Boston Group head: Bridge gap in internet economy with policy for growth

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This article is part of our special report ICT: Fuelling the economy.

New data shows that Europe's most crisis-riven countries are suffering from a deficit of internet connectedness. There is no simple solution, but governments need to encourage better infrastructure and engagement, says David Dean, because without the web, growth will not come easily. 

David Dean is the Munich-based senior partner of the Boston Consulting Group, whose report – 'Sizing the digital economy' – has been carried out for Google. He spoke with EURACTIV's Claire Davenport.

To read a news article drawing on this interview, please click here.

ICT is boosting countries' GDP, that much is clear. But what about job creation? And what kind of jobs are being created predominantly?

It's not easy to estimate how many jobs are being created by the Internet as so many different kinds of jobs are resulting from an increased dependence on the Internet across many sectors. A large share of jobs is at established companies – supermarkets, airlines and banks, etc – as they increasingly use the Internet for marketing and selling their products and services.

The strongest ICT economies, the UK, Sweden, Hong Kong, Denmark and the Netherlands, all have something in common: they have a reputation for highly skilled labour with excellent English. Does language make a difference in how successful ICT is in a given country?

The wide presence of English undoubtedly helps those countries with strong English-language skills as their companies can access a very broad global audience. English has become the lingua franca of the Internet, but with the likely availability of simultaneous translation tools in the next few years this advantage will not necessarily be a lasting one.

If language and wealth are not principal factors, then what are? A solid infrastructure? Competitive markets? Tech savvy consumers?

Language and wealth certainly play a role, but a competitive, not necessarily leading-edge, "good enough" infrastructure clearly helps as does a willingness of consumers to experiment and use the medium. Having secure payments systems helps too. Acceptance of credit cards is also a strong driver.

Which of the three factors in your study, enablement, expenditure and engagement, is the most influential in boosting a country's ICT economy or e-intensity, as you call it?

Of course without the infrastructure nothing much will happen. But that's not sufficient – it's important also to encourage businesses, governments and consumers to go online and for policy makers to adopt a "joined up" approach to addressing all three factors.

A recent study from the Economist Intelligence Unit voices concern that “labour rigidity” in some European markets could hamper technological innovation. Is this also your finding and if so, what should be done to make the labour market for ICT more flexible?

This is not something we've examined specifically, but as much of the growth is coming from smaller companies embracing the Internet, it is quite likely that labour rigidity could be a hurdle to adoption.

What about the cash strapped economies on the EU's periphery, like Greece, Italy and Portugal? Any advice on how they can improve their ICT landscape in a downturn?

These economies need to grow to recover. Promoting the use of Internet by the small and medium sized companies that characterise these economies could help.

Neelie Kroes has set out some very ambitious targets for broadband speeds and penetration in the EU? Do you think she jumped the gun?

If governments accept that the Internet can generate growth and create jobs, then it's important to have the infrastructure for companies to leverage. However, companies in many more rural areas are not necessarily looking for "blistering" speeds. They want "good enough access" at reasonable costs. Almost as importantly though, small and medium sized companies complain about the difficulty of attracting employees with the right talent to drive their Internet ambitions.

The EU is trying to write new consumer rules for internet shoppers because it believe consumers reluctantly shop from websites in different countries due to uncertainty on returns policies, etc. Meanwhile businesses argue that linguistic differences are keeping cross-border ecommerce slow. What do you argue?

Clearly linguistic differences play a role in consumer behaviour here, but as in the physical world there is much that can be done to encourage cross-border shopping.

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