Factors of regional/national success in Information Society developments: Information Society strategies for candidate countries by Marc Bogdanowicz, Jean-Claude Burgelman, Clara Centeno, Elisaveta Gourova, and Gérard Carat
Bread or Broadband? The thirteen candidate countries (CCs) for entry into the European Union in 2004 (or beyond) confront difficult choices between "Bread or Broadband" priorities. The question raised in this article is how to put Information Society (IS) policy strategies at the service of social welfare development in these countries, while optimizing their resources and economic output.
The article summarises a dozen original research studies, conducted at the European Commission’s Institute for Prospective Technology Studies (IPTS). It identifies ICT infrastructures, infostructures and capabilities in the CCs, the economic opportunities these may offer their ICT domestic industry, and the lessons from previous IS development experience in the European Union that could possibly be transferable.
The paper concludes that only those trajectories that offer a compromise in the Bread or Broadband dilemma, taking into account both welfare and growth issues, will be politically sustainable.
2. The specific context of candidate countries
3. Building an IS: Lessons to be learnt from some EU15 experiences
4. Potentials for a candidate countries’ ICT industry-led IS development
5. Future "Tigers" in the candidate countries
6. Conclusions: Shifting the focus
Immediately after the fall of the Berlin wall in 1989, the European Union (EU) entered a process of "Enlargement". The aim was to negotiate the addition of thirteen countries to the existing fifteen EU Member States (EU15). The thirteen candidate countries (CCs) are the Baltic republics of Estonia, Lithuania and Latvia; the Mediterranean countries of Turkey, Malta and Cyprus; and, the Central European countries of Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia.
Ten years later in 2000, the Council of European Ministers meeting in Lisbon formulated ambitious targets for the EU society to reach by 2010, the so-called "Lisbon Strategy":"Europe has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion. Achieving this goal requires an overall strategy aimed at:
- preparing the transition to a knowledge-based economy and society by better policies for the information society and R&D, as well as by stepping up the process of structural reform for competitiveness and innovation and by completing the internal market;
- modernising the European social model, investing in people and combating social exclusion;
- sustaining the healthy economic outlook and favourable growth prospects by applying an appropriate macro-economic policy mix.
(...) The shift to a digital, knowledge-based economy, prompted by new goods and services, will be a powerful engine for growth, competitiveness and jobs. In addition, it will be capable of improving citizens’ quality of life and the environment".
Information and Communication Technologies (ICTs) were expected to play a key role in this, and all thirteen CCs, while still striving to achieve the conditions of the Enlargement process [ 1], have signed up to the Lisbon strategy, which contains an ICT-related Action Plan. This gives rise to the question of which IS strategy the CCs should follow, given their overall social, political and economic problems.
To breakdown the problem, we put forward the following questions that are answered in subsequent sections:
- What characteristics of the CCs are relevant to the successful development of an Information Society? Are there specific economic, social, political or technological prospects (or threats) in candidate countries, which should be taken into account? (See section 2. The specific context of candidate countries)
- Did we learn anything from EU15 experiences that is transferable to the CCs? To what extent is IS development local and context-specific or is it dependent on the global market? What are the possible trajectories for developing an IS in the CCs? (See section 3. Building an IS: Lessons to be learnt from some EU15 experiences)
- How can ICT production, diffusion and use support growth opportunities? Is the development of the ICT industrial sector a major opportunity for the CCs? And to what extent would such development meet the challenges of the emerging Knowledge-based Society? (See sections 4. Potentials for a candidate countries ICT industry-led IS development and 5. Future "Tigers" in the candidate countries)
- Finally, in order to meet the Lisbon objective "to become the most competitive and dynamic knowledge-based economy in the world", which examples of best policy practice could CCs follow and where do the policy paradigms need to be re-thought? (See section 6. Conclusions: Shifting the focus)
2. The specific context of candidate countries
Future opportunities [ 2] and possible barriers for IS development in the CCs can be clustered around three enabling areas or necessary components for building an Information Society: networks (infrastructure), services and applications (info-structure) and skills (capabilities) .
The rate at which an Information Society can be constructed is strongly dependent on the availability and affordability of ICT to individuals, organisations and the society as a whole. Most data confirms that there is no purely technical reason why technological leapfrogging would not be possible in the CCs. The CCs have demonstrated their ability to deploy and adopt mobile telephony quicker than the EU15. Mobile phone penetration per 100 inhabitants has, in a relatively short period of time, overtaken fixed line penetration in Czech Republic, Estonia, Hungary, Slovak Republic, Slovenia and Turkey ( Table 1).
Table 1: Fixed and mobile penetration in candidate countries, 2001.
Source: ITU, 2002.
Year 2001 Mobile subscribers Fixed lines candidate countries per 100 inhabitants CAGR (%) 1995-2001 per 100 inhabitants CAGR (%) 1995-2001 Bulgaria 19 106 36 2.8 Cyprus 46 37 63 2.6 Czech Republic 66 128 37 8 Estonia 46 68 35 4.1 Hungary 50 64 37 10.1 Latvia 28 90 31 1.7 Lithuania 25 100 31 3.6 Malta 35 52 53 2.4 Poland 26 127 30 12.1 Romania 17 175 18 5.7 Slovak Republic 40 136 29 5.5 Slovenia 76 95 40 4.4 Turkey 30 87 29 4.9 Average CC 39 97 36 5
Some CCs, for example Estonia, Malta, Cyprus and Slovakia, are performing very well on infrastructure deployment, and already have a higher Internet access penetration rate than some EU Member States. Similarly, Estonia and Slovenia have reached EU15 levels in terms of mobile usage and personal computer penetration. It should be noted also that cable television (CATV) is quite well developed in most CCs. More than 50 percent of all households with televisions in Slovakia, Romania and Malta, for example, have CATV connections. CATV may thus be considered an essential future opportunity for the CCs (more than for the EU 15) for the provision of low cost information and communication services to end-users.
This high adoption rate of technology and the introduction of changes to the telecommunications market may have raised excessive expectations as to the ability of CCs to catch up quickly in technological terms. However, as progress in ICT is correlated to a large extent to the level of economic development and the purchasing power of the population, countries with low per capita GDP are not capable of sustaining a high rate of ICT penetration growth. Generally, the CCs continue to lag behind EU Member States in most, if not all, measures of ICT access and usage. Furthermore, the overall economic situation in the CCs and the resulting uneven revenue distribution is widening the gap between people and organisations who can access the market of advanced technologies and services and those for whom they are a luxury.
At the moment there are large differences in technology diffusion based on geographic location, economic and social status, and age. In Turkey nearly 77 percent of all computers are owned by 40 percent of all households. These belong to the highest socio-economic groups, while the low economic groups, around 40 percent of households, own only 10 percent of all computers (Tubitak-Bilten, 2001). In Latvia and Bulgaria, less than 15 percent of households have computers (Eurostat, 2001). Consequently, the CCs had, for example, an average of 6.3 PCs per 100 inhabitants in 2000, compared to an average of 35 PCs in EU15 (ITU, 2001a). The gap exists and may be growing. Internet usage has mainly developed in educational institutions (44 percent), followed by corporate and government users (29 percent) and finally users at home and in small offices (27 percent) (ITU, 2001b). In Estonia 58 percent of Internet users are between 19-29 years old, while only seven percent of the users are between 50-74 years old [ 4]. The high usage price is a serious barrier for the spread of new communication technologies. Hungary and Poland, for example, have the highest Internet access charges during off-peak times among OECD countries [ 5]. The low teledensity and long waiting lists in some of the CCs e.g. more than three percent of the population in Poland, Romania, Bulgaria and Turkey also hamper Internet penetration and increase the risk of growing regional disparities in the provision of access to new communication networks and services.
However, this growing digital divide in the CCs is much more complex than it is in EU15:
- rural/urban distribution: An estimated one third of the CCs population lives in rural areas, particularly in the largest countries such as Turkey, Poland and Romania. Some 22 percent of total population make their living from agricultural activities (sometimes at subsistence level).
- regional disparities: Two-thirds of all regions [ 6] in CCs show significantly low figures [ 7] in relation to labour and revenue indicators, with extremes often reached in border regions, small provincial towns and former peripheral industrial conglomerates.
- demographic trends: The aging of the population is driving the demographic outlook for CCs [ 8]. The transition years have seen a fall in fertility rates and strong outward migration. As a result populations have decreased in many countries. Today, demographic projections, particularly those for just after 2010, show that this trend is even more pronounced than it is in EU15.
The impact of such disparities can be seen, for example, in the distribution of fixed line penetration between rural and urban areas in some countries. This can go from extremes of 0-100 percent, with no telecommunication services at all in small peripheral towns and rural villages and almost 100 percent penetration on new digital exchanges in capital cities. Also, though national telephone penetration rates may have increased for example, 77 percent of households have fixed lines (European Commission, DG INFSO, 2002) 50 percent of calls in some regions are affected by the lack of quality and reliability of these lines. This significantly limits the use of these lines for Internet access.
In addition, average national revenue disparities (observable determinants of divide) are expected to increase with Enlargement. It is estimated that the income gap between countries in EU28 will double as compared to the existing EU15 level (European Commission, DG REGIO, 2000). The impact and complexity of the potential digital divide will therefore be such that it may endanger market growth, social cohesion and democratic participation.
The ICT industry profile of these countries is as complex. The economic transformations in the last decade, the inflow of foreign direct investment (FDI) and the ability of companies in the CCs to absorb new technologies and integrate large international production chains have contributed to the emergence of new patterns of local industry specialisation. Many domestic IT companies in the CCs, without financial resources to modernise their production, were not able to compete with multinationals and have shrunk, particularly during the privatisation period, into small producers in limited niche markets. Many hardware companies have been integrated into the product life cycle of western companies through subcontracting or outsourcing, assembly, distribution, reverse engineering, etc. Consequently, in many CCs, ICT sector manufacturing industries are increasing exports to the EU15 (Havlik et al., 2001). Hungary is in a very strong position, as it has significant specialisation in office machinery and computers and electronic components, while in Poland the TV, radio and recording equipment industry has been a top exporter since 1995. The Czech Republic also plays a growing role in these market segments, while Estonia has been selected as a manufacturing and assembly centre by high-tech western companies. Malta has a comparative advantage in electronic products, which accounted for about half its exports in 1999 (Eurostat, Statistics in focus, 2000), though these, of course, remained comparatively small. Finally, the Turkish electronics industry is in a strong position with its exports of consumer electronics and telecommunications equipment. The potential role of the ICT industry (including the software segment) in CCs will be explored in a further section of this report.
The Information Technology (IT) hardware market in the CCs has grown remarkably over the past few years, mainly due to government procurement projects and foreign investments. It should be noted that as a percentage of GDP, ICT expenditure in Hungary (6.42 percent), Slovakia (5.98 percent) and the Czech Republic (8.49 percent) is higher than in Germany (5.27 percent) and Finland (5.88 percent), while it is still comparatively low in Romania (1.78 percent), Bulgaria (1.76 percent) and Turkey (2.47 percent) [ 9]. However, the total size of the IT hardware market in 2000 in all CCs was still very small, about five billion Euro (Poland and Turkey taking more than 60 percent of the whole market), compared to 235 billion Euro for the EU15 (Eurostat, 2001).
Finally, the presence of dominant foreign operators in the telecommunications market in CCs exposes this market to the fluctuations in the global telecom market.
In CCs, the rapid growth in numbers of domestic Web sites and Web portals in local languages and the provision of governmental interactive services and online content have been stimulated to a large extent by the strong demand from businesses and civil society on the one hand, and government commitments to EU policies on the other.
The advent of Internet and digital broadcasting platforms raises several new issues for the CCs related to the protection of consumers and citizens’ rights, such as access to quality content in an overall context of low per-capita revenues, and protection of intellectual property. The challenges of how to prevent infringement of ethnic, religious and minority rights, and to preserve human dignity, are a global prerequisite.
However, in these new democracies, it is more of a challenge to find the right balance between regulatory and self-regulatory rules, and to ensure both freedom of information and expression and protection from illegal or harmful content and disclosure or misuse of private information.
In order to maximise the potential for the content industry in CCs, it is important that critical mass in investment and usage is built up, and that an awareness of the profitability and potential benefits of public and private partnerships is created.
Simultaneously, governments should be a driving force towards an 'Information Society for all'. The private sector also plays a vital role in this endeavour. While incumbent media companies further develop the re-purposing and cross-promoting of content across multiple distribution channels, Net-native companies offer targeted content or delivery options in niche markets. The key to a competitive industry in the CCs is for them to become producer, as opposed to consumer, countries.
Despite the fact that business players have undertaken different initiatives providing consumers with online services, creating virtual shops or taking the first steps towards setting up systems for e-banking and e-business, the business-to-consumer market is still very limited. The few customers that use the Internet do so predominantly to receive information and to order products or services, paying on delivery. Business-to-business commerce is also in its infancy companies use electronic networks mainly to access market news/analysis and new business offers, and to communicate with suppliers while contracts and business deals are carried out by direct contacts and traditional means.
As in most EU15 countries, the spread of ICTs among businesses in the CCs is a market-driven phenomenon rather than a real strategic choice to go online. As already stated, investment capacity, especially domestic investment, is still relatively weak, and in such circumstances risky options are usually left to one side. Internal organizational factors may well be the biggest obstacle to taking the right decisions and overcoming organizational inertia. Additionally, most customers’ conservative attitudes, their lack of trust in the security of technologies and their fear of misuse of personal and business information further influence company investment in, and adoption of, ICT-based strategic options. Under developed logistics systems, lack of professional home delivery services, and the predominance of English language materials on the Web are also obstacles in this respect. Surveys have shown that the limited diffusion of ICTs, banking products and security enhancing technologies are additional obstacles (PricewaterhouseCoopers, 2000).
It seems, therefore, overly optimistic to state that many CC companies will soon be in a position to adopt and apply e-commerce technologies in order to leapfrog economic development and join the EU on a more competitive basis. Only countries such as Estonia, and possibly Slovenia, may be in a position to successfully meet this ambitious challenge.
Capabilities and skills
The CCs face greater challenges than the EU15 in providing the kind of education needed for the digital age, due to the massive economic and social changes they are undergoing [ 10]. Economic decline in these countries has caused serious problems for their educational systems as regards offering a common high standard and tackling new challenges.
Despite this, the introduction of ICT is seen as educationally important and is firmly on the CCs’ national policy agenda. Making computers with Internet connection available is seen as essential for ICT-based learning processes and this has dominated the first phase of the introduction of ICTs into education. However, even where technologies and skills are now available, the integration of ICTs into the learning process is hampered by the lack of appropriate electronic books, multimedia contents and tools in the local language. This problem could be resolved by the efforts of candidate country governments and the collaboration of all actors teaching staff, software developers, content producers and learning content distributors to facilitate the development of educational materials meeting e-learning requirements.
Though the availability of technologies and tools is a necessary condition, the key factor for success in the e-learning field is the human factor. A policy of connecting schools to the Internet is important, but not enough in itself. The ability of teachers to adapt effectively to new technologies in the learning environment is problematic despite many training programmes to re-train and prepare them for the changing learning environment.
The restructuring of the economy in the transitional period has seriously affected both vocational education and traditions of on-the-job training. Existing links with enterprises have been broken, and the support system for learning cut back. Insufficient financial resources have also limited the ability of enterprises to provide on-the-job training and qualification courses to their employees.
Initiatives have been set up in all the CCs to respond to the labour force’s increased ICT training needs. Many of these focus on building an open, flexible and transparent life-long learning system (European Training Foundation, 2000). Schemes aiming at encouraging company-training activities have been launched in Cyprus, Malta and Hungary. In Slovenia, existing company-based training facilities have been transformed into inter-company or regional practical training centres. As well as providing traditional training, CCs are seizing the opportunities that distance education offers them, mainly through the financial support of international institutions, such as the EU, UNDP and World Bank.
Training in management and leadership is another essential issue. While the Mediterranean countries have longer market-economy experience, the transition decade has faced the ten Central and Eastern European Countries (CEEC) with the challenge of preparing managers able to raise their companies’ competitiveness and adapt them to the rapidly changing technological and market conditions. There are some indications that individual entrepreneurship is driving the take-up of economic activity in CCs, particularly in the service sector, nonetheless lack of initiative and aversion to risk are still claimed to be business weaknesses. The European Bank for Reconstruction and Development (EBRD) pointed out in its 2000 Transition Report that foreign investors have experienced more difficulties in finding good managers than IT or financial staff.
Despite the downturn in the "new economy" and the cutting of many IT jobs in western countries, the ICT sector in CCs is still buoyant, attracting many young and qualified people. Some countries (such as Latvia and Bulgaria), though they worry about future shortages, consider the present availability of highly-qualified IT specialists to be an important strength for sector growth. In particular, the expansion of software applications in many CEEC has been facilitated by the existing human capital accumulated previously in the sector (Kubielas et al.,2000).
Larger companies have established their own programmes in order to retrain employees, as a result of the problems faced by the educational system and the speed with which ICT skills become outdated. In Bulgaria, Cisco has its own academy, in the Baltic States Microsoft runs authorized training programmes, and IBM computer classes are part of the University of Latvia. This tendency to private certification is particularly important for enterprises involved in ICT development and maintenance, and major users and providers of knowledge-intensive services. Specialized training and re-training courses are also offered to bank and telecommunications employees and computer specialists.
The impact of the immigration policies of western countries aimed at attracting workers with IT skills from other countries is disputable. Talented people from Poland and the Czech Republic would rather remain in their country, whereas the probability of a brain drain is estimated to be much higher in Bulgaria and Slovakia [ 11]. In Latvia, some hopes are expressed that talented people working abroad will return (brain circulation) and that the best IT specialists are unlikely to emigrate due to the high living standards they enjoy at home [ 12]. On the other hand, around 50 percent of all Turkish post-graduates studying in the U.S. would be potential emigrants to that country (OECD, 2001).
Assessment of the present IS in the candidate countries
Taken together, these trends illustrate the capacity of CCs:
- to catch up in technological terms;
- to integrate existing global companies;
- to develop competitive niches for local industry, mainly in software and content services; and,
- to use local knowledge and geographic situation as competitive assets.
However, the domestic industry’s low investment capability and the population’s low purchasing power hinder balanced economic and social development and the building of a critical mass of usage. This and the associated risk of a marked digital divide could weaken the economy, social cohesion and the development of democracy in these countries.
The formation of human capital is also a key issue. Candidate countries are focusing on meeting human resource needs in the ICT sector and generally building excellence in some areas of science and technology, while doing too little about their largely ICT-illiterate population. The strong correlation between income level, education and ICT know-how points to the need for a more holistic policy approach for all levels of society and all categories of the population.
These difficulties and opportunities have to be seen against the backdrop of the overall challenges these still newly democratic societies face in the transition to market economies. Their policy makers are under huge pressure to respond to both the legitimate short-term needs and current problems and the long-term issues of development of an inclusive and competitive Information Society. Striking a balance between these two sets of policy objectives acute societal day-to-day needs and IS development-related needs is probably the most difficult policy challenge.
It is clear that choices made today will drive their economies and societies to alternative scenarios:
- If present development imbalances are not addressed, the CCs will build a society which has islands of ICT development. However, large disparities between countries, regions and groups of people, as regards ICT and other areas, will remain. There is a risk that the social and economic benefits of the Information Society will not be reaped. CCs may even find themselves limited to low wage, low quality and lower added-value production and consumption patterns.
- If the CCs wish to establish themselves in a stronger position, a policy push and sufficient financial support are needed, to achieve a more balanced Information Society development. In times of limited public resources, striking a balance between competitive objectives (the social/the economic, the short term/the long term), targeting the major relevant factors of sustainable development and acting cooperatively with the private sector could become the guidelines of a sort of "Marshall plan" for the Information Society in CCs. Only this kind of multi-layered policy push will ensure that the CCs build up their own socially inclusive and competitive Information Society.
What lessons from past experiences would help in setting this up?
3. Building an IS: Lessons to be learnt from some EU15 experiences
The last decade of ICT-related development in EU15 Member States provides evidence of national successes and failures, set against the particular economic, industrial, historical, social and geographical context of the country or region concerned [ 13]. It is worthwhile considering how relevant initiatives in given EU15 national/regional contexts have set out conditions favourable for achieving ICT-related regional and national development, and what this development has meant in each case.
We labelled this the "Tigers approach" [ 14], "Tigers" being regions or countries with fast economic growth at high rates, rapid reduction of unemployment rates and strong growth of employment rates, reduction of outward migration or even reverse migration, etc.
Six cases were selected and are briefly described below :
- Austria: Austria was the fastest-growing European economy from 1950-1960, only surpassed by the German "Wirtschaftswunder". The catching-up done in the 1950s and 1960s and above-average growth rates in the 1970s and 1980s make Austria one of the richest countries in Europe today. However, Austria’s current favourable economic position cannot hide structural problems that will affect economic performance. If we assess Austria’s route to the Information Society, we see structural change in a mature, developed economy. Hence, this is more the story of an "old" Tiger, which has to keep up with, or even shape, development, rather than simply catching up. Austria’s story is also a story of old virtues, some of which are turning into burdens. Austria’s institutional set-up with its strong corporativist elements and its consensus-orientated policy did well in the times of catching up, but did not achieve as much structural change as Finland or other countries. Therefore, Austria should be seen as an illustration of a country in the post-"Tiger" period.
- Dresden (Germany): Saxony was the most industrialized area in Germany before World War II. During GDR times, Dresden was the largest research centre for semiconductor production (producing, for example, Europe’s first Megabit memory chip in 1988). In the course of German re-unification, employment shrank considerably. After an initial boom, growth rates later dropped to the relatively low West-German levels. For West Germany, the decision by Siemens in 1993 to invest the equivalent of EUR1.38 billion in a semiconductor plant was essential. It was followed by AMD in December 1995 and by other players. In May 2002, AMD, Infineon and DuPont Photomasks founded the Advanced Mask Technology Centre (AMTC) a global research centre. This major investment made it economic for about 30 international equipment producers to open permanent offices themselves. New producers started business such as DAS or Wacker Siltronic (in near-by Freiberg). About 10,000 semiconductor-related jobs were created in the region, more than initially expected. Government subsidies of about EUR1.2 billion will probably be much smaller than the expected social insurance and tax payments, which will be about EUR5.9 billion by 2010. The economic sustainability of these initiatives will largely depend on whether the investors will be able to make enough profit in the future, while continuing production during downturns at revenues below average costs. The timing, size and duration of the next boom will therefore be crucial.
- Flanders (Belgium): Flanders general profile has many "Tiger" characteristics. It is a very wealthy region within a complex institutional structure, yet it has a large degree of autonomy. It has a high population density and degree of urbanisation and hosts an important manufacturing industry. The economy is remarkably open in terms of trade and FDI; showing very high levels of productivity, though salary costs are also remarkably high. The population is highly educated.
Overall, the analysis shows that Flanders reaches at least the average European level for many aspects of the "Digital Society" but these achievements are not evenly distributed through the society:
- Flanders is strong in ICT infrastructure developments
- It hosts a reasonably important ICT sector
- This strong position is not matched with similar rates of ICT use
- There are signs of a digital divide, as a comparatively large share of the population is not yet accustomed to ICT applications.
Thus, the potential for ISTs in Flanders is stronger than their actual effective and widespread use. The full development potential of ISTs has not been realised in the society as a whole and ISTs are under-exploited.
- Greece: Here, IS development started later than in most other EU Member States. The first and second CSF (Community Support Frameworks) made a major contribution to building the telecommunications infrastructure, computerising public services and developing mobile telephony in the country. However, the success could have been much greater if these efforts had not been hindered by internal organizational matters like limited experience of the public sector in administration and implementation, lack of co-ordination, delays, fragmentation in programme design and implementation, etc.
Today, the Information Society initiative in Greece is taking place within an economic environment marked by high growth rates, low inflation and interest rates, and the elimination of public sector deficits. Since 1995, the GDP growth rate has been higher than the EU average. In 2002, Greece’s economy was considered to be the fastest growing economy in the European Union. High development rates led to an increase of employment and unemployment has decreased during the last couple of years (however, as a percentage, it remains one of the highest in the EU zone). Although real salaries were increased, labour costs per unit have been steadily decreasing, with labour productivity growing fast, approaching the absolute levels of other developed economies. This fact is undoubtedly related to the major increase of investment over recent years. Overall expenditure on ICT is the most widely used indicator of IS development. In the past few years, significant efforts have been made and ICT expenditure as a percentage of the GDP almost reaches the EU average. Consequently, the current situation, comparable to Portugal and Spain is characterised by some of the lowest figures in IS-related indicators. It is, however, supported by some of the highest growth rates.
- Ireland: Important early foundations for the Information Society in Ireland can be traced back to a number of events such as the early consideration given to FDI, the decision to expand the national education system, initially at secondary level and then at tertiary level, and accession to the EU. More recently, it was against a backdrop of emigration, unemployment and national indebtedness in the 1980’s that led to the first of a series of National Partnership Agreements in 1987. These laid the foundations for the economic turnaround of the early 1990’s. Due to a combination of factors from the mid-1990s, the country was in the fortunate position of having a young educated workforce, a strong presence of FDI companies particularly in IS relevant industries (e.g. IT, software) and the fiscal resources to make strategic investment. In effect, these factors, which caused the "Celtic Tiger" period from the mid 1990’s, also provided fertile ground for an Information Society initiative. In Ireland, this commenced with a report to the Government in 1996, which defined an IS vision for the country. The Government quickly recognised the potential of the IS in its own right, and as a result, the IS agenda became an integral part of government policy.
Several recent international benchmark studies suggest that, notwithstanding the significant momentum behind the Ireland’s Information Society, not enough has been done to propel the country to becoming an IS leader. Moreover, two recent benchmark studies show that Ireland’s relative standing deteriorated between 2001 and 2002, suggesting that there is reduced momentum behind its Information Society.
The analysis of these six cases (and additionally, Finland) brought up the following seven factors which, taken together, help our understanding of the birth (and death) of a "Tiger". The assessment was done without taking into account these factors’ potential transferability to the CCs.
A committed and adaptive (smart) public policy
ICT-related developments do not develop spontaneously, even less in an socially inclusive way. Each strong ICT-related development was guided, in EU15 national or regional cases, by a strong pro-active public policy push. Strong does not mean centralised or top-down. Rather, the examples show the need for adaptive and committed policies, allowing risk-taking and long-term objectives, and for public authorities to play a coordinating role. Also, those policies were often seen as holistic or multi-layered showing a strong interest in the overall (economic) development of the country, rather than being focused strictly on ICT. They also rely on a broad set of interdepartmental co-operative means. IS policies are seen as being part of the broader category of development policies, covering a variety of domains such as economic development, industrial policy, science and technology, employment, regional policy, innovation policy, education and media. This type of holistic policy seems to have been more possible in countries which had acknowledged domestic crises or which were seeking strong identity building. Pro-activity is another typical feature in these policies, though the risk was high for individual actors because of the level of uncertainty and the apparent necessity for visible individual "champions". Government played a key role in coordinating an on-going learning process and creating predictability for most partners. This was done, for example, by establishing innovative partnerships among actors and by creating clear policy goals and roadmaps.
Co-opetition refers to the search for the right and creative mix of co-operation and competition, through, for example, the co-ordinated meeting of diverse possibly competing actors in a goal-focused and time-determined taskforce. This mix aims at creating mutually beneficial situations where providing diversity and generating synergies may help to create common goals and trajectories for all. This concept calls first for innovative institutional arrangements in public policy management, which includes the delegation of decision making and implementation capacity, as well as a citizen/entrepreneur-oriented mindset. Co-opetition frameworks have been used in areas such as infrastructure development for the benefit of the public, a safe digital environment, standards and interoperability, and also education, societal assessments, and democratic and environmental initiatives. Such arrangements also appear to be crucial in cluster development [ 16]. They based on the idea that reciprocal responsibilities pay better than "Winner takes all" games. They may nevertheless translate into privileged arrangements, which escape democratic control (nepotism) particularly because they seek consensus among a set of contradictory interests.
The scale and scope of co-opetition matters. The geographical scale or the technological scope may be too large for a given set of actors to ensure commitment and pursue a common goal. International, national, regional partnerships are necessary and successful when they imply adoption and adaptation as concomitant processes. Smaller co-opetition frameworks seem to be easier to handle, and thus more obviously successful (as in the example of smaller countries).
Co-opetition demands that government plays an important role as coordinator of a diversity of actors of varying sizes. This role encompasses the difficult challenge of 'policy learning'. The environment for policy makers and partner-actors becomes highly complex and constraining.From ICT manufacturing industry to the adaptive use of the industrial profile
During the second half of the 1990’s, several national economies benefited from the contribution of ICT industries to added-value, GDP and employment. Countries such as Ireland, Finland, Sweden can easily be identified as "Tigers", when trends across a broad range of their socio-economic indicators are taken into account. In these cases, the presence of foreign and indigenous ICT manufacturing multinationals and/or a dynamic SME-sector successfully developing international niche-markets were essential ingredients.
It is evident, however, that national/regional industrial structure also matters. Countries and regions, which have a tradition in industrial manufacturing, may succeed in modernising that industry through ICT use. Relevant software production and the adaptive use of ICTs are at the core of these IS strategies. Specific national or regional assets including in services can help generate ICT-intensive industries and are referred to as 'sweet spots', which are either 'given', historical, or strategically created.
Mature industrial products, no longer susceptible to large productivity improvements, tend to end up in low cost locations. Traditional industries are product or supply oriented, and cannot escape simple cost-based competition; modern industries, however, can compete on quality and be much more marketing, or demand-oriented. In order to develop as a country or a region there is a need to seize the right opportunities, by innovating on new products or becoming more productive in almost mature ones. In these cases, pre-existing industrial structure and its interaction with ICTs plays a major role, the effects of which may trickle down to the rest of the economy.
A variety of financing tools
Foreign Direct Investment is a major tool, particularly for funding and developing an ICT (manufacturing) sector. However, venture capital, seed capital, public subsidies and the protection of revenues through adequate regulation (for example, intellectual property rights) are also essential tools to promote domestic development. ICT-related development is an uncertain path that needs considerable trial and error, and also a range of financial tools appropriate to very diverse scales of initiative and risk. This flexibility is important where innovative products and services may start from very different points and involve a wide range of actors.
A major challenge is to transform funding into knowledge transfers, incentives into committed involvement in the domestic economy and society, and isolated bets into spillovers that generate more sustainable and embedded benefits.
Financing tools should be integrated into a broader framework encouraging an entrepreneurial mindset. If this framework is absent, there is a risk that financing is entirely devolved to possibly fragile mono-industrial aims and/or high volatility.
Education, info-culture, awareness: The intangible facet
National intangible assets play a major role in fostering ICT potential. Some are demand-side oriented, such as the general educational level of the population and explicit support to creativity and self-learning in both technical aspects of ICT and also general literacy and infoculture [ 17]. Others assets lie in facets of the supply chain: R&D capacities, fundamental research and curiosity-oriented research, technology transfer mechanisms, patent regulation and innovation policies.
Education always plays a major role in successful ICT-related development, and has to be viewed in the long-term. The upgrading of each generation’s educational level is a central ingredient to development. It could also be argued that our education systems should be supply-side oriented and directly support the necessary professional ICT skills, even at the risk of being too "answer-oriented" [ 18]. It is also true, however, that our modern societies seem to need "question-oriented" education where a general ability for "learning to learn" and creativity is fostered. The same argument goes for infoculture.
While the political decisions concerning the supply-side particularly if translated into hard investments in visible initiatives such as industry or science parks seem to be more obvious, governments have an essential role to play in the development of a solid demand side, by the relevant co-ordination of education, or policies supporting knowledge seeking behaviours. These intangible assets rely strongly on the level of awareness of the public and private decision-makers themselves. The managerial capacity of the decision-makers and their sensitivity to the issues raised by the IS, are themselves an essential facet of a country’s intangible assets.
Creative use of specific contexts: Alliances by position, language, identity
Geographical position or size may confer on a country a specific role in geopolitics or international trade. Traditional migration flows may reveal unexplored networking capacities as well as access to foreign resources. Language specificity may translate into market access or the affirmation of national identity. Traditional skills may be a hidden attraction. Such features can be embedded in international alliances or in ICT products and services, in marketing behaviour and mobilising visions or in the distribution of managerial responsibilities. Strategic creativity matters more than the hurdles. Addressing these apparent hurdles to ICT-development at national or regional level may reveal opportunities for creating competitive advantages. Not addressing them often turns them into real weaknesses.
EU policies have an important impact on ICT-related development. In most cases, they have supported development both by mandatory regulation frameworks and by awareness raising, direct subsidies or benchmarking initiatives.
Reciprocally, EU policies may also generate reverse effects. The focus on the EMU and the stability pact, and on the Enlargement process and its conditions, may have distracted some governments from other priorities.
4. Potentials for a candidate countries’ ICT industry-led IS development
The "European Tigers" Ireland, Finland, and Sweden have features in common and their position contrasts with the rest of Europe, and even the world in some cases [ 19]. These three countries stand out with very strong ICT manufacturing profiles. ICT manufacturing mobilizes 40 to 70 percent of their ICT workforce. Around four percent of their total employment and eight percent of their total business employment is concentrated in the ICT sector. In Ireland and Finland, this has had a very positive impact on employment rates during the last decade. These countries generate a comparatively major share of their national ICT turnover and added value through ICT manufacturing, putting them far above EU15 averages. They also show above average turnover and added value in ICT manufacturing per person employed. Finally, their trade balance on ICT goods is positive which, compared to the rest of Europe, is remarkable. These financial results in turn have had a positive impact on the overall national economy.
Closer observation of these cases shows that they do not share a common model of development and that the various strategies may lead to positions which may be differently appreciated regarding their longer term sustainability.
Ireland specializes in the manufacturing of office machinery and computers, and foreign, mainly American, firms have a very strong presence as a result of a long-term development strategy. Attracting foreign business firms is a strategy shared by Ireland and the U.K., both of which have developed information technology-oriented specialization in close cooperation with U.S. companies.
Finland has specialized strongly in the manufacture of television and radio transmitters and apparatus for line telephony. It is EU15’s second largest telecommunication equipment producer after France (2001). This success is usually attributed to the history and activity of one large company, Nokia, and its suppliers.
Sweden has also specialized successfully in the manufacture of television and radio transmitters and apparatus for line telephone. This success is also attributed to the activity of one large company, Ericsson, and its suppliers. Developing strictly domestic companies, particularly those specializing in communications technology, has been a Nordic strategy.
The case of the Dresden microelectronics cluster development, coming a little later historically, again shows some similarities with the "Anglo-Saxon" model of development described above, in that it is embedded in microelectronics manufacturing, and is FDI and U.S. oriented. The case of Flanders, possibly because it has resulted in few effective and domestic manufacturing industries, follows a different path. In these two cases, whatever their industrial ambitions, one hesitates to speak (so soon?) of "Tigers" and today’s downturn of the ICT sector and the economy as a whole, brings into question the fragility of the initiatives taken.
These examples of European "successful" Information Societies often give rise to the view that there is a need for a competitive ICT sector in Europe and possibly in each country of Europe. It is then argued that ICT industries have strongly demonstrated during the last decade that they account directly for an important share of Europe’s economy and growth and at the same time, have been an essential enabler for competitiveness in other sectors of the economy.
In a report on the competitiveness of Europe’s ICT markets, Booz-Allen and Hamilton argue that it is the stated goal of most governments to encourage vibrant indigenous ICT industries as a source of economic growth, quality employment and broader innovation. Market positioning, efficiency of production, quality of skills and a context for innovation are important for the European ICT industry irrespective of who owns the ICT companies based in Europe. The authors claim that unless Europe addresses these issues, jobs and other benefits of the ICT industry are inexorably doomed to move out of Europe. The report concludes: "the competitiveness of Europe’s ICT industry and markets will determine the future competitiveness of Europe" [ 20].
However, if this statement is true, it may well be related to the specific sector-related growth trend of the 1995-2000 period. While the trajectory of the European "Tigers" cannot be reduced to a mere "industrial" story a view that would dramatically oversimplify their effective development the long-term sustainability of their winning positions should be assessed from two perspectives:
- they occupy the positions of "first served" countries in an important even if provisionally stagnating sector of the economy. "Followers" should therefore assess the difficulty of challenging these positions when they consider their strategy.
- they may have developed a vibrant innovation capacity in ICT and other branches, reinvesting the benefits in a new cycle of value creation which makes them less dependent on the potential downturns of the ICT manufacturing industry.
In the 1990s, several factors combined to accelerate ICT diffusion and growth. Technological change, coupled with large price reductions, led to a surge in the use of digital technologies. With firms ready to exploit the opportunities offered by ICT, the liberalization of telecommunications and the growth of the Internet economy allowing for economies of scale and network effects brought new vigour and eagerness to investment in new technologies. In the U.S., business investment in computers and peripheral equipment, measured in real terms, jumped more than fourfold between 1995 and 1999. A rapid increase is also detectable in the EU, though not at the same pace as in the U.S.
Consequently, the assessment of IS successes and their transferability in time and space has to be put under the microscope. The burst of the "new economy" and the global economic downturn have strongly reduced the vigour of ICT markets and leave less space for new challengers. It is thus quite possible that times have changed for national Information Society projects relying strongly on the building block of ICT manufacturing industries growth. This question has a direct bearing on the transferability of the observed success and failure factors to the context of the CCs and, more specifically, to the support given to their ICT manufacturing industries.
5. Future "Tigers" in the candidate countries
To what degree are "Tiger" scenarios possible for CCs? Do their ICT industries show signs of a potential "Tiger" renaissance or not?
Identifying potential "Tigers"
The ICT manufacturing production value generated by the CCs is proportionally small as compared to world or EU15 production. Considering the dramatic effects of the transition period generally in the early 1990’s and the consequent collapse of most of their ICT industries, this cannot be seen as a surprise. Since then, strong FDI flows and the arrival of most, if not all, major ICT multinationals in these countries have given local industry a second chance and increased competencies. Nevertheless, candidate country production today does appears to have little effect on the position of Europe, as an Enlarged Europe, in the global ICT production market. Production by the candidate countries only accounts for 1.2 percent of the global market. EU25+ expands the EU15 production value by only 5.9 percent. The scale of the change is thus of little significance.
A look at the country shares ( Table 2) is more interesting. Hungary leads with nearly half the total production value in ICT manufacturing in the CCs. It generates 73 percent of the total electronic data processing (EDP) equipment production value. It also leads in consumer electronics (CE) and in components, with 39 percent and 32 percent respectively of total candidate country production value. Poland ranks second with around one fifth of the total ICT manufacturing production value in CCs. Turkey is third with a slightly smaller share than Poland. The Czech Republic comes fourth with a share of about one tenth of the total candidate country production value.
Table 2: Candidate country domestic production in each ICT segment as share of total candidate country production in ICT manufacturing 1998 [ 21].
EDP Office equip. Control and Instr. Med and Ind Radio com, mobiles, radars Telecommunications Consumers electronics Components Total Bulgaria 0.1% 6.8% 1.0% 0.6% 0.4% 0.6% 0.8% 1.2% 0.7% Romania 1.5% 10% 11% 12% 3.2% 9.1% 1.7% 2.2% 3.9% Slovenia 1.3% 6.8% 10% 4% 4.1% 7.9% 2% 5.2% 3.9% Slovakia 3.3% 12% 4.4% 17% 11% 6.1% 2% 3.7% 4.6% Czech Republic 4.4% 29% 21% 22% 18% 8.5% 3.2% 18% 10% Turkey 7.3% 21% 3.3% 15% 21% 26% 32% 12% 18% Poland 9.1% 13% 32% 10% 27% 35% 19% 25% 21% Hungary 73% 0.9% 16% 19% 16% 8% 39% 32% 38% Candidate countries 100% 100% 100% 100% 100% 100% 100% 100% 100% CC/World 1.0% 0.6% 1.6% 1.4% 0.7% 3.9% 4.2% 0.7% 1.2%
Poland and Turkey’s high ranking can be attributed to the fact that they are larger than most of the CCs [ 22]. Hungary and the Czech Republic’s ranking, however, can be attributed to a form of ICT specialization, which echoes that of some EU15 Member States such as Ireland, Sweden and Finland. Further data should show whether these similarities are more than superficial.
Hungary, Poland, the Czech Republic and Turkey contribute 80 percent of the total candidate country production value in ICT manufacturing. In each of three major segments consumer electronics, EDP and components they generate as a group 93.2 percent, 93.8 percent and 87 percent respectively of total production value. Each of these countries specializes in particular areas:
- Hungary in EDP and secondly, in consumer electronics;
- Poland and Turkey in consumer electronics and secondly, in telecoms equipment; and,
- the Czech Republic in components, and secondly in control and instrumentation equipment.
Assessing the potential "Tigers"
These countries particularly Hungary and the Czech Republic show high growth rates, and declining unemployment and emigration. They usually score high on FDI flows, but rather weakly on R&D spending [ 23]. As regards these indicators, these countries can be assessed as fairly classic examples of "Tigers".
Hungary is performing particularly well, and its ICT industry is quite exclusively export-oriented. It is the only country showing an overall positive trade balance on ICT goods.
Nevertheless, a closer look at the ICT manufacturing industry in these countries shows specific weaknesses which may affect the health of their development in the mid-term.
Hungary, Poland, the Czech Republic and Turkey have the following problems in common:
- Dependency: The development of a local ICT manufacturing capacity, over the last few years has been highly dependent on external factors such as fluctuating FDI flows and their relation to incentive policies. In addition, foreign firms design their strategies in an ultra-competitive environment where relocation of activity may not be seen as an obstacle. Strong competition from other European and non-European countries, access-to-market based competition for plant and R&D centres, and the strong dependency of export-oriented industries on overall economic health, all contribute to this problem.
- There is an observable shift in production specialization towards lower-value ICT manufacturing such as consumer electronics (which represent today less than 10 percent of total world production value) or even components. This goes with a general shift towards assembling activities with low added value and little accompanying knowledge intensive activity (R&D for example). This is partly due to a focus on cost-based competition strategies rather than knowledge-based ones.
- In all these countries with the exception of Hungary the overall trade balance on ICT goods is negative. Even though these countries have a stronger ICT manufacturing industry than other CCs, their economy has to absorb the effects of a much larger demand. Poland and the Czech Republic show negative annual trade balances of approximately two billion Euro and one billion Euro respectively.
- Last but not least, it may well be that these ICT manufacturing strategies will be sensitive to the impact of accession itself. While the single market rules will boost export capabilities as doing business becomes logistically easier, it may well be that some facets of today’s policies will be subject to scrutiny under the rules of fair competition. Excessively generous incentive policies, for example, may be cut back.
When considering these factors and observing recent company decisions [ 24] in such countries, it seems fair to conclude that developing "classical" tiger strategies by encouraging foreign or domestic companies to invest in ICT manufacturing and grow, may be a mistake today. While the 1990’s were rewarding years for such strategies, the position today of western European "Tigers" Ireland, Finland, Sweden is weakened by the market downturn and the difficulties in the telecom sector. The timing may thus play against new candidates repeating such scenarios.
Additionally, CCs may still lack some of the essential ingredients that have made some west European countries’ ICT industries so successful. These ingredients are a committed and strongly supportive policy focus, institutional creativity allowing the necessary consensus (about targets) and decision building (about actions to be taken) across a broad range of partners, and a wide diversity of solid financing tools able to support the creation (and possible failure) of a multiplicity of initiatives and players of various sizes.
There is nevertheless room for an ICT industry in CCs. As already stressed in Section 2. The specific context of candidate countries, some parts of the ICT industry, like software supply, can clearly be competitive on a global scale. Such activity depends more on skills and human resources than on hard core plants and machines that can be moved from one country to another. The development towards a market economy has inspired individual entrepreneurship which has driven economic activity, as a result of which many successful businesses have developed in an environment of uncertainty and risk, unattractive for foreign investment. Domestic software firms in many countries have shown themselves to be highly competent and many of them provide successful services to U.S. and EU companies in ICT design, testing, maintenance or support. For example, software firms in Bulgaria, Poland and Romania have specialised in the development of fully integrated systems, database applications, CAD/CAM software and expert systems. Some of the CCs are already strong players and have started supplying on a global scale. As the software industry is mainly 'brain' driven, the future looks promising. First, their historical ICT R&D potential, and their highly qualified researchers have encouraged multinational companies (IBM, Nokia, Xerox, Ericsson) to establish R&D centres. In addition, international benchmarking indicators [ 25] give some of the CCs, such as Hungary, Estonia, Czech Republic and Slovak Republic, a good ranking compared to EU countries, and show a good stock of ICT labour in Rumania, Bulgaria and the Baltic countries.
In order to benefit from that local expertise, many foreign companies have invested in software houses (e.g. in Estonia, Bulgaria and Hungary) or have outsourced their work, taking advantage of the high quality and low prices in computer software markets in the CEEC. Estonian IT companies, for example, are becoming more and more integrated into the supply chains of their Nordic counterparts thus getting leading edge know-how and project management expertise. Estonia, with its well-educated population and government emphasis on ICT development, is considered to be an 'excellent test market' for new technologies [ 26]. In Latvia, however, despite the availability of good specialists, insufficient government support and access to venture capital limit the competitiveness of IT companies. Other drawbacks are the lack of marketing skills in many companies and the mismatch between university training and practice .
Software services represent one of the fastest growing sectors of the IT market in the CCs. There has been particularly strong growth in the market for packaged software, such as PC applications software, enterprise resource planning applications and application tools for database development and management. Most growth in the software and services sector derives from large-scale projects in banking, financial services, government administration, telecommunications and industry. Many domestic software companies have exploited their local knowledge of customers and the local language as a competitive asset. Local firms play an essential role as system integrators, value-added service providers, software developers and training centres, and thus dominate the segment for computer-connected services such as installation, implementation and customer training [ 28]. They are often ahead of foreign companies in the local market in areas like company management, financial accounting software, banking software and software for SMEs.
The ICT manufacturing industry could also come up with local solutions to specific domestic needs. Some issues raised by the implementation of the Acquis Communautaire, such as Universal Service and Internet access, may well serve as catalysts for domestic R&D and procurement. This also could be the basis for the build up of a domestic ICT manufacturing industry, oriented towards export (i.e. exporting local solutions to similar transition and developing economies).
To sum up: There are chances for (some) CCs to build up strong ICT industries, however these will mainly be in the software sector. However, the degree to which these will be strong enough to generate Tiger dynamics remains very questionable.
6. Conclusions: Shifting the focus
If we link the analysis of the IS state-of-play in the CCs (Section 2. The specific context of candidate countries) to the analysis of what makes a potential "Tiger" (Section 3. Building an IS: Lessons to be learnt from some EU15 experiences) we have to conclude that there is no simple way forward. Moreover, the factors that encouraged successful IS development in some EU15 countries and regions are almost impossible to repeat in the CCs.
This leads us to some key conclusions, centred on the need for a shift of focus from Information Society technologies to the development of a Knowledge-based society for the CCs:
(a) Emulating or learning
While the example of some Western European countries could be seen as showing the way forward, the simple emulation of these "best practices" is seen as less and less relevant for CCs. In particular, Information Society development should not be seen exclusively as targeted industrial development around the ICT sector itself. While this was possible for the "Tiger" countries of the EU15 during the last decade, today’s economic conditions the burst of the speculative bubble around the new economy, and the overall downturn of the global economy no longer seem to favour such scenarios.
Furthermore, in a strongly competitive and global industry, it is obvious that not everybody can be a major player. Current market developments are making the future of the ICT industry, even in EU15 countries or regions, uncertain.
(b) Bread or broadband?
CCs today confront, and will continue to confront, difficult choices between "Bread and/or broadband". Only policies offering a compromise solution to this dilemma by seeking growth and at the same time, attending to welfare and quality of life issues will be politically sustainable. Technology will be considered as unaffordable unless it can be clearly seen as contributing to the country’s well-being. The strong disparities that accompany the Enlargement process at European level, and the potentially complex digital divide that may derive from these disparities illustrates this dilemma. The key question is how best to put IS policy strategies at the service of social welfare development, while, at the same time, optimizing a country’s resources and economic output.
(c) Doomed to compliance
The implementation of the Enlargement process carries financial and political burdens. Compliance to the Acquis Communautaire offers the virtues of effective harmonization, levelling the playing field so that the market economy can prosper. For the Information Society, it has the additional advantage of offering stability and technological neutrality. Nevertheless, it also raises huge (financial) challenges, which might distract from other priorities and could undermine many of the upcoming decisions. Maximising the chances of converting Acquis compliance into opportunities may be the most productive way forward.
(d) A need- and user-defined societal project
In this context, Information Society strategies are expected to be targeted as a need-defined societal project. The development of a vision statement and its translation into goals and means will be deeply rooted in a context-related analysis of the conditions (strengths and weaknesses) of a country or a region. Considerable variations in these conditions and needs, both between the CCs themselves, and with EU15 countries, are expected. This will continue to be the case even when the CCS are subject to the rules of the Single Market and the Acquis Communautaire after joining the EU.
Information Society strategies should not be reduced to the exclusive creation of, or support to, ICT industry clusters. Though an industrial policy focused on services rather than manufacturing is still necessary, this should complement a broader strategy encompassing targets such as the general modernisation of existing economic strengths, or education, social welfare and governance. There is also a need to co-ordinate and ensure consistency between ICT policy strategies and education, employment, administration policy strategies, and development plans at different national and regional levels.
Such strategies must be driven, from their conception to their implementation, by the needs of ICT users, be they corporate or civil. EU15 experience has taught that institutional settings must be innovative enough to allow these strategies to develop and that, depending on each specific context, there is a role to play for a variety of actors from national politicians, industrialists, unions, to local NGOs.
(e) Targeting the knowledge-based society
Information Society strategies should be integrated into the broader development of a knowledge-based society. Thus ICTs would be seen much more as enablers for economic, political, social and intellectual growth than goals in themselves.
The concept of a knowledge-based society is still under debate and it has also been contaminated by the rhetoric of "new economy" and its subsequent downturn. It offers, nonetheless, a challenging shift of focus for debate, which, once matured, could be enshrined in pragmatic down-to-earth decisions and actions. For example, from an economic perspective, the Knowledge-based Society concept allows us to strike the right (and evolving) balance between cost-based competition (low wages, incentives, low added value activities) and knowledge-based competition (high qualifications, R&D, design and high end and upstream activities). It would also allow us to balance the use of knowledge as a competitive advantage (for the few) with its use as a common resource to be for the benefit of all.
About the Authors
Marc Bogdanowicz has a Social Sciences background. Before joining IPTS in April 2000, he worked as a senior researcher in two successive university departments with continuous participation in European activities, networks and observatories. Since 2001, Marc Bogdanowicz coordinates an "ICT and Enlargement" cluster of research activities as part of the IPTS prospective research actions on ICT ( http://fiste.jrc.es/).
Direct comments about this paper to M.Bogdanowicz@jrc.es and email@example.com.
J.C. Burgelman is project leader at the ICT unit of the JRC-IPTS, (on leave from his position as professor of communication technology policy at the Free University of Brussels). He has degrees in social sciences (BA, PhD) and in science and technology policy (MA) from the Free University of Brussels. He directed at the VUB the research centre Studies on Media, Information and Telecommunications which is a centre of excellence in Belgian Research.
His main research activities concern the macro sociological (welfare state) and economic impacts (knowledge based economy) of information society technologies in relation to technological foresight (convergence of platforms, innovation dynamics etc.) and innovation policies.
His latest books (as editor) are Beyond competition: Broadening the scope of telecommunication policy (Brussels); Communication, citizenship and social policy: Rethinking the limits of the welfare state (Boulder), and E-merging media (forthcoming, Berlin).
Clara Centeno has degrees in Telecommunications Engineering and Business Administration. She worked for 13 years in electronic payments business, systems, security, technology and regulatory aspects across Europe, providing independent management advice as well as solutions to financial institutions and national and international payment service providers. Her work largely focused on new technology areas namely debit, credit and electronic purse payment tools, smart cards, Pay-iTV, e-commerce, mobile, multi-application platforms and fraud prediction and detection. Since 2001, she has been working at IPTS carrying out prospective research on ICT policy related areas, such as Internet payments, security and consumer trust, PKI and digital signatures, Internet banking, cyber-security (including skills and training needs, the future of identity, identity management systems, security and privacy balance), and foresight on Information Society technologies in the enlarged EU.
Elisaveta Gourova has degrees in Electronics and Automatics Engineering (MSc) and Electrical Engineering (PhD) from the Technical University of Sofia. She formed part of the IPTS-JRC team working on the Enlargement (Futures) Project from 2000 to 2003. During this time, she made a considerable contribution to research on Information Society development in the candidate countries. She co-authored panel reports on information and communication technologies and on technology, knowledge and learning. She also wrote a report providing insight into the skills of professionals and the job availability in the ICT sector in the candidate countries.
Gérard Carat holds an MBA from ENST (Ecole Nationale Superieure des Télécommunications, France), an MA in American Literature, and a BA in History. Before joining the ICT Unit at IPTS in 1998, he worked at DG Information Society (part of the European Commission) in the team of the Advisor to the Director General on Economic and Strategy Aspects, Analysis and Forecasts, where he focused on market analysis of the telecoms and multimedia sector. Before this, he worked as a consultant (1993-1995) and with British Telecom (1992).
List of experts that contributed to the research :
Ms. Effie Amanatidou, Atlantis Consulting S.A., Greece Mr. Attila Bartha, ICEG European Centre, Hungary Mr. Jaro Berce, Government Office for EU Affairs, State Undersecretary, Slovenia Mr. Andries Brandsma, European Commission, IPTS, TECS Unit Ms. Jennifer Cassingena Harper, Malta Council for Science and Technology, Malta Mr. Antanas Cenys, Vilnius Technical University, Information Systems Department, Lithuania Mr. Vladimir Cermak, EEIP, Czech Republic Mr. Bernard Clements, European Commission, IPTS, ICT Unit Ms. Dinka Dinkova, ARC Fund, Program Director, Bulgaria Mr. Tibor Dory, European Commission, IPTS, Futures Project Mr. Peter Druga, PD Consulting, Slovakia Mr. Theo Dunnewijk, Merit-Infonomics, Netherlands Ms. Umit Efendioglu, International Labour Office (ILO), Employment Strategy Department Mr. Gustavo Fahrenkrog, European Commission, IPTS, TECS Unit Mr. Roman Galar, Technical University Wroclaw, Institute of Engineering Cybernetics, Poland Mrs. Katalin Gara-Nagy, European Commission, IPTS, EIPPCB Mr. Blaz Golob, European Commission, IPTS, TECS Unit Mr. Tero Hirvilammi, European Commission, Directorate General Information Society Ms. Renata Anna Jaksa, ICEG European Centre, Hungary Mr. Tarmo Kalvet, Praxis Center for Policy Studies, Estonia Mr. Martin Kenney, Department of Human and Community development, UCLA, U.S. Mr. Jan Kozlowski, European Commission, IPTS, TECS Unit Mr. Terry Landers, CIRCA Group Europe Ltd., Ireland Mr. Jeremy Millard, Danish Technological Institute, Denmark Ms. Rukiye Ozcivelek, Tubitak Bilten, Turkey Mr. Adrian Pascu, Ministry of Research and Education, Romania Mrs. Corina Pascu, European Commission, IPTS, ICT Unit Ms. Lidia Pola, European Commission DG Employment Ms. Klara Toth, Toth & Partner Consulting Ltd, Hungary Mr. Ilkka Tuomi, European Commission, IPTS, ICT Unit Ms. Petra Wagner, ARC, Austria Mr. Arnd Weber, Forschungszentrum Karlsruhe, ITAS, Germany Dr. Uta Wehn de Montalvo, TNO-STB, Netherlands Mr. Haluk Zontul, Tubitak Bilten, Turkey
The authors of this article do work at the Institute for Prospective Technological Studies of the Joint Research Centre Directorate General of the European Commission. The views expressed in this article are the authors’ and do not necessarily reflect those of the European Commission.
1. At the end of 2002, negotiations were concluded with Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia. After ratification these countries will join the EU on 1 May 2004. Detailed roadmaps have been agreed for Bulgaria and Romania, which offer them the perspective of membership from 2007 and the prospect has been established of starting Turkey’s accession negotiations without delay after December 2004, if it fulfils the Copenhagen political criteria.
2. This section is mainly based upon: Gourova, Burgelman, Bogdanowicz and Herrmann, 2001; Bogdanowicz, Fahrenkrog and Golob, 2002; Burgelman, Gourova and Bogdanowicz, 2002; Bogdanowicz, 2003; and, Burgelman, Gourova and Bogdanowicz, 2003.
3. This quite holistic approach was first introduced by Mansell and Wehn (editors), 1998.
4. Data from surveys carried out by Baltic Media Facts Ltd., accessible at http://www.bmf.ee.
5. Data from OECD accessible at http://www.oecd.org/dsti/sti/it/cm.
6. Regions are based on the European Nomenclature of Statistical Territorial Units (NUTS). Regional borders are determined by the different sizes of countries and administrative divisions, which developed in the course of history. As a result, the regional units may differ in area and population.
7. Such as for example above 50 percent unemployment rates among the 15-24 years old.
8. With the strong exception of Turkey and slightly better figures for Malta.
9. Data from World Development Indicators, accessible at http://www.worldbank.org/data/wdi/.
10. This issue is particularly true for the 10 Central and Eastern European countries going through the transformation of their economy to a market economy.
11. An argument developed for example in "Analysis of the Bulgarian Technology Development" (2001), Working Paper, p. 110, http://www.ced.bg.
12. An argument developed for example in Tukisa (1999), "An important anniversary for the University of Latvia’s Mathematics and Informatics Institute," Baltic IT Review, volume 15, p. 11.
13. This section is mainly based on the case studies developed in Amanatidou and Damvakeraki, 2003; Landers, 2003; Nauwelaers and Wintjes, 2003; Wagner, Dachs and Ananos, 2003; Weber, 2003; and their Synthesis in: Bogdanowicz, Burgelman, Dunnewijk, Wintjes, Nauwelaerts, Weber, Dachs, Wagner, Ananos, Damvakeraki, Amanatidou and Landers, 2003.
14. The concept of "Tiger" countries was originally coined in earlier decades with the observable rapid development of a series of Asian countries such as Taiwan and South Korea. Interesting enough, the model of development here already was largely based on the strength of a manufacturing industry (automotive, consumer electronics, etc.). The word has been used again, in particular when referring to Ireland as the "Celtic Tiger" in: Ferreira and Vanhoudt, 2002. Catching the Celtic tiger by its tail: Unveiling the causes behind the growth success story. EIB Sector Papers. European Investment Bank. Draft.
15. These brief descriptions are based on executive summaries written by the authors of the cases studies and published in the Tigers Synthesis Report (See References at the end of this report): For Austria, Petra Wagner, Bernhard Dachs and Mar Ananos from ARCS; for Dresden, Arnd Weber from Forschungszentrum. Karlsruhe. The full case studies are also available.
16. The literature on regional innovation clusters shows that too much or too little competition between companies in a cluster may prevent growth of the cluster as a whole, due to the result of too much or too little diversity. The same holds for co-operation. See Cowan and Wintjes (1999) "Addressing the Creation, Operation and Exploitation of Localised Technological Change". Chapter 4.2 in: "Industrial District and Localized Technological Knowledge", Final Report to the European Union, DG XII. With respect to the role of cooperation and partnership in such network or cluster development we also refer to Granovetters’ statement on "the strength of weak ties", see Granovetter (1985) "Economic action and social structure: The problem of embeddedness," American Journal of Sociology, volume 91, number 3, pp. 481-510.
17. "Infoculture" is approximated in the case studies as the will and capacity of a population to spend time on rather symbolic activities such as reading and writing, cultural heritage, etc.
18. Some case studies mention the confrontation of those two types or pedagogic methods of education: "Yet Austria’s education system is also associated with a conservative academic tradition which is more "answer" than "question"-oriented (...). This implies that it does not broadly and proactively promote creativity and/or research skills."
19. This section is mainly based on: Bogdanowicz (2003) The future of the ICT manufacturing industry in candidate countries. IPTS Internal Working Paper. IPTS, Sevilla, Spain.
20. Booz-Allen & Hamilton, 2000, p. 4.
21. Source of data: Reeds Electronics, 2002. Calculation IPTS. Countries are ranked by increasing production value. Data is processed for eight of the 13 candidate countries. Those eight countries represent approximately 95% of the population and of the GDP of the 13 candidate countries. Complementary data, mainly for the case of Estonia, would be valuable but should not transform radically the observed trends. Beyond 1998, 1999 data and forecasts on 2000 and 2001 confirm also the overall trends.
22. The size of ones’ country total economy impacts potentially these measurements. This bias simply underlines the strong positions of smaller countries, such as Hungary or the Czech Republic.
23. Gross Domestic Expenditure on R&D (GERD) is on average 0.84% of GDP in candidate countries as compared to 1.93 in EU15. Hungary, Poland and Turkey show even lower shares ranking from 0.6 (TK) to 0.8 (HU). Only the Czech Republic shows a 1.33% GERD (Data 2000).
24. Those decisions translate in observable re-investment and reallocation decisions in Asian countries, in particular China and/or investment in Consumer Electronics assembling.
25. Such as: Center for International Development, 2002. Network Readiness Index. Harvard University. U.S.; or the Brainbench, 2001. Global IT IQ Report. Brainbench. U.S. (http://www.brainbench.com).
26. CEEBIC, http://www.mac.doc.gov/eebic/countryr/estonia/market/EstTeleServices.htm.
27. Ernst & Young, "Opportunities for investment and co-operation in the IT Sector in Latvia: A study of the IT Services Sector," Baltic IT Review (1999), p. 15.
28. Weber et al., "The Wider Picture: Enlargement and Cohesion in Europe," Futures project Series No.15, IPTS, 1999.
29. The subject of this research the IS in candidate countries received up till now little or no academic attention. Also the most basic data on the ICT sector in the candidate countries are missing and what exists (from official or consultancy sources) raises serious heuristic problems with regard to comparability, accuracy and reliability. We therefore used very much what our networks of 'local' researchers and experts gave us networks the IPTS has been building since 1999. More in particular we relied very much on a process of validation which is specific for much of IPTS work and which is a result of its mission: Giving scientific independent policy support to the European Commission. This validation is done by bringing together key experts on the subject and from the candidate countries, confronting them with our research and achieving a consensus. Everything in this article has therefore been through this process. The list above is made out of the experts having participated directly to the discussions rooting the elaboration of this article. Several other feedback loops, organised in parallel for each of the discrete research reports, have mobilized possibly several hundred specialised experts in the various domains that have been discussed above.
E Amanatidou and T. Damvakeraki, 2003. Identifying factors of success and failure in European IST related national/regional developments. Case study for Greece. Sevilla, Spain: ESTO/Atlantis Research/IPTS-JRC, European Commission.
M. Bogdanowicz, G. Fahrenkrog and B. Golob, 2002. Employment and societal change. Enlargement Futures Report 02. Sevilla, Spain: IPTS-JRC, European Commission.
M. Bogdanowicz, 2003. The Future of the ICT manufacturing industry in candidate countries. IPTS Internal Working Paper. Sevilla, Spain: IPTS-JRC, European Commission.
M. Bogdanowicz, J.-C. Burgelman, T. Dunnewijk, R. Wintjes, C. Nauwelaerts, A. Weber, B. Dachs, P. Wagner, M. Ananos, T. Damvakeraki, E. Amanatidou and T. Landers, 2003. Identifying factors of success and failure in European IST-related national/regional development. Sevilla, Spain: IPTS-JRC, European Commission.
Booz-Allen & Hamilton, 2000, The competitiveness of Europe’s ICT markets. The crisis amidst the growth. The Hague: Netherlands Ministry of Economic Affairs.
J.-C. Burgelman, E. Gourova and M. Bogdanowicz, 2003. Building the information society in EU candidate countries: Such a long way ahead. In: A. Calabrese and C. Sparks (editors). Toward a political economy of culture: Capitalism and communication in the 21st century. Lanham, Md.: Rowman and Littlefield.
J.-C. Burgelman, E. Gourova and M. Bogdanowicz, 2002. Barriers and challenges in building an IS for all in the EU candidate countries. Beyond the digital divide: Reducing exclusion and fostering inclusion. Brussels, Belgium: VUB Press.
G. Carat, 2003. Mobile technologies and universal service in candidate countries. The case for 3G. IPTS Internal Working Paper. Sevilla, Spain: IPTS-JRC, European Commission.C. Centeno, 2003. Adoption of Internet services in the Enlarged European Union, Lessons from the Internet banking case. Sevilla, Spain: IPTS-JRC, European Commission.
T. Dunnewijk and R. Wintjes (editors), 2003. Identifying factors of success and failure in European IST-related national and regional developments Synthesis report. Sevilla, Spain: ESTO/MERIT/IPTS-JRC, European Commission.
European Commission, DG REGIO, 2000. The Second report on economic and social cohesion. Brussels, Belgium: European Commission.
European Commission, DG INFSO, 2002. eEurope+ progress report. Brussels, Belgium: European Commission.
European Training Foundation, 2000. Review of progress in vocational education and training reform of the candidate countries for accession to the EU in the light of developments in European policy on vocational training. Torino, Italy: European Training Foundation.
Eurostat, 2001. "IS statistics," Statistics in focus, number 27. Luxembourg: European Commission.
Eurostat, 2001. "European Union FDI with candidate countries: An overview," Statistics in focus, number 26. Luxembourg: European Commission.
E. Gourova, 2003. Insight into ICT professional skills and jobs in the Candidate Countries. Sevilla, Spain: IPTS-JRC, European Commission.
E. Gourova, J.-C. Burgelman, M. Bogdanowicz and C. Herrmann, 2001. ICT Panel Report. Enlargement Futures Report Series. Sevilla, Spain: IPTS-JRC, European Commission.
E. Gourova, K. Ducatel, J. Gavigan and F. Scapolo, 2001. Technology, knowledge and learning. Enlargement Futures Report Series 03. Sevilla, Spain: IPTS-JRC, European Commission.
P. Havlik, M. Landesmann and R. Stehrer, 2001. "Competitiveness of industry in CEE candidate countries," WIIW Research Report, number 278. Vienna, Austria: Vienna Institute for International Economic Studies.
International Telecommunications Union (ITU), 2001a. ITU Statistical Yearbook, at http://www.itu.int/ITU-D/ict/publications/yb/index.html.
International Telecommunications Union (ITU), 2001b. Internet in a transition economy: Hungary case study, at http://www.itu.int/ITU-D/ict/cs/hungary/material/hungary.pdf.
S. Kubielas and I. Yegorov, 2000. "Strategic alliances and technology transfer in Central and Eastern Europe," Science and Public Policy, volume 27, number 4 (August), pp. 265-274.
T. Landers, 2003. Identifying factors of success and failure in European IST related national/regional developments. Case study for Ireland. Sevilla, Spain: ESTO/CIRCA Group/IPTS-JRC, European Commission.
R.Mansell and U. Wehn (editors), 1998. Knowledge societies: Information technology and sustainable development. Oxford: Published for and on behalf of the United Nations by Oxford University Press.
C. Nauwelaers and R. Wintjes, 2003. Identifying factors of success and failure in European IST-related national/regional developments: The case of Flanders. Sevilla, Spain: ESTO/MERIT/IPTS-JRC, European Commission.
OECD, 2001. International mobility of the highly-skilled. Paris, France: OECD, at http://www1.oecd.org/publications/e-book/9202011E.PDF.
M. Ambler, V. Jones, P. Gacek, G. Stringa and M. Horvath 2000. The strategic impact of EU enlargement: The business view. PricewaterhouseCoopers, at http://www.pwcglobal.com/.
Tubitak-Bilten, 2001. Bilgi Teknolojileri Yayginlik ve Kullanim Arastirmasi 2000. Ankara: Tubitak-Bilten.
P. Wagner, B. Dachs and M. Ananos, 2003. Identifying factors of success and failure in European IST-related national/regional developments: The case of Austria. Sevilla, Spain: ESTO/ARC-S/IPTS-JRC, European Commission.
A. Weber, 2003. Semiconductors, skills, and the states: The region of Dresden. Sevilla, Spain: ESTO/ITAS Forschungszentrum/IPTS-JRC, European Commission.
Paper received 15 September 2003; revised 18 September 2003; accepted 22 September 2003.
Copyright ©2003, First Monday
Copyright ©2003, Marc Bogdanowicz, Jean-Claude Burgelman, Clara Centeno, Elisaveta Gourova, and Gérard Carat
Factors of regional/national success in Information Society developments: Information Society strategies for candidate countries by Marc Bogdanowicz, Jean-Claude Burgelman, Clara Centeno, Elisaveta Gourova, and Gérard Carat
First Monday, volume 8, number 10 (October 2003),