A catching-up demand but still rather marginal

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A catching-up demand but still rather marginal

The figures recently published by EUROSTAT on Information Technologies in the applicant countries remind us that their contribution to the overall demand in the enlarged Europe still remains marginal even if they are catching up quite fast on EU levels.

As to personal computers (PC), the average equipment for 100 inhabitants in the applicant countries is strongly influenced by Turkey, Romania and Poland as they account for 74% of the whole population. At the end of 2001 they displayed three of the lowest equipment rates, albeit a strong, or even very strong growth, with respectively +8%, +12% and +24% against +8% on average in the EU15. Poland has even gone through a real boom, its current park (3.3M PCs) representing the equivalent of the Czech Republic (1.4M, +12%), Hungary (1M +15%) and Slovakia (0.8M, +8%) together.

Globally, the computer equipment market in the applicant countries represented 6bns in 2001 against 117bns in the EU, with a similar growth as for PCs, and was mainly driven by foreign investors. For all Information Technologies together (IT, equipment, data processing, software and services), the ratio to the EU market size is even smaller ( 11 and 305bns), Poland and Turkey being the main markets (50% of the total). In terms of per capita, Slovenia and the Czech Republic are most spendthrift, with expenses of respectively 176 and 168, yet still far behind the EU15 ( 777 per capita).

Apart from Turkey, telecommunication expenditures were even more dynamic; first, thanks to the increasing use of Internet, itself stimulated by the growing number of Internet hosts, and second, to the fast catching-up in mobile phones. These expenditures accounted for 5% of their GDP (in 2000), more than the double of those related to IT, a definitely higher figure than the European average (3.3% of the GDP), but marginal in terms of amounts ( 30 against 300bns), as prices remain high in the region.

The number of mobile telephone subscribers progressed very fast in the applicant countries: between 1995 and 2000 their number doubled each year. In 2001 the growth rate was lower but, nevertheless, amounted to +42%, including Turkey, with a boom in Bulgaria (+110%) and Slovakia (+93%). On average, one out of three persons had a mobile phone, with Slovenia (76%) and the Czech Republic (66%) at comparable levels with the EU (72%).

Internet surfers in the applicant countries rose by approximately 40% in 2001, which is a higher rate than in the EU (+33%). But compared with Western Europe the rate of use for 100 inhabitants still only reached one quarter (7.8 against 31.4). These differences can mainly be explained by a lower income and relatively high access costs to Internet limiting the number of private users: in 2001, 2% of the households in Latvia had a connection, 3% in Lithuania, 3% in Hungary (2000), 8% in Poland, 10% in Estonia and 24% in Slovenia. Finally, Internet host growth in the applicant countries was slightly higher than in the EU (+33% vs. +27%), strong persistent disparities however, remain within the applicant countries.

Flextronics, worldwide n°1 in the electronic subcontracting sector, with 4 producing facilities in Hungary, has just decided to re-localize its X-Box production from Hungary to China, the other production site being in Mexico. If this decision was largely justified by costs and economies of scale*, demand aspects were also crucial: China, for example, has already 145M mobile subscribers, which illustrates quite well the limits of attractiveness of the CEEC, this time on the demand side.

For more analyses see the

enlargement website of DREE.  

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