrival of Fast Internet and Employment in Africa,” American Economic Review, Vol. 109(3), March
2019, p. 1050.

82

van der Marel, Erik, Matthias Bauer, Hosuk Lee-Makiyama, and Bert Verschelde, “A Methodology to Estimate the Costs of Data
Regulations,” International Economics 146, December 2015, p. 14.

83

As described further below, in our analysis we measure mobile technology adoption using the variable “mobile broadband adoption per
100 people” from the International Telecommunications (ITU). According to the ITU, “Active mobile‐broadband subscriptions refers to thesum of active handset‐based and computer‐based (USB/dongles) mobile‐broadband subscriptions to the public Internet. It covers actual
subscribers, not potential subscribers, even though the latter may have broadband‐enabled handsets. Subscriptions must include arecurring subscription fee or pass a usage requirement – users must have accessed the Internet in the last three months. It includes
subscriptions to mobile‐broadband networks that provide download speeds of at least 256 kbit/s (e.g. WCDMA, HSPA, CDMA2000 1x EV‐
DO, WiMAX IEEE 802.16e and LTE), and excludes subscriptions that only have access to GPRS, EDGE and CDMA 1xRTT.” See ITU,“WTI Indicators with Definitions,” p. 12, available at https://www.itu.int/en/ITU-D/RegionalPresence/AsiaPacific/Documents/Events/2017/Aug-aspstat2017/WTI_Indicators_with_Definitions_14Aug2017_final.pdf.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Figure 8. Evolution of Mobile Phones, 1983–2007

While we could use any breakthrough technological innovation for our analysis, we view mobile technology as
particularly well suited for two reasons.
First, the way mobile technology evolved to change the way we use the Internet is reminiscent of the path themetaverse appears to be poised to follow. When the iPhone was introduced in 2007, it was a combination oftechnologies that already existed, including a mobile phone, the Internet, MP3 player, and camera, with aproposition that it would improve user experience.84 Although these technologies each already existed on theirown, putting them together in a single device fundamentally altered how users connect with the Internet byovercoming the limitations of geography. With access to the Internet at their fingertips, users were no longer
tethered to the physical location of a desktop computer, and all types of experiments of new potential use cases for
the Internet eventually arose through the innovations of creators. Consequently, some of these experiments
became viable solutions for people, such as ordering a taxi and automatically paying for the ride with your credit
card information (Uber), or rural farmers and agricultural vendors engaging in entrepreneurship and selling
produce via smartphones and livestreaming platforms.85 The convenience and expectation that consumers would
have continual access to fast cellular networks fueled investments in smartphone handsets and the developmentof mobile applications, which in turn transformed the way people work, find entertainment, and connect.86

84

Miller, Chance, “15 years of iPhone: Rewatch the original Steve Jobs keynote announcing the iPhone,” 9To5Mac, January 9, 2022,
available at https://9to5mac.com/2022/01/09/steve-jobs-original-iphone-announcement-15-years/.

85

David S. Evans, and Howard H. Chang, and Steven Joyce, “What Caused the Smartphone Revolution?” September 17, 2019, p. 12(“Smartphone Revolution”); Selina Xu, “Livestreaming Farmers Earn Millions From Fruit on China’s TikTok,” Bloomberg Wealth, July 6,
2021, available at https://www.bloomberg.com/news/articles/2021-07-07/livestreaming-farmers-earn-millions-from-fruit-on-china-s-tiktok.

86

Smartphone Revolution, p. 15.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Existing conceptions of the metaverse have a similar flavor of combining existing technologies—in this case,
AR/VR, mixed and extended realities, videoconferencing, multi-player gaming—and turning them into something
new that fundamentally transforms how we connect with each other and further breaks down location barriers byenabling seamless and immersive experiences without the need to be physically present in one location. 87 The
wide range of expected applications for the metaverse is also similar to that of mobile technology, including in thecommunications, entertainment, education, healthcare, manufacturing, and retail sectors.
Second, mobile technology is a relatively recent—but not too recent—technological innovation, and data on its
adoption are readily available for countries all around the world. Data on older technologies are likely to be moresparse, while newer technologies such as AR and VR are too recent to have completed the full evolution of theiradoption and direct, indirect, and catalytic effects on economies. Mobile technology fills the sweet spot as being
both rich with data and having similar value propositions as envisioned for the metaverse.

B. Literature on the economic impacts of mobile technology
A number of academic and industry studies have measured the impact of mobile technology on economic output(typically measured in terms of gross domestic product, or GDP) and other economic indicators in both developed
and developing countries. As discussed in Section II, technological innovation can drive new growth in output, or it
can displace output from other sectors of the economy. Depending on the sector or region, this can have positiveor negative effects on output, employment, prices, and other economic indicators. In this section, we review
existing empirical research on the economic impact of mobile technology. Overall, while different studies define
and measure mobile technology in different ways, the existing research indicates that in a wide range of contexts
and across various definitions and measures, mobile technology has had a substantial and beneficial impact on
global and local economies.
First, mobile technology is associated with a large share of global GDP. A series of studies conducted by theindustry organization GSMA found that the “mobile economy” contributed approximately $2.4 trillion (3.6%) to
global GDP in 2013, $3.9 trillion (4.6%) to global GDP in 2018, and $4.4 trillion (5.1%) to global GDP in 2020.88
These estimates include direct contributions (e.g., mobile operators and related infrastructure), indirectcontributions, and productivity contributions, with productivity accounting for the largest share of GDP—for

87

The Global Herald, “Metaverse: How Roblox-Inspired Companies Are Bringing the Internet to Life,” August 11, 2021, available athttps://theglobalherald.com/news/metaverse-how-roblox-inspired-companies-are-bringing-the-internet-to-life/ (“Cutting-edge metaverse
applications are still at the conceptual stage. If they do become reality, virtual meetings and shopping online would feel like real-life
activities, with digital copies of almost everything that also reflect real-world changes in real time through advanced 3D image capturing.”).

88

GSMA includes direct contributions from mobile operators and the “rest of [the] mobile ecosystem” as well as “[a]dditional indirect andproductivity benefits” in its estimate of contribution to GDP. Similarly, GSMA includes direct employment by mobile operators, distributors
and retailers, and the rest of the mobile ecosystem, as well as indirect employment by “adjacent industries” in its estimate of contribution toemployment. See “How the Smartphone has Impacted Economic Development,” The University of Scranton, available athttps://elearning.scranton.edu/resource/business-leadership/how-the-smartphone-has-impacted-economic-development (“According to amajor report conducted by GSMA, the mobile economy contributed an estimated $2.4 trillion to the international economy in 2013,
representing about 3.6% of global gross domestic product.”); GSMA 2019, p. 4 (“In 2018, mobile technologies and services generated $3.9
trillion of economic value (4.6% of GDP) globally […]”); GSMA, “The Mobile Economy,” 2021, (“GSMA 2021”), p. 38, available athttps://www.gsma.com/mobileeconomy/wp-content/uploads/2021/07/GSMA_MobileEconomy2021_3.pdf (“In 2020, mobile technologies
and services generated 5.1% of global GDP, a contribution that amounted to almost $4.4 trillion of economic value added.”).

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

example, $2.9 trillion (3.4%) in 2020.89 Moreover, the study found that in 2020, the global mobile industry directly
employed about 12 million people and indirectly employed another 13 million people in adjacent industries. 90
Second, studies have found that mobile technology has contributed to GDP growth. Using data on both developed
and developing countries, a 2012 Deloitte study found that a 10% substitution from 2G to 3G penetration was
associated with a 0.15 percentage point increase in the GDP per capita growth rate globally. Furthermore, adoubling of mobile data usage was associated with a 0.5 percentage point increase in the GDP per capita growthrate.91 While these empirical estimates are based on both developed and developing countries, Aker and Mbiti(2010) identify five potential mechanisms through which mobile technology adoption can impact growth inundeveloped economies, some of which may also apply to developed countries. The mechanisms include: (1)improving access to information and reducing search costs, (2) improving firms’ productive efficiency, (3) creating
new jobs, (4) reducing households’ risk by improving communication within their social network, and (5) delivering
financial, agriculture, health, and education services via mobile apps and platforms.92
Third, a handful of studies have focused on measuring the impact of mobile technology specifically in developing
countries, exploring a range of different economic indicators. Waverman et al. (2005) find that a 10% increase inmobile penetration was associated with a 0.6% increase in GDP per capita growth rate in developing countries,
which is up to two times larger than the impact in developed countries.93 This finding could be driven by the “leapfrogging” opportunities for many poor countries resulting from mobile phones being substitutes for fixed lines as
the main communication networks, and therefore enabling such countries to “supplant the information-gatheringrole of fixed-line systems.94 Andrianaivo and Kpodar (2011) study mobile technology’s interaction with financial

89

The GSMA reports do not elaborate on what is included in “indirect” and “productivity” contributions.

90

GSMA 2021, p. 39.

91

The study also found that a 10% increase in mobile penetration (the number of mobile phone subscribers per 100 population, which
includes subscribers with basic cellular phone plans that do not have broadband Internet access) increases total factor productivity in thelong run by 4.2 percentage points. See Deloitte, “What is the Impact of Mobile Telephony on Economic Growth? A Report for the GSM
Association,” November 2012, available at https://www.gsma.com/mobilefordevelopment/resources/what-is-the-impact-of-mobiletelephony-on-economic-growth/, p. 2 (“For a given level of total mobile penetration, a 10 per cent substitution from 2G to 3G penetration
increases GDP per capita growth by 0.15 percentage points […] A doubling of mobile data use leads to an increase in the GDP per capita
growth rate of 0.5 percentage points […] A 10 per cent increase in mobile penetration increases Total Factor Productivity in the long run by
4.2 percentage points.”). See also Recon Analytics and ctia, “The 4G Decade: Quantifying the Benefits,” July 2020, (“Recon and ctia The
4G Decade”), available at http://reconanalytics.com/2020/07/the-4g-decade-quantifying-the-benefits/, p. 4 (“Thanks to 4G, U.S. GDP grew
$248.7B more than projected”).

92

Here, “mobile technology” refers to mobile phones. See Aker, Jenny, and Isaac M. Mbiti, “Mobile Phones and Economic Development in
Africa,” Journal of Economic Perspectives, Vol. 24(3), 2010, pp. 213–214.

93

Here, “mobile penetration” pertains to mobile phone penetration. See Waverman, L., M. Meschi and M. Fuss, “The Impact of Telecoms on
Economic Growth in Developing Countries,” in Africa: The Impact of Mobile Phones, Vodafone Policy Paper Series, No. 2, March 2005.
See also Roller, Lars-Hendrik, and Leonard Waverman, “Telecommunications Infrastructure and Economic Development: A Simultaneous
Approach,” The American Economic Review, vol. 91 (4), September 2001. Roller and Waverman (2001) found a statistically significant
positive causal link between landline and telex penetration and GDP growth for OECD countries, where a 1% increase in penetration
increases economic growth by 0.045%. Furthermore, they found that a critical mass of 40% penetration leads to increasing returns on
telecom investments.

94

Technology leapfrogging refers to adopting the latest technology in a setting where the previous generation of the technology was notpresent. See, e.g., Fong, Michelle Wye Leng (2009) Technology leapfrogging for developing countries. In: Encyclopedia of Information
Science and Technology. Khosrow-Pour, Mehdi, ed. Information Science Reference, Hershey, Pa, USA, pp. 3707-3713; Waverman, L., M.
Meschi and M. Fuss, “The Impact of Telecoms on Economic Growth in Developing Countries,” in Africa: The Impact of Mobile Phones,
Vodafone Policy Paper Series, No. 2, March 2005, p. 2 (“We find that mobile telephony has a positive and significant impact on economic
growth, and this impact may be twice as large in developing countries compared to developed countries. This result concurs with intuition.
Developed economies by and large had fully articulated fixed-line networks in 1996. Even so, the addition of mobile networks had
significant value-added in the developed world: the value-added of mobility and the inclusion of disenfranchised consumers through payas-you-go plans unavailable for fixed lines. In developing countries, we find that the growth dividend is far larger because here mobile
phones provide, by and large, the main communications networks; hence they supplant the information-gathering role of fixed-line
systems.”).

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

inclusion, and estimate that in African countries where mobile financial services exist, mobile penetration further
enhances the contribution of financial inclusion to economic growth by 7.42% relative to countries where these
services are not yet deployed.95,96 Lastly, within-country studies show that breaking down geographic barriers to
information and communication reduces price dispersion of agricultural and fishing goods and increases welfare.97
For example, in Kerala, India, greater mobile coverage that made mobile service available in areas of the sea
where most fishing occurred allowed fishermen to coordinate with traders and take advantage of spatial arbitrage
opportunities that increased profits and consumer surplus by 8% and 6%, respectively, while decreasing consumer
prices by 4%.98 In Niger, mobile phones allowed grain traders to obtain price information without having tophysically travel to a market (as was traditionally the case), thereby reducing search costs and time and increasing
search breadth, leading to reduced price dispersion across markets.99
Finally, while many studies indicate that mobile technology has had a net positive impact on both developed anddeveloping economies, the literature also raises some potential risks and tradeoffs of mobile technology adoption.
For example, Kentaro Toyama, a computer scientist and international development researcher, explains that in thecontext of development, “technology tends to amplify existing inequalities” and “helps the rich get proportionatelyricher, thus widening, not narrowing, the gaps between rich and poor.”100 Toyama identifies three mechanisms
through which technology can increase inequality: differential access, differential capacity (e.g., disparities in skill),and differential motivation.101 Wych, Simiyu, and Othieno (2016) found that the dissonance caused by differential
capacity and differential motivation among rural Kenyan women’s mobile phone usage resulted in the amplificationof existing inequalities. The design interface of Safaricom, Kenya’s largest network provider, confused andcomplicated rural Kenyan women’s ability to use their handsets, sometimes leading them to lose money to the95

Mobile financial services (MFS) refers to branchless banking services offered through mobile network operators (MNO). The user would
open an account or e-wallet with the MNO, and give cash to the MNO in exchange for an electronic record of value on a virtual accountkept through the MNO. In addition to the basic deposit and withdrawal services, users can also electronic money to other users via text
messages The countries and MFS in the study include Zambia (CELPAY), South Africa (WIZZIT and MTN Mobile Money), and Kenya (MPESA).

96

Here, “mobile technology” refers to mobile phones and “mobile penetration” refers to mobile phone penetration. See Andrianaivo,
Mihasonirina, and Kangni Kpodar, “ICT, Financial Inclusion, and Growth: Evidence from African Countries,” IMF Working Paper No. 11/73,
April 2011.

97

See e.g., Robert Jensen, “The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries
Sector,” The Quarterly Journal of Economics, vol. 122 (3), 2007; Jenny C. Aker, “Information from Markets Near and Far: Mobile Phones
and Agricultural Markets in Niger,” American Economic Journal: Applied Economics, Vol. 2(3), July 2010.

98

Here, “mobile coverage” pertains to mobile phones. See Jensen, Robert, “The Digital Provide: Information (Technology), Market
Performance, and Welfare in the South Indian Fisheries Sector,” The Quarterly Journal of Economics 122(3), August 2007, pp. 879-924,
available at https://web.stanford.edu/class/comm1a/readings/jensen-digital-divide.pdf, p. 883 (“[F]ishermen’s profits increased on averageby 8 percent while the consumer price declined by 4 percent and consumer surplus in sardine consumption increased by 6 percent […]”).

99

Aker, Jenny C., “Information from Markets Near and Far: Mobile Phones and Agricultural Markets in Niger,” American Economic Journal:
Applied Economics 2, July 2010, pp. 46-59, pp. 46-47 (“As grain traders have traditionally traveled to markets to obtain price information
for agricultural goods, mobile phones should have reduced their search costs, allowing them to search over a larger number of markets
more quickly. This effect was supported by the grain traders themselves, one of whom stated, ‘[With a mobile phone], I know the price for
US $2, rather than traveling (to the market), which costs US $20.’”); pp. 57-58 (“The introduction of mobile phones is associated with a 10
to 16 percent reduction in price dispersion across [agricultural] markets […] the primary mechanism through which mobile phones affectmarket-level outcomes is a reduction in search costs, as grain traders operating in mobile phone markets change their search andmarketing behavior as compared to their non-mobile phone counterparts.”).

100

Kentaro Toyama, “Technology as Amplifier in International Development,” iConference '11: Proceedings of the 2011 iConference, 2011.

101

Differential access refers to inequalities among consumers that affect their access to technologies; differential capacity refers to how“disparities among people, such as better education, refined social skills, and influential connections all translate to a greater ability for the
better-off to use technology for their own purposes”; and differential motivation refers to “what people want to do with the technology they
have access to.” See Kentaro Toyama, “Technology as Amplifier in International Development,” iConference '11: Proceedings of the 2011
iConference, 2011.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

country’s for-profit network provider rather than engaging in income-generating activities.102 An implication of thisliterature is that technology alone cannot fix or address disparities in access, capacity, and motivation—rather, it
tends to amplify existing inequalities in these dimensions. The research indicates that technological innovations
are most likely to be successful in developing economies if they “amplify already successful development efforts orpositively inclined intent.”103
Overall, the existing research on the economic impacts of mobile technology indicates that mobile technology has
had many substantial impacts on global and local economies—in terms of GDP, jobs and employment,
productivity, and other dimensions that contribute to consumer welfare. An implication is that if the metaverse were
to be adopted and diffused in a similar way as mobile technology, it would have the potential to have similarly
wide-reaching economic impacts.

IV. Empirical Analysis of the Economic Impact of Mobile
Technology
In this section, we build off the existing literature and accepted econometric methods to develop an empiricalapproach to estimate the impact of mobile technology adoption on GDP growth. We then use the results as abenchmark for calculating the potential economic impact of the metaverse on GDP growth in Section V.
Our goal is to utilize a parsimonious approach that is simple and flexible enough to be applied broadly acrossdifferent regions and that uses data that are readily available for most, if not all, countries around the world. At thesame time, we develop a rigorous approach grounded in methods that have been widely applied in existing
research, and thus can be replicated or leveraged for other similar efforts.
Broadly, studies of economic impact of new technologies take one of two methodological approaches. One groupof studies uses macro-level panel data such as from the International Monetary Fund or the World Bank,
leveraging variation across many different countries and over time to estimate the impact of a technology on GDP
growth. These studies typically regress the growth rate of GDP per capita on a measure of adoption of thetechnology and a number of other economic indicators.104 To address potential endogeneity concerns, thesestudies often use the lags of the endogenous variables as instruments and estimate the parameters of the model102

For example, some respondents were subscribed to premium services without their active knowledge and were unaware of how to
unsubscribe from these services because of the cumbersome process to do so. The “process [to unsubscribe] involves entering a shortcode, navigating five different menus, answering queries by inputting a number, scrolling to the bottom of menus, translating unfamiliar
terms (i.e., “Selfcare” and “International Voice Bundles”), and selecting an option that provides no feedback to confirm that users haveactually unsubscribed.” See Susan Wych, Nightingale Simiyu, and Martha E. Othieno, “Mobile Phones as Amplifiers of Social Inequality
among Rural Kenyan Women,” ACM Transactions on Computer-Human Interaction, Volume 23, Issue 3, 2016 (“Our analysis suggests that
[Safaricom’s] design at the very least contributes to confusing and complicating our rural Kenyan respondents’ abilities to use theirhandsets, and at worst, results in them losing money to the country’s for-profit network provider.”).

103

Kentaro Toyama, “Technology as Amplifier in International Development,” iConference '11: Proceedings of the 2011 iConference, 2011.

104

See, e.g., Deloitte, “What is the impact of mobile telephony on economic growth? A Report for the GSM Association,” November 2012;
Ulku, Hulya, “R&D, Innovation, and Economic Growth: An Empirical Analysis,” IMF Working Paper, September 2004; Andrianaivo,
Mihasonirina and K. Kpodar, “ICT, Financial Inclusion, and Growth: Evidence from African Countries,” IMF Working Paper, April 2011; Lee,Sang H., J. Levendis, and L. Gutierrez, “Telecommunications and Economic Growth: An Empirical Analysis of Sub-Saharan Africa,”
Applied Economics 44(4), October 2009; Roller, Lars-Hendrik and L. Waverman, “Telecommunications Infrastructure and Economic
Development: A Simultaneous Approach,” The American Economic Review 91(4), September 2001, pp. 909-923; Waverman, L., M.
Meschi and M. Fuss, “The Impact of Telecoms on Economic Growth in Developing Countries,” in Africa: The Impact of Mobile Phones,
Vodafone Policy Paper Series, No. 2, March 2005.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

with generalized method of moments. A second group of studies uses micro-level data from a single country,
leveraging variation within a country—such as staggered timing of mobile enrollment or internet cable arrival(enabling fast internet)—to identify the impact of the technology on outcomes like consumer welfare, employment,
and price dispersion using a quasi-experimental design.105 While the latter studies can take advantage of unique
identification strategies, their results may not be generalizable to other countries or settings.
Given our focus on modeling the economic impact of mobile technology for a broad range of countries andregions, we take the first approach, using the Arellano-Bond generalized method of moments (GMM) estimator.106
We view these estimates as a useful first-order approximation of the relationship between a breakthroughtechnological innovation and economic growth, which helps ground our estimate of the metaverse’s potential
economic impact.

A. ModelFor our baseline model, we follow Waverman, Meschi, and Fuss (2005) and Andrianaivo and Kpodar (2011) tostudy the relationship between GDP per capita growth and mobile broadband adoption. The equation is as follows:′ln(𝐺𝐷𝑃𝑝𝑐𝑖,𝑡 ) − ln(𝐺𝐷𝑃𝑝𝑐𝑖,𝑡−1 ) = 𝛼 ln(𝐺𝐷𝑃𝑝𝑐𝑖,𝑡−1 ) + 𝛽 ln(𝑚𝑜𝑏𝑖𝑙𝑒 𝐵𝐵𝑖,𝑡 ) + 𝑋𝑖,𝑡
Γ + 𝜈𝑖,𝑡𝜈𝑖,𝑡 = 𝜂𝑖 + 𝜖𝑖,𝑡 ,where 𝐺𝐷𝑃𝑝𝑐𝑖,𝑡 is GDP per capita in country 𝑖 and year 𝑡, and 𝑚𝑜𝑏𝑖𝑙𝑒 𝐵𝐵𝑖,𝑡 is the number of mobile broadband
subscriptions per 100 people in country 𝑖 and year 𝑡. Following the economic growth literature, we control for othercountry-level variables that can impact GDP growth.107 𝑋𝑖,𝑡 includes the following control variables: the number of
fixed broadband subscriptions per 100 people, the number of patent applications per capita, secondary school
enrollment, the fertility rate, government expenditure as a percent of GDP, and gross capital formation as apercent of GDP.108 Finally, 𝜂𝑖 is a country fixed effect, and 𝜖𝑖,𝑡 are idiosyncratic errors. The coefficient of interest
is 𝛽.
Rearranging the lag of GDP per capita, we can estimate the following equation using ordinary least squares (OLS):

105

See, e.g., Jensen, Robert, “The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries
Sector,” The Quarterly Journal of Economics 122(3), August 2007; Aker, Jenny C., “Information from Markets Near and Far: Mobile
Phones and Agricultural Markets in Niger,” American Economic Journal: Applied Economics 2, July 2010, pp. 46-59; Hjort, Jonas, andJonas Poulsen, “The Arrival of Fast Internet and Employment in Africa,” American Economic Review, Vol. 109(3), March 2019; Jack,
William, and Tavneet Suri, “Risk Sharing and Transactions Costs: Evidence from Kenya’s Mobile Money Revolution,” American Economic
Review, Vol. 104(1), January 2014, pp. 183 - 223.

106

Arellano, Manuel, and Stephen Bond, “Some tests of specification for panel data: Monte Carlo evidence and an application to employment
equations,” Review of Economic Studies, Vol. 53, 1991.

107

See, e.g., Barro, Robert J., “Economic Growth in a Cross Section of Countries,” The Quarterly Journal of Economics 106(2), May 1991, pp.
407-443; Waverman, Meschi, and Fuss (2005); Andrianaivo and Kpodar (2011).

108

Secondary school enrollment is the ratio of total secondary school enrollment (regardless of age) to the population of secondary school
age group. Fertility rate is the average number of children that would be born to a woman over her lifetime that would survive to at least 5years old. Gross capital formation is the outlays on additions to the fixed assets of the economy plus net changes in the level ofinventories. See The World Bank, “DataBank: World Development Indicators,” available at https://databank.worldbank.org/source/worlddevelopment-indicators.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE′
ln(𝐺𝐷𝑃𝑝𝑐𝑖,𝑡 ) = 𝛾 ln(𝐺𝐷𝑃𝑝𝑐𝑖,𝑡−1 ) + 𝛽 ln(𝑚𝑜𝑏𝑖𝑙𝑒 𝐵𝐵𝑖,𝑡 ) + 𝑋𝑖,𝑡
Γ + νit(1)𝜈𝑖𝑡 = 𝜂𝑖 + 𝜖𝑖,𝑡 ,where 𝛾 = 1 + 𝛼.
The model shown in equation 1 could suffer from endogeneity because higher GDP per capita can increasedemand for mobile broadband through income effects. Another source of endogeneity is the correlation between
𝐺𝐷𝑃𝑝𝑐𝑖,𝑡−1 and the error term 𝜈𝑖𝑡 . To address these endogeneity issues, we follow Arellano and Bond (1991) inestimating the model using the GMM estimator and time-specific instrumental variables, where the population
moment 𝐸(𝑍 ′ Δ𝜖) = 0 requires that the instruments are uncorrelated with the differenced errors. We perform a setof robustness checks to test for the validity of the instruments.
We estimate the first-difference specification using a two-stage GMM estimator, implemented with the xtabond
Stata command. We assume the following logged variables are endogenous: the number of mobile broadband
subscriptions per 100 people, the number of fixed broadband subscriptions per 100 people, and the number ofpatent applications per capita. To limit the number of instruments, we only use the second lags of these threevariables, and the second and third lags of log GDP per capita as instruments. We assume the remaining firstdifferenced variables (primary and secondary enrollment, fertility, government expenditure, and gross capitalformation) are exogenous and are their own instruments. We report Windmeijer-corrected robust standard errors,
which provide finite sample correction for the variance of two-step GMM estimators.

B. Data
Our main data source is the World Bank’s World Development Indicators database (WDI). According to the World
Bank, WDI is the organization’s primary collection of development indicators, “compiled from officially recognizedinternational sources” and “presents the most current and accurate global development data available.”109 WDI
contains panel data covering up to 266 individual countries and territories from 1960 to 2019, depending on theindicator(s) selected from over 1,400 available indicators.110 The data can also be aggregated to geographical109

The World Bank, “DataBank,” available at https://databank.worldbank.org/home.aspx (“World Development Indicators (WDI) is the primaryWorld Bank collection of development indicators, compiled from officially recognized international sources. It presents the most current andaccurate global development data available, and includes national, regional and global estimates.”).

110

WDI data are collected from various sources, including other international organizations (e.g., UNESCO, ITU, WIPO) and national
accounts data files. Regardless of a specific indicator’s data source, the data available in WDI are directly impacted by the upstream
sources. Gaps in data coverage may be due to administrative reasons—such as the year in which a dataset or indicator was introduced ina country, changes to indicator definitions or data collection methodology, or an incomplete or delayed submission; gaps may also be due
to quality or statistical reasons—such as low distribution frequency of a survey, political instability or lack of statistical capacity, or otherdata quality concerns. For example, WDI includes data on gross school enrollment ratios from UNESCO; if there are gaps in UNESCO’s
data on school enrollment, potentially due to any combination of the causes mentioned above, these gaps would be reflected in the WDI
data as well. In addition, high-income countries that do not borrow from the World Bank are not obligated to report data on certain
indicators related to debt and aid, among others, which may contribute to gaps in data coverage for these indicators. See The World Bank,“Data: Why are some data not available?” available at https://datahelpdesk.worldbank.org/knowledgebase/articles/191133-why-are-somedata-not-available; The World Bank, “DataBank: World Development Indicators,” available at https://databank.worldbank.org/source/worlddevelopment-indicators; The World Bank, “Data: Why is there missing data for high-income countries?” available athttps://datahelpdesk.worldbank.org/knowledgebase/articles/198559; UNESCO, “UIS Education Data Release: September 2019,” available
at http://uis.unesco.org/sites/default/files/documents/ip59-uis-education-data-release-september-2019.pdf; UNESCO, “Background
Information on Education Statistics in the UIS Dataset,” September 2021, available at
http://data.uis.unesco.org/ModalHelp/OECD/background-information-education-statistics-uis-database-en.pdf.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

regions, international economic/financial organizations, and socioeconomic groups of countries.111 The variables
we use from WDI are GDP per capita in constant 2015 USD, fixed broadband subscriptions per 100 people,
resident and non-resident patent applications per capita, secondary school gross enrollment ratio, total fertility rate,
under-5 mortality rate per 1,000 live births, general government final consumption expenditure as a percent ofGDP, and gross capital formation as a percent of GDP.
We supplement the data from WDI with data from the World Bank’s complete DataBank, which includes additional
databases focused on governance and regulation, development, jobs and labor, infrastructure, remittance, anddebt. The variable we use from the DataBank is rule of law.
We further supplement these data sources with data from the International Telecommunication Union (ITU), “theUnited Nations specialized agency for information and communication technologies.”112 The variable we use from
ITU is mobile broadband subscriptions per 100 people, which is available for the period 2007 to 2019.113 Because
mobile broadband adoption is our key variable of interest, this limits our analysis to the period 2007 to 2019.
We map countries to regions and development groups following the World Bank’s most recent classification. The
geographical regions we use are Asia Pacific (APAC); Europe; Latin America (LATAM); Middle East, North Africa
and Turkey (MENAT); Sub-Saharan Africa (SSA); and the countries of Canada, India, and the United States. The
development groups used are high income, upper-middle income, lower-middle income, and low income.114
Figure 9 provides a complete list of the variables used in the analysis and their definitions and sources.

111

The World Bank, “DataBank,” available at https://databank.worldbank.org/home.aspx; The World Bank, “Data: Methodologies,” available athttps://datahelpdesk.worldbank.org/knowledgebase/articles/906531-methodologies; The World Bank, “Data: World Bank Country andLending Groups,” available at https://datahelpdesk.worldbank.org/knowledgebase/articles/906519.

112

ITU, “About International Telecommunication Union (ITU),” available at https://www.itu.int/en/about/Pages/default.aspx.

113

ITU’s definition of active mobile broadband subscriptions is as follows: “Active mobile‐broadband subscriptions refers to the sum of active
handset‐based and computer‐based (USB/dongles) mobile‐broadband subscriptions to the public Internet. It covers actual subscribers, notpotential subscribers, even though the latter may have broadband‐enabled handsets. Subscriptions must include a recurring subscription
fee or pass a usage requirement – users must have accessed the Internet in the last three months. It includes subscriptions to mobile‐
broadband networks that provide download speeds of at least 256 kbit/s (e.g. WCDMA [(3G)], HSPA [(3G)], CDMA2000 1x EV‐ DO [(3G)],
WiMAX IEEE 802.16e [(4G-level)] and LTE [(4G)]), and excludes subscriptions that only have access to GPRS, EDGE and CDMA 1xRTT.”
See ITU, “WTI Indicators with Definitions,” p. 12, available at https://www.itu.int/en/ITU-D/RegionalPresence/AsiaPacific/Documents/Events/2017/Aug-aspstat2017/WTI_Indicators_with_Definitions_14Aug2017_final.pdf; Gartner Glossary,“WCDMA (Wideband Code Division Multiple Access),” Gartner, available at https://www.gartner.com/en/informationtechnology/glossary/wcdma-wideband-code-division-multiple-access; Electronics Notes, “What is HSPA: Tutorial,” available athttps://www.electronics-notes.com/articles/connectivity/3g-hspa/what-is-hspa-high-speed-packet-access-tutorial.php; Rohde & Schwarz,“CDMA2000® 1xEV-DO Technology,” available at https://www.rohde-schwarz.com/nl/technologies/cellular/cdma2000-1xev-do/cdma20001xev-do-technology/cdma2000-1xev-do_55906.html; Electronics Notes, “WiMAX IEEE 802.16 technology tutorial,” available athttps://www.electronics-notes.com/articles/connectivity/wimax/what-is-wimax-802-16-technology-basics.php; T-Mobile, “What is LTE?”available at https://www.t-mobile.com/resources/what-is-lte.

114

The World Bank, “Data: World Bank Country and Lending Groups,” available athttps://datahelpdesk.worldbank.org/knowledgebase/articles/906519.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Figure 9. Variable Definitions and Sources
Variable

Variable Definition

SourceGDP

GDP per capita in constant 2015 USD.

World Bank's World
Development Indicators (WDI)

Mobile broadband
subscriptions per 100
peopleThe number of active mobile broadband subscriptions per
100 inhabitants.

International Telecommunication
Union (ITU)

Fixed broadband
subscriptions per 100
peopleThe number of fixed broadband subscriptions per 100
WDI
inhabitants; fixed broadband subscriptions are fixedsubscriptions to high-speed access to the public Internet(via a TCP/IP connection) at downstream speeds of at least
256 kbits/s.

Patent applications per
capitaThe sum of resident-filed and non-resident-filed patentapplications filed through the Patent Cooperation Treaty
procedure or with a national patent office.

Secondary school
enrollment

Secondary school gross enrollment ratio. This is the ratio of WDI
total students enrolled in secondary education (regardlessof age) to the population of the age group that officiallycorresponds to secondary education.

Fertility rate

Total fertility rate, accounting for under-5 mortality. This is
WDI
the average number of children that would be born to a
woman - and survive to at least the age of 5 - if she were tolive to the end of her childbearing years and bear children inaccordance with age-specific fertility rates of the specified
year.

Government expenditure General government final consumption expenditure as apercent of GDP.

WDI

WDI

Gross capital formation

Gross capital formation as a percent of GDP; this includes WDI
outlays on additions to the fixed assets of the economy andnet changes in the level of inventories.

Rule of law

An aggregate indicator representing perceptions of theWorld Bank's Worldwide
extent to which agents have confidence in and abide by the Governance Indicators (WGI)
rules of society, and in particular the quality of contract
enforcement, property rights, the police, and the courts, aswell as the likelihood of crime and violence.

Note: All variables are taken directly from the World Bank and ITU with the exception of fertility rate, which is calculated as (total fertility rate)*(1(under-5 mortality rate per 1,000 live births/1,000)).
Sources:[1] World Bank.
[2] International Telecommunication Union.

C. Summary statistics
Summary statistics on mobile technology adoption indicate that the level and rate of adoption varies acrossgeographic regions and development groups.
Figure 10 shows the average per-100-people adoption as well as the total adoption of mobile broadband
technology and mobile cellular technology for the regions APAC, Canada, Europe, India, LATAM, MENAT, SSA
and the United States in 2019. India and SSA exhibit the lowest per-100-people adoption of mobile broadband

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

technology while the United States and Europe exhibit the highest per-100-people adoption, followed by APAC,
Canada, MENAT, and LATAM.115

Figure 10. Mobile Technology Adoption Levels by Region, 2019

RegionAPAC
CanadaEurope
India
LATAM
MENAT
SSA
United States

Mobile broadband Mobile broadband
subscriptions,subscriptions,per 100 people
total
90.85
2,354,872,494
82.71
30,941,000
101.83
711,257,090
47.04
642,799,000
73.89
406,560,085
75.61
380,207,693
37.37
331,515,809
152.17500,735,000

Mobile cellularsubscriptions,per 100 people
122.1891.86
130.12
84.27
101.46112.7087.22
134.46

Mobile cellularsubscriptions,
total
3,295,242,494
34,366,950
965,024,449
1,151,480,361
621,796,901
567,163,300
796,208,509
442,457,000

Sources:[1] World Bank.
[2] International Telecommunications Union.

Mobile broadband subscriptions per 100 people is our preferred measure of mobile technology adoption due to its
direct association with mobile access to the Internet.116 As discussed above, we view adoption of mobile
broadband (and the portable Internet access it provides, along with the more developed and widespreadinfrastructure that underlies mobile Internet access) as a closer analog to the metaverse than mobile cellularsubscriptions alone.

115

Possible explanations for some regions exhibiting average adoption over 100 mobile broadband subscriptions per 100 people include (1)usage of multiple mobile devices, each with their own data plan and (2) usage of mobile devices with multi-SIM capabilities. Depending on
the region (and provider), mobile broadband subscriptions may apply to a variety of wireless devices including basic phones, smartphones,
tablets, netbooks, modems, mobile hotspot devices, smartwatches, and connected cars. Multi-SIM card phones allow users to activate
multiple data plans and use multiple phone numbers on the same device (separately), whether for business, travel, or other purposes.
Multi-SIM mobile devices are especially popular in Asia, with most Android handsets sold in China having two SIM slots and all iPhone 12
models sold in Japan being dual SIM (as of the end of 2020). In addition, multi-SIM devices are gaining popularity in India. See T-Mobile,“Policies: Open Internet,” available at https://www.t-mobile.com/responsibility/consumer-info/policies/internet-service; Verizon, “Important
Information About Verizon Wireless Broadband Internet Access Services,” available at https://www.verizon.com/support/broadbandservices/; Verizon, “Number Share - Mobile,” available at https://www.verizon.com/solutions-and-services/numbershare/; Verizon, “eSIM
FAQs - Two numbers on one phone,” available at https://www.verizon.com/support/dual-sim-with-esim-faqs/#benefits; Apple, “Using DualSIM with an eSIM,” available at https://support.apple.com/en-us/HT209044; Chiu, Karen, “Dual SIM slots and gold iPhones: Five ways
Apple is embracing China,” South China Morning Post, September 12, 2018, available athttps://www.scmp.com/abacus/tech/article/3028810/dual-sim-slots-and-gold-iphones-five-ways-apple-embracing-china; Apple
Communities, “How can I buy dual SIM iPhone 12 Pro in Japan?” Apple, December 31, 2020, available athttps://discussions.apple.com/thread/252250952; Nielsen, “Telecom Transitions: Tracking the Multi-SIM Phenomena in India,” The Nielsen
Company, available at https://www.nielsen.com/wp-content/uploads/sites/3/2019/04/nielsen-featured-insights-tracking-the-multi-simphenomena-in-india.pdf.

116

Mobile broadband subscriptions per 100 people does not distinguish between prepaid and postpaid subscriptions and does not capture
extent of usage (e.g., how people use their phones, how long they use their phones for); the definition only specifies that “[s]ubscriptions
must include a recurring subscription fee or pass a usage requirement – users must have accessed the Internet in the last three months.”
We therefore view mobile broadband subscriptions as a useful, though imperfect, proxy for mobile technology adoption. See ITU, “WTI
Indicators with Definitions,” p. 2, available at https://www.itu.int/en/ITU-D/Regional-Presence/AsiaPacific/Documents/Events/2017/Augaspstat2017/WTI_Indicators_with_Definitions_14Aug2017_final.pdf.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Figure 11 shows how mobile broadband adoption grew from 2007-2019 for each region. An adoption level of 50
mobile broadband subscriptions per 100 people is shown in red as a point of reference. The figures show thatdifferent regions have experienced different rates of growth in mobile broadband adoption, even if adoption beganat different points in time. Overall, regions and countries that exhibit higher mobile broadband adoption in 2019
also experienced faster growth in adoption, while regions and countries that exhibit lower mobile broadband
adoption in 2019 also experienced slower growth in adoption. For example, the United States and Europe exhibit
the highest mobile broadband adoption in 2019, and both regions progressed from zero to 50 mobile broadband
subscriptions per 100 people in approximately five years or less. On the other hand, SSA and India exhibit thelowest mobile broadband adoption in 2019, and both regions progressed from zero to about 50 mobile broadband
subscriptions per 100 people over approximately ten years.

Figure 11. Mobile Broadband Adoption by Region, 2007–2019

Notes:[1] Mobile broadband adoption is measured as the number of mobile broadband subscriptions per 100 people.
[2] The red line corresponds to 50 mobile broadband subscriptions per 100 people.
Sources:[1] World Bank.
[2] International Telecommunication Union.

We also look at adoption by different categories of development defined by the World Bank, which reveals amonotonic relationship between income groups and mobile broadband adoption. Figure 12 compares mobile
broadband adoption for high income, upper-middle income, lower-middle income, and low-income countries from2007 to 2019. At each point in time during this period, high-income countries exhibit the highest mobile broadband
adoption, followed by upper-middle income countries, then lower-middle income countries, and, lastly, low-income
countries.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Figure 12. Mobile Broadband Adoption by Development Group, 2007–2019

Note: As of the 2022 fiscal year, low-income economies are defined by the World Bank to be economies with a GNI per capita of $1,045 USD or
less in 2020; lower middle-income economies are those with a GNI per capita between $1,046 and $4,095; upper middle-income economies arethose with a GNI per capita between $4,096 and $12,695; high-income economies are economies with a GNI per capita of at least $12,696.
Sources:[1] World Bank.
[2] International Telecommunication Union.
[3] The World Bank, “Data: World Bank Country and Lending Groups,” available athttps://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups.

While the rest of our analysis focuses on global and regional results, these patterns indicate that to the extent
different countries within a geographical region fall into different development groups, there may be significant
heterogeneity in adoption and economic outcomes at the individual country level.

D. Regression results
Turning to our regression results, we find a positive and statistically significant relationship between mobile
broadband adoption and GDP that is robust to different estimation strategies.
Figure 13 reports our main regression results. Column (1) reports results from estimating a basic pooled OLS
model. The coefficient on the logged value of mobile broadband subscriptions per 100 people indicates that a 10%
increase in mobile broadband adoption is associated with a 0.029 percentage point increase in GDP per capita
growth. The other statistically significant covariates are government expenditure, which is negatively correlatedwith growth, and gross capital formation and rule of law, which are both positively correlated with growth.
Columns (2) and (3) report results from a country fixed effects model and the Arellano-Bond GMM model,
respectively, both with robust standard errors. While both give statistically significant estimates for the coefficient ofmobile broadband adoption, the fixed effects model estimate is slightly higher. A 10% increase in mobile
broadband adoption is associated with a 0.099 percentage point increase in GDP growth in the fixed effects modeland a 0.087 percentage point increase in GDP growth in the GMM model. The GMM estimation results in higher

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

magnitude estimates for secondary enrollment, government expenditure, and gross capital formation. Government
expenditure as a percent of GDP has a statistically significant negative correlation: a 1 percentage point increasein government expenditure’s share of GDP is associated with a 0.0095 percentage point decrease in GDP per
capita growth. This is perhaps because stimulus spending increases during economic downturns. 117

Figure 13. Relationship Between GDP Growth and Mobile Broadband Adoption

Lag log GDP per capita
Log Mobile Broadband per 100 ppl
Log Broadband per 100 ppl
Log Patent
Secondary Enrollment
Fertility
Gov Expenditure / GDP
Gross Capital Formation / GDP
Rule of Law
Constant

Observations
R-squared
Number of countries
AR(1)
AR(2)
HansenInstrument Count
Standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1(1)
Pooled OLS

(2)
FE

(3)
GMM

0.9865***(0.0022)0.0029***(0.0008)0.0018(0.0016)-0.0005(0.0009)
0.0001*(0.0001)-0.0027(0.0023)-0.0020***(0.0002)0.0008***(0.0001)
0.0093***(0.0019)0.1291***(0.0246)

0.8539***(0.0213)0.0099***(0.0020)0.0061(0.0066)
0.0028(0.0040)0.0003(0.0002)0.0097(0.0165)-0.0078***(0.0016)0.0017**(0.0007)0.0057(0.0113)
1.3917***(0.1977)0.7004***(0.0564)0.0087**(0.0041)0.0225(0.0154)-0.0199(0.0168)0.0009**(0.0004)-0.0399(0.0248)-0.0095***(0.0020)0.0037***(0.0011)0.0150(0.0135)838
0.9996838
0.9267107683
990.01540.118
0.094764

In the GMM estimation, a total of 64 instruments are used.118 The rows AR(1) and AR(2) are the p-values of thetest for autocorrelation of order one and two, respectively. The test exhibits evidence of autocorrelation of order
one but fails to reject the null hypothesis of no autocorrelation of order two. Hence, the test indicates that it isappropriate to use second lags as instruments. The Hansen test is a test of the null hypothesis that the117

Additionally, we estimated a regression specification where government expenditure and gross capital formation are treated as
endogenous variables, using their second lags as instruments. The coefficient for mobile broadband is 0.0104 with p-value <0.01. The
Hansen test and autoregression test confirmed instrument validity and the lack of autoregression of degree two.

118

The 64 instruments include the eleven second lags of mobile broadband, the twelve second lags for each of log GDP per capita, log
broadband, and log patent, the twelve third lags of GDP per capita, and the five exogenous variables. Mobile broadband subscriptions per
100 people is only available from 2007-2019, so the maximum number of second lags is 11. GDP, patents, and broadband are available
before 2007, so they each have 12 second lags.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

instruments are independently distributed of the error process. With a p-value of 0.095, the Hansen test ofoveridentifying restrictions fails to reject the null hypothesis 𝐸(𝑍 ′ Δ𝜖) = 0, providing support for the validity of the
instruments.

E. Robustness
To check that the lags we have chosen form an appropriate set of instruments, we ran two alternative
specifications with different lags as instruments. If the Hansen test returns a p-value less than 0.05, then thealternative specification does not have valid instruments.
Figure 14 reports the results of these robustness checks. Column (1) repeats the baseline model results fromcolumn (3) of Figure 13 for reference. Column (2) reports results that instrument log GDP per capita with only its
second lags instead of both second and third lags, which reduces the number of instruments to 52. The coefficienton mobile broadband adoption is similar to the baseline case, but the Hansen test p-value is only 0.0301, whichindicates that the model may be mis-specified without the third lags of GDP per capita as instruments. Column (3)reports results for a specification in which mobile broadband adoption, fixed broadband adoption, and patentapplication are instrumented with their third lags instead of second lags. The coefficient on mobile broadband
adoption is smaller in magnitude and not statistically significant in this specification.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Figure 14. Robustness: Alternative Lags as Instruments

Lag GDP per capita
Log Mobile Broadband per 100 ppl
Log Broadband per 100 ppl

(1)

(2)

(3)

Baseline GMM

Lag 2

Lag 3

0.7004***0.6815***0.6577***(0.0564)(0.0683)(0.0603)

0.0087**0.0089*0.0061(0.0041)(0.0047)(0.0057)

0.02250.02360.0420(0.0154)(0.0177)(0.0277)

Log Patent-0.0199-0.0154-0.0298(0.0168)(0.0177)(0.0182)

Secondary Enrollment

0.0009**0.0009**0.0009**(0.0004)(0.0004)(0.0004)

Fertility-0.0399-0.0496*-0.0515*(0.0248)(0.0294)(0.0280)

Gov Expenditure / GDP-0.0095***-0.0093***-0.0094***(0.0020)(0.0024)(0.0023)

Gross Capital Formation / GDP

0.0037***0.0037***0.0036***(0.0011)(0.0011)(0.0011)

Rule of Law

Observations
Number of countries
AR(1)0.01500.00850.0195(0.0135)(0.0135)(0.0121)

683

683

683

99

99

99

0.01540.0261

0.0523

AR(2)

0.118

0.165

0.177

Hansen0.09470.0301

0.188

64

52

63

Instrument Count
Standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1

We conclude from these robustness checks that GDP per capita should be instrumented with both its second andthird lags, while the technology variables should be instrumented with the second lags only, consistent with thebaseline GMM model reported in Figure 13. The model reported in Figure 13, column (3) therefore reflects ourpreferred specification, and our main finding from this analysis is that a 10% increase in mobile technology
adoption is associated with a 0.087 percentage point increase in GDP growth. In the next section, we apply thisfinding to quantify the potential economic impact of the metaverse.

V. Analysis of the Potential Economic Impact of the Metaverse
In this section, we draw on our economic analysis of mobile technology as a model for the potential economic
impact of the metaverse, measured in terms of GDP. We find that if the metaverse were to be adopted and grow ina similar way as mobile technology, then we would expect it to be associated with a 2.8% contribution to global
GDP after 10 years.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

A. Quantification of the potential impact of the metaverse on GDP
We quantify the potential impact of the metaverse on GDP by applying the model of mobile technology from
Section IV in two steps.
First, we calculate a single statistic that summarizes the level and speed of mobile technology adoption: thecompound annual growth rate (CAGR) of mobile broadband subscriptions per 100 people over the 2007-2019
sample period. Figure 15 reports this statistic globally and for each region. Globally, mobile broadband adoption
increased from 6.2 to 76.9 subscriptions per one hundred people between 2007 and 2019, implying a global
CAGR of mobile technology adoption of 23.3%. By region, the CAGR of mobile technology adoption ranges from
12.2% in Canada to 83.9% in MENAT.119 We use these observed growth rates in mobile technology adoption as
the assumed growth rates for metaverse adoption.

Figure 15. Mobile Technology Adoption by Region, 2007–2019

RegionAPAC
CanadaEurope
India
LATAM
MENAT
SSA
United States
GlobalStarting Levelof Adoption(per 100
people)
[A]
3.5
29.4
8.8
0.9
0.2
0.1
3.0
8.7
6.2

Ending Level
Compoundof Adoption
Annual Growth(per 100Years ofRate ofpeople)Adoption
Adoption
[B]
[C]
[D]
90.8
13
31.2%
82.7
10
12.2%
101.8
13
22.6%
47.0
9
63.1%
73.9
13
66.9%
75.6
13
83.9%
37.4
13
23.5%
152.2
12
29.7%
76.9
13
23.3%

Notes:[1] Due to variation in data coverage over time, starting and ending adoption levels for a region may not cover the exact same set of countries.
[2] Years of adoption is the number of years of available adoption data.
[3] Compound annual growth rate is calculated as [D] = ([B] ÷ [A]) ^ (1 ÷ ([C]–1)) – 1.
Sources:[1] World Bank.
[2] International Telecommunication Union.

Second, we calculate the contribution of the metaverse to GDP in the 10 years following the beginning of adoption,
assuming that a small increase in metaverse adoption has the same marginal impact on GDP growth as a small
increase in mobile broadband adoption. We assume that GDP will continue its growth trend from the most recent
ten years of available data (2009-2019), and we calculate the difference in GDP after 10 years with and without the
metaverse. The calculation can be derived as follows.

119

The ITU mobile broadband data for Canada begins in 2010. Considering Canada and the United States most likely started using mobile
broadband around the same time in 2007, the calculated CAGR for Canada of 12.2% would be an underestimate. Canada also has lower
adoption rates than the United States by 2019, 82.7 and 152.2 respectively. Hence, the actual CAGR of adoption for Canada is likely
between 12.2% and the United States’ 29.7%.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Let 𝛾 be the annual secular growth rate of GDP. Let 𝑟 = 𝐶𝐴𝐺𝑅𝑎𝑑𝑜𝑝𝑡𝑖𝑜𝑛 ⋅ 𝛽 be the additional annual growth in GDP
attributable to the metaverse, which is given by the product of the CAGR of adoption (assumed to be equal to the
CAGR of mobile technology adoption) and the estimated coefficient of 0.0087 from our regression of GDP growth
on mobile broadband adoption (see Figure 13, column 3). Let 𝐺0 be the level of GDP at the start of metaverse
adoption. Without the metaverse, the GDP after 10 years is given by 𝐺0 (1 + 𝛾)9 . With the metaverse, the GDP
after 10 years is given by 𝐺0 (1 + 𝛾 + 𝑟)9 . The share of total GDP attributable to the metaverse after 10 years istherefore given by:
𝑀𝑒𝑡𝑎𝑣𝑒𝑟𝑠𝑒’𝑠 𝑆ℎ𝑎𝑟𝑒 𝑜𝑓 10𝑡ℎ 𝑌𝑒𝑎𝑟 𝐺𝐷𝑃 =(1 + 𝛾 + 𝑟)9 − (1 + 𝛾)9(1 + 𝛾 + 𝑟)9(2)

The metaverse’s share of GDP in the 10th year following the beginning of its adoption does not depend on any
assumption about when adoption begins. For ease of interpretation, we also calculate the metaverse’s total
contribution to GDP in dollars after 10 years assuming the metaverse exists today. Letting 𝐺0 be 2022 GDP.
Assuming metaverse adoption begins in 2022, then the metaverse’s total dollar contribution to GDP in 2031 would
be given by:
𝑀𝑒𝑡𝑎𝑣𝑒𝑟𝑠𝑒’𝑠 𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑡𝑜 𝐺𝐷𝑃 𝑖𝑛 2031 ($) = 𝐺0 (1 + 𝛾 + 𝑟)9 − 𝐺0 (1 + 𝛾)9(3)

Equation 3 says that the metaverse’s contribution to GDP in 2031 is the difference between GDP in 2031 with themetaverse and GDP in 2031 without the metaverse.120
Figure 16 summarizes the results of these calculations. Our model implies that the metaverse’s share of global
GDP in the 10th year is 2.8%. By region, the metaverse’s share of regional GDP in the 10th year is 2.3% for
APAC, 0.9% for Canada,121 1.7% for Europe, 4.6% for India, 5.0% for LATAM, 6.2% for MENAT, 1.8% for SSA,
and 2.3% for the United States. Because these numbers do not account for any displacement of GDP from otherindustries that may occur over the 10-year period, they can be viewed as a lower bound on the metaverse’s shareof 10th year GDP.

120

Another way to conceptualize the calculation is that in each year between 2022 and 2031, the metaverse contributes a small amount of
incremental growth to GDP that otherwise would not exist without the metaverse. We assume this small amount of incremental growth thatthe metaverse adds to GDP each year persists over time and continues to be associated with the metaverse. Equation 3 is roughly equal
to the sum of these small incremental annual contributions to GDP, but with compounding.

121

Because the CAGR of adoption for Canada is likely understated due to limited data availability (as noted above), the implied contribution of
the metaverse to GDP in Canada is likely also understated.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

Figure 16. Contribution to GDP from the Metaverse in 10 Years

RegionAPAC
CanadaEurope
India
LATAM
MENAT
SSA
United States
GlobalAssumedMetaverse’s
Metaverse’s Total
SecularShare of 10th Contribution to GDP
GDP Growth Year GDP in 2031 ($ Trillions)
[E]
[F]
[G]
4.3%
2.3%
$1.04
1.1%
0.9%
$0.02
1.5%
1.7%
$0.44
5.4%
4.6%
$0.24
1.1%
5.0%
$0.32
1.9%
6.2%
$0.36
1.0%
1.8%
$0.04
1.6%
2.3%
$0.56
2.0%
2.8%
$3.01

Notes:[1] Assumed secular GDP growth rate is the compound annual growth rate of GDP over the 2009-2019 period.
[2] The implied increase in GDP as a share of 10th year GDP is calculated from equation 2, where 𝛾 is given by column (E) and 𝑟 is given by the
product of column (D) from Figure 15 and the estimated coefficient on log mobile broadband per 100 people from Figure 13, column (3).
[3] The total contribution to GDP in 2031 is calculated as the product of column [F] and projected GDP in 2031 with the metaverse, which isequivalent to equation 3.
Source: World Bank.

We can contextualize our results against existing projections of the economic potential of the metaverse by
assuming that the metaverse existed today and calculating the contribution to GDP after 10 years in dollars. Ourmodel implies that if metaverse adoption were to begin in 2022, then the metaverse’s total contribution to global
GDP in 2031 would be $3.01 trillion (measured in 2015 U.S. dollars), one third of which, or $1.04 trillion, is
attributable to APAC.122 Additionally, contributions to Canada, Europe, India, LATAM, MENAT, SSA, and theUnited States GDP are $0.02, $0.44, $0.24, $0.32, $0.36, $0.04, and $0.56 trillions, respectively.
The global estimate lies within the range of existing projections. Industry analysts and observers have offered awide range of estimates for the potential valuation or addressable market size of the metaverse. Near-term
estimates range from about $800 billion123 to upwards of $2 trillion124 over the next few years.125 Long-term

122

The $3.01 trillion figure is based on projected world GDP in 2031 accounting for secular growth and growth associated with the metaverse,
which is approximately $104.97 trillion in 2015 U.S. dollars. This estimate does not account for population growth and therefore likely
understates the metaverse’s potential contribution to GDP.

123

Bloomberg Intelligence estimates the Metaverse market “may reach $783.3 billion in 2024.” A majority of the estimated Metaverse market
value in 2024 is attributed to the gaming sector – particularly the gaming software, services, and hardware sectors – and the live
entertainment sector (e.g., films, live music and sports).

124

According to Business Insider, Bernstein analysts have estimated “the size of metaverse-related markets to be $2 trillion and growing.”
Yahoo Finance and Nasdaq have both reported on this same estimate, with Yahoo Finance quoting Bernstein’s claim that “[t]he combined
annual run-rate of the most relevant markets is $2 trillion and growing.”

125

Bloomberg Intelligence, “Metaverse may be $800 billion market, next tech platform,” Bloomberg, December 1, 2021, available athttps://www.bloomberg.com/professional/blog/metaverse-may-be-800-billion-market-next-tech-platform/; Huang, Vicky G., “Wall Street
analysts are rushing to dub the metaverse the next multi-trillion-dollar investing opportunity. Here’s what 3 of them are saying about its
potential and risks,” Business Insider, December 11, 2021, available at https://www.businessinsider.com/metaverse-stocks-tokensaltcoins-wall-street-crypto-gamefi-facebook-roblox-2021-12; Mozée, Carla, “Major brand names from Microsoft to Bumble have said they’regetting into the metaverse. Here are 5 household names making plans for Web3,” Yahoo!Finance, December 9, 2021, available athttps://finance.yahoo.com/news/major-brand-names-microsoft-bumble-182626579.html; Saintvilus, Richard, “Who Will Win the Battle for
the Metaverse?” Nasdaq, December 13, 2021, available at https://www.nasdaq.com/articles/who-will-win-the-battle-for-the-metaverse.

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

estimates range from approximately $3 trillion to $30 trillion by the time the metaverse reaches widespread
adoption, with the most optimistic estimate being over $80 trillion.126 A number of sources project that a mature
metaverse could be a multitrillion-dollar industry, though they do not estimate the amount of time needed for the
metaverse to reach maturity.127 If metaverse adoption were to begin today, our estimate of a $3.01 trillion (in 2015
U.S. dollars) contribution to global GDP in 2031 would be on the high end of the near-term projections, consistent
with our ten-year time horizon being longer than that of the near-term projections. On the other hand, our estimate
is on the lower end of the long-term projections, which may reflect, at least in part, that our analysis is based on
growth in GDP associated with the metaverse and does not account for any displacement of GDP that is currently
attributable to other industries or sectors.128

B. Challenges and opportunities for metaverse adoption
The metaverse is still in an early stage, with many contributors from around the world helping to plan its inclusive
design and construction.129 We are currently witnessing the early phases of development, including the rolling out
of infrastructure and technologies that will likely support the metaverse. The extent to which the economic potentialof the metaverse is realized depends on how effectively the necessary infrastructure and technology aredeveloped and deployed, as well as how widely the new technology is adopted by consumers and businesses—that is, whether the metaverse can make it past the “Trough of Disillusionment” and onto the “Slope of
Enlightenment.” Once the infrastructure is in place and adoption is underway, it opens the door for thedevelopment of endless endeavors built by creators, developers and businesses, as has been the case with theInternet and mobile technology.
In the rest of this section, we discuss more concretely some of the challenges and opportunities for the metaversein achieving its potential.
Infrastructure and technology requirements. The metaverse will require many new technologies, innovations,and discoveries before it can be fully realized. New metaverse-specific protocols will evolve, new companies and126

Goldman Sachs, “Framing the Future of Web 3.0: Metaverse Edition,” December 10, 2021, available athttps://www.goldmansachs.com/insights/pages/gs-research/framing-the-future-of-web-3.0-metaverse-edition/report.pdf; Speights, Keith, “3Stocks to Buy With a $30 Trillion Metaverse Market on the Way,” The Motley Fool, December 6, 2021, available athttps://www.fool.com/investing/2021/12/06/3-stocks-to-buy-with-a-30-trillion-Metaverse-marke/.

127

See, e.g., Kim, Sohee, “Metaverse Is a Multitrillion-Dollar Opportunity, Epic CEO Says,” Bloomberg, November 17, 2021, available athttps://www.bloomberg.com/news/articles/2021-11-17/Metaverse-is-a-multitrillion-dollar-opportunity-epic-ceo-says?sref=GzMobW41;
Logan, Kylie, “Cathie Wood says the Metaverse could be worth trillions and will affect the world in ways ‘we cannot even imagine rightnow,’” Fortune, December 3, 2021, available at https://fortune.com/2021/12/03/cathie-wood-Metaverse-trillions-affect-every-sector/; Cook,
John, “We asked seven venture capitalists if the Metaverse is the next big thing or just a lot of hype,” GeekWire, November 23, 2021,(“Geekwire”), available at https://www.geekwire.com/2021/we-asked-seven-venture-capitalists-if-the-Metaverse-is-the-next-big-thing-orjust-a-lot-of-hype/; Huang, Vicky G., “Wall Street analysts are rushing to dub the metaverse the next multi-trillion-dollar investing
opportunity. Here’s what 3 of them are saying about its potential and risks,” Business Insider, December 11, 2021, available athttps://www.businessinsider.com/metaverse-stocks-tokens-altcoins-wall-street-crypto-gamefi-facebook-roblox-2021-12; Goldman Sachs,“Framing the Future of Web 3.0: Metaverse Edition,” December 10, 2021, available at https://www.goldmansachs.com/insights/pages/gsresearch/framing-the-future-of-web-3.0-metaverse-edition/report.pdf.

128

Similarly, the GSMA’s estimate of the mobile economy’s contribution to global GDP of $4.4 trillion (5.1%) in 2020 accounts for any
displacement of other industries that has occurred over time, whereas our estimate of the metaverse’s contribution to global GDP is basedon new growth in GDP and not displacement of existing industries.

129

Facebook, Inc. (now Meta Platforms, Inc.), “Second Quarter 2021 Results Conference Call,” July 28, 2021, available athttps://s21.q4cdn.com/399680738/files/doc_financials/2021/q2/FB-Q2-2021-Earnings-Call-Transcript.pdf, p. 4 (“[Mark Zuckerberg, CEO]:[I]t's going to take a lot of work, and no company is going to be able to build this all by themselves.”).

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THE POTENTIAL GLOBAL ECONOMIC IMPACT OF THE METAVERSE

innovations will come into existence, and new industries will emerge that directly or indirectly sustain or are
sustained by the metaverse.
Technology expert and venture capitalist Matthew Ball has outlined three core elements that need to come into
place for the metaverse to actualize: concurrency infrastructure, the adoption of standards and protocols, and theon-ramp experience.130
Concurrency infrastructure refers to the technology that will support the simultaneous presence of millions of users
in a shared synchronous experience. The metaverse will require computational infrastructure to enable many-tomany server connections that can interact persistently and concurrently, in contrast with the current Internet
infrastructure of one-to-one server connections.131
Standards and protocols will also be needed to actualize the level of interoperability envisioned for the metaverse.
One company or a handful of companies will not own or be the metaverse; rather, individual companies’ products
will be destinations in the metaverse or support the metaverse. Achieving this level of interoperability will require
collaboration on a massive scale, including consolidation and uniformity of the existing protocols and standards132
as well as creation of (and agreement on) new protocols and standards.133
And finally, the on-ramp experience requires critical-mass adoption of the metaverse by creators. Ball uses ananalogy of a newly built shopping mall: sellers and buyers are not going to rush to the mall unless there areadvantages and attractions for all of them. So, unless the metaverse has something exciting to offer both creators
and users, it may be challenging to achieve widespread adoption of the metaverse may be a challenge toovercome.134
The development and adoption of hardware and software also present potential challenges for metaverse adoption
and retention.135 With respect to hardware, for the metaverse based on VR technologies to become successful ona similar level as personal computers and mobile phones, the vast adoption of hardware pieces such as VR

130

Ball, Matthew, “The Metaverse: What It Is, Where to Find it, and Who Will Build It,” matthewball.vc, January 13, 2020, available athttps://www.matthewball.vc/all/themetaverse.

131

Ball, Matthew, “The Metaverse: What It Is, Where to Find it, and Who Will Build It,” matthewball.vc, January 13, 2020, available athttps://www.matthewball.vc/all/themetaverse.

132

Specifically, Ball believes the standard set of what is “accepted” for a given function, file, etc., will need to be smaller than current sets to
support interoperability and live synchronous experiences. For example, companies including Amazon, Meta and Google currently use
technologies that are similar but do not “transition into one another,” and Ball seems to suggest that, in order for the metaverse to beinteroperable and synchronous, the set of such technologies should be narrowed down such that it is easier to transition between different
platforms. See Ball, Matthew, “The Metaverse: What It Is, Where to Find it, and Who Will Build It,” matthewball.vc, January 13, 2020,
available at https://www.matthewball.vc/all/themetaverse (“The Metaverse will require an even broader, more complex, and resilient set of
S&Ps. What’s more, the importance of interoperability and live synchronous experiences means we’ll need to prune some existing
standards and “standardize” around a smaller set per function. Today, for example, there are a multitude of image file formats: .GIF,.JPEG, .PNG, .BMP, .TIFF, .WEBP, etc. And while the web today is built on open standards, much of it is closed and proprietary. Amazon
and Facebook and Google use similar technologies, but they aren’t designed to transition into one another — just as Ford’s wheels aren’t
designed to fit a GM chassis.”).

133

See Ball, Matthew, “The Metaverse: What It Is, Where to Find it, and Who Will Build It,” matthewball.vc, January 13, 2020, available athttps://www.matthewball.vc/all/themetaverse. See also Monier, Stephane, “Special Report – Metaverse: overhyped or the next internet
revolution?” Lombard Odier, December 21, 2021, available at https://www.lombardodier.com/contents/corporate-news/investmentinsights/2021/december/special-report--metaverse-overhy.html.

134

Ball, Matthew, “The Metaverse: What It Is, Where to Find it, and Who Will Build It,” matthewball.vc, January 13, 2020, available athttps://www.matthewball.vc/all/themetaverse.

135

Sevilla, Gadjo, “Hardware is the key to metaverse adoption—software is the key to retention,” eMarketer, January 25, 2022, available athttps://www.emarketer.com/content/hardware-key-metaverse-adoption-software-key-retention/ (“eMarketer on metaverse adoption”).

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headsets and controllers is required. The adoption rate of VR headsets is expected to depend on price, ease ofuse, proliferation of apps, and user experience in the virtual environment.136 Early users of VR hardware havecomplained about the headsets being hot, uncomfortable, having subpar battery life, and being difficult to operatewith eyeglasses, and it is unclear how much time per day users will be willing to wear VR headsets.
Software and operating systems for VR headsets are expected to remain one of the biggest challenges influencing
adoption and retention. Current users of smartphones and personal computers are used to typing information on ascreen, which in VR is replaced by a 40-inch virtual floating keyboard.137 Fundamental functions such as
messaging, searching, moving files are currently multistep processes that confuse even the most technicallyadvanced users.138 Moreover, it takes time, and with a two-hour battery life limit, the VR experience can become
frustrating for users unless software and operating systems quickly develop and address these challenges. 139
Developing a seamless user experience for the metaverse is expected to take time and is anticipated tomaterialize in phases, as more individual and business users adopt the technology.
Other factors. Metaverse adoption may also face country- or regional-specific challenges in the form of governing
bodies’ policy or regulatory objectives. In 2021, the AR/VR Policy Conference organized by The Information
Technology and Innovation Foundation (ITIF), and The XR Association hosted expert talks and panels on“explor[ing] the role of policy in AR/VR innovation and identify[ing] priority areas for policymakers to consider asthese technologies continue to expand.”140 A main takeaway from the conference was that data supervision andmanagement—including establishing digital safety and personal privacy standards from the outset—is a key policy
concern for AR/VR, given the substantial volume of information about individuals and their environment required todeliver immersive, engaging experiences.141
For example, the European Union is in the process of finalizing digital competition and content moderation laws
(the Digital Markets Act (DMA) and Digital Services Act (DSA)) that would require digital platforms to better support
digital competition and regulate the content on their platforms to prevent the spread of harmful and/or illegal
content and products. Specifically, these laws require platforms to disclose more information to their users. For
example, social media platforms would need to tell users if the visibility of certain content was restricted, and ecommerce platforms would need to invest more resources into vendor identity verification to curb sales of illegal or
harmful products. Notably, Human Rights Watch has pointed out that, as the DMA and DSA defer to existing EU
and national laws on defining “illegal” content, these laws could potentially facilitate government censorship in thedigital world.142
Individual companies are also voicing their concerns given the increasing proliferation of AR/VR in homes andclassrooms. Some have emphasized the importance of safeguarding children’s physical and emotional wellbeing,

136

eMarketer on metaverse adoption.

137

eMarketer on metaverse adoption.

138

eMarketer on metaverse adoption.

139

eMarketer on metaverse adoption.

140“The Augmented and Virtual Reality Policy Conference” ARVR Policy Conference, available at https://www.arvrpolicy.org/.

141

Dick, Ellysse, “Public Policy for the Metaverse: Key Takeaways from the 2021 AR/VR Policy Conference,” November 15, 2021, available athttps://itif.org/publications/2021/11/15/public-policy-metaverse-key-takeaways-2021-arvr-policy-conference/ (“AR/VR Policy Conference”).

142

Human Rights Watch, “EU: Put Fundamental Rights at Top of Digital Regulation,” January 7, 2022, available athttps://www.hrw.org/news/2022/01/07/eu-put-fundamental-rights-top-digital-regulation. The article discusses additional concerns as well.

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while others have raised that bad actors can exploit and abuse AR/VR to “change reality.”143 For example, Roblox
emphasized during their Q2 2021 earnings call that the metaverse must be a platform that is both “civil and safe”
for children while remaining interesting to adults, and that safety is a top priority for Roblox in integrating voice andvideo communications.144 Roblox highlighted that building “policy-aware” and law-abiding platforms with lawabiding content creators and developers is another key priority.145 An implication is that building an accessible,
inclusive, and safe metaverse is going to play a vital role in accelerating its adoption and enabling further
development of its innovative technologies.

VI. Conclusion
Economic theories of innovation and empirical evidence of the impacts of mobile technology and other successful
technological innovations of the past 20th century indicate that the metaverse has the potential to have substantial,
beneficial economic impacts in multiple dimensions—including contributing to GDP growth, creating jobs,
increasing productivity, and improving consumer welfare through other dimensions in both developed anddeveloping countries.
Our empirical analysis provides an aggregate measure of the metaverse’s total potential contribution to GDP overa medium-term time horizon—suggesting that if the metaverse were to be adopted and grow in a similar way asmobile technology, then we would expect it to be associated with a 2.8% contribution to global GDP after 10 years.
However, the impacts of the metaverse are likely to be felt differently in different sectors of the economy, indifferent regions, at different points in time, and for different people. And over time, if the metaverse is successful,it will likely displace some existing technologies and industries, as prior technologies have done before. A direction
for future research is to quantify these heterogeneous impacts and measure the potential displacement ofindustries and restructuring of local economies that may accompany the growth of the metaverse.
Current public commentary about the metaverse indicates that many pieces still need to come together to makethe metaverse a reality and that businesses, consumers, creators, and policymakers will together contribute to its
success. With successful development and deployment of infrastructure and other technologies, policies that
support widespread and equitable distribution and uses of the metaverse, and endless creative innovations built on
top of the foundational technology, the metaverse can be expected to have substantial beneficial economic
impacts around the world.

143

AR/VR Policy Conference.

144

Roblox Q2 2021 Earnings Call, p. 10, available at https://s27.q4cdn.com/984876518/files/doc_financials/2021/q2/final-081721-q4-robloxcorporation-q2-2021-earnings-1067544.pdf (“Roblox Q2 2021 Earnings Call”).

145

Roblox Q2 2021 Earnings Call.

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About the Authors

Lau Christensen is a managing principal at Analysis Group in the Denver office.
Over the past 25 years, Mr. Christensen has conducted economic analysis in a
broad range of areas, including major finance, tax, and antitrust litigations, as wellas media and entertainment licensing matters. Mr. Christensen frequently
collaborates with world-renowned experts to combine cutting edge techniques withthe business realities faced by his clients. His work has included numerous
engagements in the media and technology space, including the preparation of
impact studies related to technology and innovation.
Alex Robinson, Ph.D., is a manager at Analysis Group in the Boston office. Dr.
Robinson specializes in the application of microeconomics, econometrics, andstatistics to the analysis of antitrust issues and complex business disputes in a
broad range of industries, including health care, pharmaceuticals, and consumer
and industrial goods. She has supported numerous experts in the analysis ofhorizontal and vertical merger transactions and on issues related to intellectual
property and commercial litigation matters.

The authors would like to thank Guangye Cao, Aidai Kozubekova, Rosie Mate, Maitreyi Menon, and Shirley Wu for
their valuable assistance in preparing this report.

Analysis Group is one of the largest international economics consulting firms, with more than 1,000 professionals
across 14 offices in North America, Europe, and Asia. Since 1981, Analysis Group has provided expertise ineconomics, finance, health care analytics, and strategy to top law firms, Fortune Global 500 companies, andgovernment agencies worldwide.

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