lunes, 5 de mayo de 2014

The risk of falling behind: A future we will never achieve?

As any other industry, the size of ICT industry in a region could be expressed as a part of its GDP. The importance of this value is the positive impact that it is said ICT has on the economy as a whole. Some studies estimated that ICTs are responsible of nearly a third of GDP growth. So the bigger the share that ICTs are of GDP the better for the economy.

Recently, I have crossed with several studies related with ICTs and GDP in the European Union (including Spain) and the state-of-the-art of ICT investments. Some of them put the focus on where we are, other where we could be after some years. The link between this two points should be the ICT investments we are currently made.

There is an interesting study of the Internet Economy contribution to the EU GDP written by the FI-PPP. "The European Internet Industry and Market" estimated the value of  Internet Economy in 2010  in Europe in as much as 4,1% of the EU GDP. Not a good result if we think that some studies estimated that in the USA ICTs has a share of 7,1% of GDP. But if we pay attention to how it is distributed the ICT industry in Europe according with this study things are worst. We are facing the risk of an enlargement of the divide between rich and not so rich countries in Europe. While the contribution of UK, Germany and UK to Internet Economy in EU is bigger than their weight in EU GDP, countries as Spain or Italy have a weight aproximately equivalent to half their weight in EU GDP.

A second study prepared by the European Commission as part of the background documentation for the "European Semester" make some estimations of the potential share of ICT in EU GDP. In the document "Digital Agenda: Broadband and e-Communications" , the EC estimates that by 2016 ICT will be 5,6% of EU GDP (still lower than in USA). But what is more important, the document estimates that even in laggard countries among the five bigger economies in EU, Spain and Italy , the impact of ICTs in GDP will be as much as 7% of GDP.  As the document where this estimation comes from says, this will be only possible if EU increases its ICT capital stock to the US level, or what it the same, if we spent more money in ICTs.

Nevertheless, it is doubtful that we are making our homework in EU to achieve that rosy future. The OECD published recently the study "OECD 2013 Communications Outlook". As it is usual in this organisation, the excel data are avalaible for reuse. I have been using some of the data related to the spending per habitant in public telecommunications infrastructure and making comparisons between Europe and USA. The image speaks by itself about the investment gap between USA and the EU and the different policies follow in each area. While US has maintained with a slight decrease their investments during the ecnomic crisis the EU investments have suffered a great slowdown. And this is a serious problem for Europe, some studies  (even mentioned in EC papers) show that a 10 percentage point increase in the broadband penetration rate leads to an annual growth in per-capita GDP of some 1 to 1.5 percentage points.

An ICT driven economy in EU looks as the future we will never achieve. I hope I´m wrong.

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