A Digital Future
by Dr Erkki Ormala
President,
DIGITALEUROPE
Europe is at a cross road. In the climate of a continuing fiscal crisis most of our energy is focused on short-term fiscal consolidation. This issue must be resolved in an appropriate way to restore macroeconomic stability which ultimately is a precondition for growth and prosperity in Europe.
At the same time a digital revolution is sweeping societies and businesses across the globe. Countries which have been quick to respond are enjoying the benefits and making their way to the top of world rankings. Emerging economies are a case in point; their impressive positive growth figures can be attributed to their willingness to embrace this digitally driven revolution. Europe too has a window of opportunity to capitalise on the growth potential embedded in this digitally driven revolution.
Investing in innovation is a prerequisite for harnessing Europe’s growth potential and ensuring macro-economic stability. DIGITALEUROPE applauds the European Commission for its foresight in responding to this need through flaship initiatives like the Innovation Union, a highlight of the Barroso II Presidency. The Innovation Union acknowledges that the creation of a competitive innovative ICT industry sector is a corner stone of job creation and long term economic dividends in the EU. DIGITALEUROPE shares the European Commission’s view that there is a need to focus EU innovation on the Grand Challenges, but we are also conscious that the greatest challenge of all in Europe is to restore economic growth.
European Commissioner in Charge of Digital Agenda, Neelie Kroes watches a robot reaching for a toy car after the opening of fet11, The European Future Technologies Conference and Exhibition held under the auspices of the Hungarian EU Presidency in Budapest, 4 May 2011. | EPA/LAJOS SOOS HUNGARY OUT
The ICT industry sector is one of the most rapidly growing industries globally. ICTs enable us to address the Grand Challenges. Yet today, as we accelerate into the digital age, Europe still has no single market for digital services. This lack of a single market will limit Europe’s growth opportunity unnecessarily. Creation of a digital single market by 2015 would yield a 4% point growth in the European GDP by 2020. This corresponds to a €500 billion increase – translating to over €1000 for every European citizen.
Without a functioning single market the ‘Innovation Union’ will not live up to its potential as investment in ideas will not be commercialised, new jobs will not be created. Europe must act decisively to remove the barriers that limit our ability to leverage the benefits of a culture of innovation and the European digital single market. European citizens and business alike know the frustration and problems of cross-border eCommerce. Less than 10% of the eCommerce in Europe is currently cross-border. Extending business from one member state to another can incur €2 million additional costs for a company due to diverging rules and regulations in different member states.
It is a neat coincidence that the conclusion of the European Union’s Lisbon Strategy and discussions around its successor, ‘Europe 2020’, happened when the economic and political shape of the world was being rapidly remodeled. The European Union must think very carefully about its ambitions, its challenges and how to achieve its goals urgently. If we are committed to becoming the world’s leading knowledge economy, Europe’s political leaders must actively focus on overcoming the fragmentation in digital industries, markets and communities. Failure to do so means Europe risks losing its economic, political and cultural lead.
Commissioner Kroes’ Digital Agenda for Europe is an important roadmap for the Barosso II Commission; it reflects and addresses many of our current challenges. To deliver a successful European Digital Agenda each member state has a role to play in recognising the benefits for its citizens and businesses, but also for citizens and businesses across the EU. The Digital Agenda is rightly focussed on the completion of the digital single market, and while many EU countries agree in principle that this is an important ambition many continue to reserve the right to exclude their particular interests outside the digital single market. The consequences are evident. Recent data shows undisputedly that Europe is losing ground rapidly. European websites are virtually absent from the list of most visited web sites in the world. And, even more alarming, is the trend we see in the growth of the leading internet service companies in the world. It is no longer the US which is dominating this space: Chinese internet services providers are challenging American companies with hundreds of millions of customers and rapid expansion into foreign markets. Among the five most valuable Internet companies in the world after Google and Amazon are two Chinese companies, Baidu and Tencent, with over $30 billion market cap well before eBay. No European company is visible on this list.
It is clear that digital technology creates entirely new business models, which in turn generate new jobs. Europe must seize the opportunity to create more high-value jobs for its citizens. We are faced with a choice of which route we take to deal with current social and economic challenges. To DIGITALEUROPE the choice is clear: we must urgently make the decision to deliver a European digital single market based on the founding principles of Jacques Delor’s 1992 vision of a single market. The Digital Agenda for Europe provides the roadmap and the Innovation Union is a vehicle that will deliver rewards. Public policies must support the consolidation of our global position and be a bold force for change. Investment in innovation is one turn-key, the other is the political will to deliver of a digital single market in Europe.
