The economic impact of ICT in Europe
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The economic impact of ICT in
EuropeLucilla Sioli
Head of UnitDG Information Society and Media
European Commission
Economic impact of ICT: 3 channels
• Investment in ICT
• Efficiency gains in ICT-producing sector
• Efficiency gains in ICT-using sectors
Economic impact of ICT (1995-2000): ICT drives half of productivity gains in the EU (and 75% in the US)
Aggregate Labour Productivity Growthand its sources (1995-2000)
36%44%
14%
9%
25%
17%
0
0.5
1
1.5
2
2.5
EU-15 US
An
nu
al g
row
th, i
n p
er c
ent
Efficiency gains inthe rest of theeconomyNon-ICT relatedinvestment
Efficiency gains inICT producing sector
Investment in ICTs30%25%
Economic impact of ICT (2000-2004): ICT drive half of productivity gains in the EU (and
efficiency gains in the US)Aggregate Labour Productivity Growth
and its sources (2000-2004)
21%30%20%
48%18%
50%
0
0.5
1
1.5
2
2.5
3
EU-15 US
Ann
ual g
row
th, i
n pe
r ce
nt
Efficiency gains in therest of the economy
Non-ICT relatedinvestment
Efficiency gains in ICTproducing sector
Investment in ICTs
11%
2%
ICT
2%
ICTquanti-fied effect
The ICT sector alone drives 20% of productivity growth
Size in GDP Contribution to labour productivity growth 2000-
2005
5% 20%
ICT sector Biggest sector in terms of
R&DICT
26,4%
Pharmaceutical and biotechnology
13,0%
Machinery and equipment
7,9%
Automotive15,3%
Aerospace7,1%
Other sectors30,3%
Share of ICT in EU total Business Expenditure R&D (2005)
ICT R&D spending in EU and US
3
ICT spending on Research & Development
R&D spending in billions €
0
10
20
30
40
50
60
70
80
EU US
Public
Private
ICT Segments
IT Equipment13%
IT Services24%
Software9%
Telecom Services
45%
Telecom Equipment
9%
EU Recovery Package on ICT: (1)Public Private Partnerships
• Factories of the Future
• Energy Efficient Buildings
• Green Cars
R&D in national recovery packages
• The size of R&D stimulus measures is relatively small
• The magnitude of the stimulus varies across countries
• The crisis may have increased gaps between countries
(2) Broadband in EU recovery package
• 1.02 bn € earmarked for broadband in Rural Development Programme
• Objective: BB for all by 2013
• Only 1/3rd (35%) was used for broadband
Broadband coverage and take up
2005 2006 2007 2008 2009
87% 89% 91%93%92%
23%30%
42%
56%49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
BB penetration (Households) BB Coverage
Broadband penetration rate in EU27
24%23%
21%
20%
18%16%
14%
12%
10%8%
6%5%
16%16%
15%14%
13%11%
10%9%
8%7%
5%4%
0%
5%
10%
15%
20%
25%
Jan-04 Jul 04 Jan-05 Jul 05 Jan-06 Jul 06 Jan-07 Jul 07 Jan-08 Jul 08 Jan-09 Jul 09
Broadband DSL
Lagging behind on FTTH deployment
0
2.000.000
4.000.000
6.000.000
8.000.000
10.000.000
12.000.000
14.000.000
16.000.000
18.000.000
2005 2006 2007 2008 2009
Japan South Korea USA EU
1/3rd Europeans never used the internet
• Besides income, age and education play a role
eCommerce
2
No EU single market for eCommerce
Estimated value of online transactions: around 150 billion € in 2009
8%
37%
0% 10% 20% 30% 40%
% of all EU Individuals ages 16-74
OnlinePurchasing
Cross-borderOnline
Purchasing
The eCommerce potential
Allindividuals
Allindividuals
16-24
Willingness to pay for content
% % of individualsof individuals
10 %
NOT having paid for online audiovisual content
in last 3 months
30 %
40 %
50 %
70 %
60 %
20 %
80 %
Having paid for online audiovisual content
Source: -
16-24
What can we do to support a sustainable recovery/what should
our ‘Digital Agenda’ be?Support R&D
• Provide for adequate competition and regulatory conditions in telecoms markets
• facilitate the spread of high speed broadband
• Encourage the uptake of ICT– addressing issues related to inclusion, privacy and security
• Invest in education and ICT skills
• Encourage innovation in content markets – addressing issues of IPR
• Make the most of ICT for the environment and for government and public service provision
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