miércoles, 4 de febrero de 2015

Are we living the end of the US leadership of the #digital economy?

Europe is worried about its digital future. The sentence "Europe is lagging behind" is a common place in the European Union policy papers on ICT and digital economy. It is certain that all the indicators point in that direction, nevertheless, not only Europe should be worried about its digital future. It looks that USA also is in trouble to maintain its leadership in the digital economy. Below the surface of the current dominance of the Silicon Sultans over the digital economy some signs of the end of an era are appearing.

To begin with, the long-term indicators are heralding a decay of the US dominance over the Knowledge Economy. One of the more widespread indicator in this field is the Knowledge Economy Indicator (KEI) which aims to represent the overall level of development of a country or region towards the Knowledge Economy. The indicator is sponsored by the World Bank and assesses the performance on four pillars:  economic incentive and institutional regime, education and human resources, the innovation system and ICT. While in 1995 the USA was leading the ranking, since the year 2000 it has gone downwards and it has lost eight positions in the overall classification.

In the area of long-term indicators the R&D investments provide also signals of a faltering position. We should remember that the base of the currents US dominance of the digital economy was a Federal R&D project. Internet was the product of a Defense Department research project. Therefore, the decay of Federal funding for R&D is maybe pointing to a future drought of ICT inventions.

The globalisation of the ICT industry and the digital economy is one of the main reasons for this decline. In the past USA was the main source of ICT innovations and products, but there are signs that innovative ICT consumer products are not comming from US anymore. The main sign of the decline is the field of smartphone vendors. While in the past the leading vendors of the most spreaded consumer device (PCs) were americans (IBM, HP, Dell, ...), among the top 5 of the vendors ranking of the current most important consumer device (smartphone) there is only one american company.

But not only there are signs of the end of the american leadership in the ICT consumer devices production. There are some worrisome signals also in the e-commerce and cloud services arena. On one hand, the vast China market is propelling the market value of the Chinese e-commerce companies over the American companies. Alibaba is bigger than two of the three American consumer services giants and only Google resists for the moment. On the other hand, the Snowden affair has generated a cloak of distrust on US cloud providers that is endangering the US data economy. The New York Times established a rank bewteen $ 35 billion and $ 180 billion of losses by 2016.

We are leaving the end of another cycle of the ICT revolution. Both long-term and short-term indicators are providing us with signals of a future change of leadership. After the European dominance in the 90´s based on the GSM invention and the Silicon Valley empire of the first two decades of the second millenium, the leadership looks as if it is moving again eastwards.  Let´s hope that Europe will have some place in the future of the digital economy.


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