The report is structured as follows. Thenext section introduces the theoretical notion of a'virtual economy' and explains how it is distinctfrom other Information and Communication Technology(ICT)-related economic activities. The following sectionsdescribe in detail the main areas of the virtual economy,their economic impact, business models and value chains. Thetwo major areas of the existing virtual economy areidentified as: 1) third party gaming services and 2)microwork. This report will focus largely on these twodistinct but conceptually related areas. Gaming services isan established industry that provides a rich set of evidencefor analysis, while microwork is an emerging industry withapparently significant development potential. Other existingactivities within the virtual economy are categorized as: 3)marketing related paid-for connections in social media('cherry blossoming') and 4) user-created virtualgoods in virtual environments. These are not covered indetail due to their limited development potential, at leastat present. The sixth section analyzes the developmentpotential of the virtual economy. Development potential ishere understood as the ability to provide income to localeconomies through employment and entrepreneurialopportunities. Both short-run opportunities and long-runincome development are considered. Development potentialalso includes the ability to support the development oflocal ICT infrastructure. In the final section, the reportsummarizes the key findings, identifies important gaps incurrent knowledge, and sketches out the scope for possibledonor or Non-Governmental Organization (NGO)-ledinterventions towards maximizing the development potentialof the virtual economy.
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