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Europe needs a Digital Single Market now

Europe needs a Digital Single Market now. Adds at least 500 billion Euros or 4% and to EU GDP by 2020. Solution for key European challenges: economic recovery, better labour markets and public services and a smarter, greener economy.

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Europe needs a Digital Single Market now

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  1. Europe needs a Digital Single Market now • Adds at least 500 billion Euros or 4% and to EU GDP by 2020. • Solution for key European challenges: economic recovery, better labour markets and public services and a smarter, greener economy. • Key driver for productivity and competitiveness, promoting growth and innovation. • Benefits consumers through low prices, better quality and more choices.

  2. How large could the impact of the digital economy be? Figure 5.2 shows GDP growth contribution from the expansion of the digital economy in EU Over the next ten years. In the best case, the effect is almost 8 percent and the net impact of an accelerated digital economy is 4 percent.

  3. Europe falling behind the US in creating digital companies of scale Excluding telecommunications, the digital economy in Europe has a handful of companies of scale. By contrast there are 66 digital companies within the 500 largest companies in the US. Where will needed growth come from? These are the conclusions of a study carried out by Richard Marsh of Verso Economics for the DSM project

  4. The Digital Single Market as the next step in European Integration

  5. Factors influencing the economic impact of the digital economy Digital Readiness e-skills, e-awareness, ICT equipment Digital Infrastructure Penetration, coverage, bandwidth Digital Content & Services Harmonisation, large markets, innovation Use of digital services e-government, e-commerce, ERP, e-health, e-learning, … Source: Copenhagen Economics (2010), ”The Economic Impact of a European Digital Single Market”, report prepared for the European Policy Centre (EPC), March 2010 ECONOMIC IMPACT

  6. Market size is good for innovation To illustrate this further we need to look at what characterises firms which deliver digital innovations. They can generally be characterised as: • Knowledge intensive • Large R&D investments • Very low marginal costs • Substantial network effects (value increases with number of users) • Substantial regulatory costs (each new market add a cost)

  7. Illustration of business model for innovative firm in US € Earnings pr. additional consumer Average cost pr. additional consumer in the US Number of consumers US Source: Copenhagen Economics (2010), ”The Economic Impact of a European Digital Single Market”, report prepared for the European Policy Centre (EPC), March 2010

  8. A fragmented market discourages innovation Illustration of business model for innovative firm in the EU € Earnings pr. additional consumer Average cost pr. additional consumer in EU Foregone earnings Number of consumers UK Germany France Italy Source: Copenhagen Economics (2010), ”The Economic Impact of a European Digital Single Market”, report prepared for the European Policy Centre (EPC), March 2010

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