Towards a more competitive European ICT ecosystem

Stuart N. Brotman (Faculty member at the Harvard Law School and The Brookings Institution) is currently working on a thorough comparison of the US – EU situation taking into account complete national ecosystems and not just networks or apps. Obviously he’s pursuing this in the tradition of Michael Porter’sCompetitive Advantage of Nations”. This means that focussing on network investment and quality – and of course improving conditions for rollout – is a necessary though not sufficient condition for a continent or country to be overall economically successful. What ultimately counts is the combination of ubiquitous high-quality and high-speed IP networks (“telecom networks”), microelectronics industry, Internet industry (Google, Facebook, etc.) and the content industry. The US combines this in a very successful way (even if the micro-electronics industry faced a down-turn), Korea’s economic success is based widely on smart combination of strong networks, a globally leading micro-electronics industry and gigantic industrial conglomerates. Sweden (with Ericsson) and Finland (with Nokia) are the most telling examples for successful and sustainable policies in this field in Europe; these policies laid the ground for the Nordic countries sustainable top rankings in the Network Readiness Index (NRI): http://www3.weforum.org/docs/GITR/2014/GITR_OverallRanking_2014.pdf. However the recent downturn of Nokia was detrimental to Finland’s industrial position.

A more recent contribution comes from Daron Acemoglu and James A. Robinsion: „Why Nations Fail“ (http://whynationsfail.com). Daron Acemoglu and James Robinson conclusively show that it is man-made political and economic institutions that underlie economic success (or the lack of it). Korea, to take just one of their fascinating examples, is a remarkably homogeneous nation, yet the people of North Korea are among the poorest on earth while their brothers and sisters in South Korea are among the richest. The south forged a society that created incentives, rewarded innovation, and allowed everyone to participate in economic opportunities. The economic success thus spurred was sustained because the government became accountable and responsive to citizens and the great mass of people. Sadly, the people of the north have endured decades of famine, political repression, and very different economic institutions—with no end in sight. The differences between the Koreas are due to the politics that created these completely different institutional trajectories.

These examples are an urgent wake-up call for European policy makers and the incoming European Commission: The lack of a coherent long-term industrial policy in Europe, covering the entire European ICT ecosystem led to a dramatic situation. Ten years ago Europe was the mobile envy with a strong telecom sector and its innovative vendors; now Europe is trailing on a global scale, 10.000s jobs are lost and urgent investments in future oriented infrastructure have not been made, because investors found better conditions outside of Europe. This cautionary tale represents a “mene tekel” for the incoming European Commission. If this “writing on the wall” is not read and understood properly by the European policy makers, the European ICT ecosystem will face a further decline, as the Korean example shows.