ICEG E uropean Center

ICEG EICEG European uropean Center Center

Factors and Impacts in the Information Society:Analysis of the New Member States and Associated

Candidate Countries

Pál Gáspár Pál Gáspár

Presentation at the conference organized by ICEG European Center and Presentation at the conference organized by ICEG European Center and Hungarian Economics Association, Budapest, 18 October, 2004Hungarian Economics Association, Budapest, 18 October, 2004

ICEG European Center, www.icegec.org

Structure of Presentation

NMS and ACC-3 countries: Comparative Review of Lisbon Indicators

IST Level of Development ICT Level of Development Factors Affecting IST and ICT Developments Open Issues

I. NMS and ACC-3 countries: Comparative Review of Lisbon Indicators


Structural Indicators: GDP per capita

GDP per capita, 2003, PPS, EU-15=100

0

20

40

60

80

100

120

TR RO BG LV PL LT ACC-13

EE SK NMS HU CZ MT SI CY EU-15


Structural Indicators: Labour Productivity

Labour Productivity, 2003, EU-15=100

0

20

40

60

80

100

120

BG RO TR LV LT EE PL ACC-13 NMS SK CZ HU SI CY MT EU-15


Structural Indicators: Employment Rates

Employment rates, %

0

10

20

30

40

50

60

70

80

TR PL BG MT HU RO SK ACC-13

NMS LV LT EE SI EU-15 CZ CY


Structural Indicators: Spending on Human Resources

Spending on Human Resources/GDP

01234

5678

RO TR SI BG CZ HU SK ACC-13

MT EU-15

PL NMS CY LV LT EE


Structural Indicators: R+D Expenditures

R+D expenditures (in % of GDP)

0

0,5

1

1,5

2

2,5

CY RO LV BG PL EE TR LT SK ACC-13 HU CZ SI EU-15

II. IST Level of Development


IST Level of Development: ICT Market Value

• Significant gap between NMS and older Member States,

• Levels linked to level of economic development,

• Differences in the € or in GDP based ranking are significant among NMS (income and price convergence, PPS measurement)

• Recently changes in ranking as fast growth rates and real increase of the ICT market values in some countries (Poland, Slovakia), while slight decline in others

ICT Market value in Euro, 2003

0

200

400

600

800

1000

1200

1400

1600

RO TR BG LT PL LV SK EE HU CZ MA SL EU-15


IST Level of Development: Access Path and Fixed Lines

• Smaller gaps between NMS and EU-15

• Structural factors explaining part of the differences

• Different trends in mobile and fixed penetration rates in individual NMS and ACC-3 countries

• Significant gaps among the NMS and ACC-3 in stock and especially flow figures

Access rates and fixed lines

0

20

40

60

80

100

120

140

160

RO LV BG PL ACC13 LT SK EE HU MT SI CZ EU15

Access rates

Fixed lines


IST Level of Development: PC availability

Number of PCs per 100 of population

0

5

10

15

20

25

30

35

40

BG TR RO ACC13 HU PL LT LV SK CZ EE MA CY SL EU15

Gaps in PC use high and have been recently growing

Strong correlation with income levels and three country groups

Besides incomes prices and affordability, policies and supply of IS services are the major explanatory factors

Dynamic picture differs strongly between NMS and ACC-3 with increasing gaps


IST Level of Development: Households online

Households online (%)

0

5

10

15

20

25

30

35

40

RO TR SK BG LT LV PL HU EE CZ CY MT SI

Low levels except Malta and Slovenia, and surprisingly low in NMS,

Income differences, access prices are important

Strong correlation between percentage of households online and the relative level of development

Strong correlation between the number of households online and the level of fixed line penetration rates


IST Level of Development: Access Costs

Dial up and PC costs in % of monthly household income

0

5

10

15

20

25

BG PL SK RO LT LV HU ACC13

EE CZ TR SL MT CY

0

50

100

150

200

250

300

350

400

450

20 hours peak dial-up costs

PC

Cyprus, Malta and Slovenia are the leading countries as the relative costs of Internet access, PC purchase in PPS adjusted level and relative to households income is the lowest,

Regulation, market structure, income differences, income growth explain mainly the differences,

There is also a fairly strong correlation between Internet penetration rates and price of

access.


IST Level of Development: Broadband penetration

Broadband penetration (%)

0

1

2

3

4

5

6

7

8

9

LI PO RO SK BG CZ LA HU SLO EE EU-15

Much lower shares in NMS and ACC-3 in broadband

Broadband technology outdated Government policy, private

sector spending, public funding, technological constraints, price levels explain the gaps between NMS and EU-15

Recent recognition of gaps and accelerated developments, national broadband strategies


IST Level of Development: Digital Divide Index

Digital Divide Index

0

10

20

30

40

50

60

EU-15 EE CZ PO SK SLO LI HU LA BG RO

Higher but not significantly worse index for NMS and ACC-3 than for the EU-15

Gender gap is less, but income and education gaps are more important determinants of the Index

Digital divide in these countries comes also with bigger social and regional divides


IST Level of Development: Conclusions

Considerable and indicator specific gaps between NMS and ACC-3 and the EU-15 in IS indicators

Gaps in most cases widening, sometimes fast: PC use, broadband access, ICT market value and households online show it most ,

Major areas of concern: low level of PC use in households, high

access prices, the low share of broadband access, Quantitative differences hide also qualitative ones between NMS

and ACC-3 and the EU-15, Significant differences exist in use of information and

communication technologies by the business, household and public sectors


IST Level of Development: Conclusions

As expected close links between the indicators: e.g. access prices, and PC purchase positively correlated

with Internet penetration rates While stock figures reflect significant and sometimes

widening gaps, recent flow data are more favourable in NMS and ACC-3,

There are significant differences between the individual NMS and ACC-3 countries

ICT Level of Development


ICT Level of Development: ICT Sector in Production

ICT sector in GDP

0

5

10

15

20

25

LA PL SK RO LI CZ EU.15 HU BG SLO EE MA

• Contribution to GDP between 1,3% and 22,5%,

• Malta, Slovenia, Hungary are the leading producers,

• Three types of ICT sectors depending on the destination of sales and domestic market size


ICT Level of Development: ICT Sector in Employment

ICT sector in employment

0

1

2

3

4

5

6

7

8

PL LI RO BG SK MA EE CZ HU LA SLO EU-15

• Contribution varies between 0,3% and 5 % of the total labour force,

• Low level of ICT output and high productivity explain the levels below production


ICT Level of Development: ICT Sector in Exports

ICT sectors in exports

0

10

20

30

40

50

LA BG RO SK PL LI CZ SLO EE HU MA

• Very high differences due to different market size and openness level,

• Re-exporting and assembling with gradually increasing value added content

• Vulnerability to shocks, re-deployment and cost competition.


ICT Level of Development: ICT Sector Trade Balance

ICT trade balance/GDP

-4

-3

-2

-1

0

1

2

3

4

SK LV CY RO LT BG SL PL TR HU CZ EE MA

• Deficits prevail with the exception of Malta and Estonia

• Different reasons: either temporary due to product cycle or permanent due to low domestic production and growing consumption


ICT Level of Development: Conclusions

Bigger polarisation in ICT indicators than IST indicators among the NMS and ACC-3 countries

The value and the market share of ICT sector in NMS and ACC-3 is lower than in EU countries and EU-15

ICT output in total is below EU levels except for some countries with a strong FDI penetration and production in these sectors

ICT related spending and consumption is lower both at households and enterprises level than in the older Member States

The future of ICT sector is very country-dependent

IV. Factors Affecting IST and ICT Developments


Factors Affecting IS Developments

I. Economic Growth and Real Convergence Income level and its growth strongly influence the nature and speed of

the spread of information society ICT spending and economic growth closely linked,

Affecting disposable incomes and private investments,

II. Changing pattern of household consumption: Significant increase in real private consumption Consumption dynamics driven besides income by composition effects Changes in real private consumption considering price developments,


Factors Affecting IS Developments

III. Sustainability of public finances and public sector reform

Lack of public funding of IS developments, Fiscal imbalances constrain IS funding, Lack of public finance reform and bad composition of public

expenditures,

IV. Economic, social and regional disparities Widening regional disparities, Social divides: income distribution, long-term unemployment,

employment levels, Differences in access to IS services and goods,


Factors Affecting ICT Developments

Restructuring: expanding service sector and reindustrialisation with remaining structural legacies

FDI and the economic openness of the countries Financial sector development and its financing capacity

for the ICT sector Privatisation and regulation Educational levels and supply of human capital

V. Open Issues


Open Issues Raised by the Research

ICT, productivity and competitiveness Policy bottlenecks in developing a well

functioning information society ICT and IST Developments and the Lisbon

IndicatorsICT and Use of Structural Funds in the NMS

THANK YOU FOR YOUR ATTENTIONTHANK YOU FOR YOUR ATTENTION

PÁL GÁSPÁRPÁL GÁSPÁRDirectorDirector

14 Korompai Street 14 Korompai Street H-1124 BudapestH-1124 Budapest

Tel: +36-1-248-1160Tel: +36-1-248-1160Fax: +36-1-248-1161Fax: +36-1-248-1161

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