A Framework for Analysis 1. Digital Endowments 2. Digital Intensities 3. Digital Restrictions
Digital Endowments - Europe has strong endowments when measured with other parts of the world (e.g. Internet use, educated labour, digital skills). - Europe is converging – gradually declining differences between EU countries.
Endowments: Europe is converging
Digital Intensities: A Laggard Europe - Digital Intensities measure how much value- added is generated by investments in Digital Endowments. - Strong and positive relation between Digital Endowments and Digital Intensities. - Surprisingly weak growth in Digital Intensities in the past 10 years. - Europe’s is trailing comparable economies.
Contribution of ICT services to value-added growth (% points)
Who is lagging – firms or consumers?
Digital Consumer Absorptions Gap 100 OECD frontier EU frontier Gap between EU and OECD Gap between leading EU economy and EU Leading EU frontier 80 economy 60 40 20 0 Retired or other Individuals with a Unemployed Individuals with a Households Households Individuals with a Employees, Self- Females inactive using no or low level of using the middle level of internet access computer access high level of employed and Students using the internet educational internet educational at home, rural at home, rural educational family workers the internet attainment using attainment using area area attainment using using the the internet the internet the internet internet
Digital Business Absorption Gap 100 OECD frontier Gap between EU and OECD EU frontier 80 60 Leading EU Gap between leading economy EU economy and EU frontier 40 20 0 Businesses Businesses with Businesses with Persons Businesses Persons Businesses with Businesses Businesses with purchasing formal policy to a website employed using receiving employed a website or using CRM a broadband cloud manage ICT allowing for a computer orders over regularly using homepage (Customer connection - computing privacy risks online ordering with Internet computer a computer in Relationship includes both services or reservation access networks their work Management) fixed and or booking software mobile
Firm Productivity Gap and Digitalisation Firm productivity gap and E-business 5 4 3 2 1 0 CZE LTU LVA EST PRT ESP SVN BEL ITA AUT DEU FIN Firm TFP gap E-business
Digital Restrictions Observation 1 : Comparably restrictive environment Observation 2 : Regulatory heterogeneity
Digital Restrictions in EU (DTRI) DTRI Across EU members .4 .3 .2 .1 0 e y a n y e a y d d k m a n a l a a a a s s g a a d m c a n i i l r r e u i t c c i n n i i i i i i i d r n a n a k a u n r g t r n n l v l a u o b r a n a e a a d a a t n a a p t a t g m i a u s e o p d o a m I e g o u a M l l e g a l m S v o n u v t e n u t y g b L r r l r r s p n w l l o e r G P i h u A o C r r F u o C F n E e m e o e e I l B S l H t B P S i S R G R D i K h e L t x h e d u N c e L e t i z n C U
Heterogeneity in Digital Regulation .2 .15 .1 .05 0 IPR Business mobility Content access Data policies Foreign investment Public procurement Standards Competition policy Intermediary liability Taxation & Subsidies Tariffs and Trade Defence Online sales and transactions Quantitative Trade Restrictions
Heterogeneity in Market Regulation
Digitalisation and Internal EU Services Restrictions E-business and EU Services Restrictions .6 .1 .08 Scale from 0-1 .4 .06 .04 .2 .02 0 0 IT and Information Distribution Construction Finance and Insurance Postal and Courier Transport and Storage Publ., Audiov. and Broadc. Professional and Business . E-business (left) EU STRI (right)
Conclusion for Policy - Services are in need of special attention - A new agenda for (digital) competitiveness is needed in the EU. - Focus on SMEs technology absorption and closing the firm productivity gap - Reduce the level of restrictiveness. - Reduce heterogeneity in digital and market regulations.
Thank you! - All charts in this presentation come from: ECIPE study, Europe’s Digital Future: Strengthening Competitiveness and Performance ECIPE study, Are Services Sick? How Going Digital Can Cure Services Performance - For more information, please contact me at Fredrik.Erixon@ecipe.org
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