Europe is slowly emerging from one of the worst financial and economic crises in decades. A new report shows that digitisation efforts by the EU could not only revamp the economy, but could reunite Europe too, writes Beñat Bilbao.
Beñat Bilbao is a senior economist at the World Economic Forum (WEF).
Growth prospects in Europe remain unstable and unemployment stubbornly high in many countries. Against this backdrop, new technology and digitization are potential sources of economic growth and job creation for Europe as European economies are starting to shift towards new sectors. According to the European Commission, in the coming years, up to 100,000 digital jobs are likely to come up in the market every year.
However, the level of digitization across European Union member states is not the same, with some countries less able to benefit from information and communication technologies (ICTs) – technologies that provide access to information through telecommunications, including the internet, wireless networks, cell phones and other communication mediums.
The new edition of the World Economic Forum’s GlobaI Information Technology Report – which analyses how well countries are placed to reap the digital dividend – shows that while many European countries are leading in the rankings (with several Nordic and Western countries within the top 10), others continue to lag behind. A digital divide persists within the European Union.
While digitization varies across Europe, a broad classification by geography shows that Northern and Western Europe perform better than Southern and Central and Eastern Europe, even if the situation differs broadly within these groups. For example, within Central and Eastern Europe, Estonia is similar to some of the countries in Western Europe, and within Southern Europe, Portugal and Spain also outperform Greece.
A more in-depth analysis of the results, however, provides more detail about the nature and drivers of this digital divide in Europe, which is characterized by five key findings:
- The gap between North-Western European economies and the rest of the EU member states is reflected in virtually all areas analysed by the report’s Index, including market and regulatory conditions, high levels of ITC uptake, levels of usage by all stakeholders (citizens, businesses and governments), and economic and social impacts accruing from ICTs.
- Overall, most countries have fairly well developed ICT infrastructures in terms of mobile network coverage and internet bandwidth. While some countries should continue strengthening their ICT infrastructures, this may not be the main source of the digital divide in Europe.
- The cost of accessing ICTs is similar in all EU member states and should not be regarded as a main source for different levels of ICT uptake.
- The gap in ICT usage across countries is bigger for businesses and narrower across governments. Overall, governments in most EU member states have recognized the importance of developing ICTs and offer a fairly large amount of public services online. However, the differences in the capacity of businesses to develop and integrate ICTs on their business models are much starker.
- The gap in terms of social, and especially economic impacts, is the widest among all categories analysed by the Index, and illustrates the new nature of the digital divide in Europe. As the benefits of ICTs increasingly permeate all the different activities, the digital divide within Europe becomes starker in terms of the impacts that different stakeholders can benefit from.
These findings have several policy implications, both for individual EU member states and the European Commission in its effort to build a common digital agenda that stimulates a virtuous circle of investment in ICT infrastructure, higher uptake levels and stronger impacts for all. Arguably the main one is that digital strategies should not focus only on developing the ICT infrastructure, but also in creating the right conditions for an effective use of ICTs to boost innovation, competitiveness and social inclusion.
In order to meet these challenges, public policies and company strategies need to focus on improving the digital literacy of the population, boosting the overall skills capacity of the workforce through effective educational and training systems, and effectively integrating ICTs with other sources of innovation such as R&D investments or higher levels of on-the-job training.
The Nordic countries offer interesting lessons on how to raise digitization and integrate it in an enabling environment for innovation. To maximize the impact, these activities will need to be coordinated across stakeholders. Creating and strengthening public-private collaborations will be key.