Skip to main content

Article Category

News

Article available in the folowing languages:

Report highlights importance of ICT take-up for productivity and competitiveness

Levels of productivity growth across Europe are heavily influenced by innovation and the take-up of information and communication technology (ICT), according to the 2003 edition of the European Commission's 'Competitiveness Report'. However, the report also states that Euro...

Levels of productivity growth across Europe are heavily influenced by innovation and the take-up of information and communication technology (ICT), according to the 2003 edition of the European Commission's 'Competitiveness Report'. However, the report also states that Europe has yet to realise the full productivity gains that ICT diffusion can bring. Among Member States, the contribution of ICT investment to the acceleration of European labour productivity during the 1990s was largest in Ireland, Finland and Sweden and smallest in Portugal, Spain and Germany. Among the larger countries, ICT played a large role in productivity growth only in the UK. At the level of individual companies, the report finds that firms that combine organisational improvements with investment in ICT tend to achieve high productivity growth. E-business applications, for example, which are used by most large firms in the EU, require not only investment in technology, but also organisational changes that impact profoundly on the working environment. Nevertheless, take-up of e-business applications by small and medium sized enterprises (SMEs), in particular, needs to be further encouraged, according to the report. Speaking on 28 November in Brussels, EU Enterprise and Information Society Commissioner Erkki Liikanen commented: 'Investment in ICT is clearly a critical enabler of productivity growth, and, for that matter, also of innovation. However [...] we should not focus on technology just for technology's sake. If we want to reap the productivity benefits of ICT, we need to invest, in parallel, in the reorganisation of companies and administrations, and in skills. This is a key element of a proper IT governance approach.' In its analysis of European regions, the report finds a positive correlation between productivity and R&D intensity, specialisation in high-tech activities and the number of students in higher education. Highly productive regions were also likely to have a well developed entrepreneurial culture with strong links between research undertaken in universities and innovation activity in business. High-tech clusters in areas such as biotechnology were found to confer productivity advantages through common access to knowledge and capital. Good connections to all major forms of transport, particularly international airports, and a modern telecommunications network were also found to be features of regions with a strong productivity performance. 'The common thread,' according to the report, 'appears to be the potential to connect the different economic actors - both in the physical sense through good transport and communication networks and in a more intangible way through a common vision among regional stakeholders as well as through collaboration between the academic and the business world.' The report also finds that while productivity growth disparities between various regions in the EU and accession countries are still significant, these differences are narrowing slowly.