What is the Digital Economy and Society Index, and what does it measure?
The Digital Economy and Society Index (DESI) is an annual report published by the European Commission that monitors the progress of EU Member States’ on digital. This report includes country profiles, which help Member States identify areas for priority action, and thematic chapters providing an EU-level analysis in the four principal policy areas, which group 33 indicators:
|1 Human capital||Internet user skills and advanced digital skills|
|2 Connectivity||Fixed broadband take-up, fixed broadband coverage, mobile broadband and broadband prices|
|3 Integration of digital technology||Business digitalisation and e-commerce|
|4 Digital public services||e-Government|
DESI 2021 has been adapted to reflect the Digital Decade Compass, which sets out Europe’s ambition on digital, laying out a vision for the digital transformation and concrete targets for 2030 in the four cardinal points: skills, infrastructures, digital transformation of businesses and public services.
The Path to the Digital Decade, the policy programme proposed on 15 September 2021, sets out a novel form of governance with Member States, through a mechanism of annual cooperation between EU institutions and the Member States to ensure they jointly achieve ambitions. With this, the monitoring of the Digital Decade targets will be assigned to DESI. As a result, DESI indicators are now structured around the 4 cardinal points of the Digital Decade Compass.
The DESI country reports incorporate a summary overview of the digital investments and reforms in the Recovery and Resilience Plans for the 22 plans that have already been approved by the Commission. The EU Member States have committed to spend at least 20% of their national endowments from the Recovery and Resilience Plan on digital and so far, Member States are meeting or largely exceeding this target.
What is the overall performance of EU Member States in digital according to this year’s DESI?
The most significant progress as compared to last year can be seen in Ireland and Denmark, followed by the Netherlands, Spain, Sweden and Finland. These countries also perform well above the EU DESI average, based on their scores in DESI 2021.
Main findings of DESI 2021 in the 4 areas
As part of the commitments put forward in the EU’s 2030 Digital Compass, the digital skills target aims for at least 80% of EU citizens to have basic digital skills by 2030.While 84% of people used the internet regularly in 2019, only 56% had at least basic digital skills in that same year. A large part of the EU population lacks digital skills, but there are country-specific differences: the Netherlands and Finland are the frontrunners in this area, while Bulgaria and Romania are lagging behind. Moreover, a rate of 56% of the population having digital skills is only a slight increase (two percentage points) since 2015, representing a yearly growth rate of only 0.9%. This growth rate needs to increase threefold to reach the 2030 target of 80%.
According to the Communication on the 2030 Digital Compass, the number of ICT specialists in the EU should reach at least 20 million by 2030, compared to 8.4 million in 2020 (corresponding to 4.3% of the labour force). Although there has been steady growth since 2013, an acceleration is needed to reach the target. Notable leaders in this category are Finland, with 7.6%, and Sweden, with 7.5% of the workforce respectively that have the highest proportion of ICT specialists in the labour force.
The 2030 Digital Compass also sets the target that gigabit networks should be available to all by 2030. According to the data from 2020, only 59% of households can benefit from fixed very high capacity network (VHCN) connectivity with the potential of offering gigabit connectivity. Rural VHCN also improved – from 22% in 2019 to 28% in 2020 – but a large gap between rural and national figures remains. Malta, Luxembourg, Denmark and Spain are the European leaders on total VHCN coverage (all with more than 90% of homes covered). By contrast, in Greece, less than 1 in 5 households have access to VHCN.
By 2030, the EU aims for all populated areas to have 5G coverage. As of mid-2020, commercial 5G network deployments started in 13 Member States, and coverage reached 14% at EU level. The Netherlands and Denmark are the most advanced countries in this area, with 80% coverage. A precondition for the commercial launch of 5G is the assignment of 5G spectrum in every country, and by 31 August 2021, 25 Member States had already assigned 5G spectrum in at least one of the three 5G pioneer bands.
Integration of digital technology
The aim of the EU’s Digital Compass is that, by 2030, at least 90% of small and medium-sized enterprises (SMEs) in the EU should use digital technologies at enterprise level. In 2020, only 60% of SMEs have adopted digital technologies. Denmark and Finland are already very close to the EU target with 88%, while Bulgaria and Romania are falling behind (33%).
The second target for the next ten years: at least 75% of companies should use advanced digital technologies such as Artificial Intelligence (AI), cloud and big data technologies by 2030. The DESI 2021 demonstrates that, while businesses are becoming more and more digitalised, the use of advanced digital technologies remains low; for example, only one in four companies use AI or cloud computing and 14% use big data. In this area, Finland and Sweden lead on the use of cloud, Malta and the Netherlands on big data, and Czechia and Austria on AI.
Digital public services
The Digital Compass sets the target that all key public services for citizens and businesses should be fully online by 2030. Such key services span a broad range from studying to, purchasing a car and to starting a business amongst other things.
The DESI monitors the online provision of public services by giving each Member State a score on whether or not it is possible to complete each step of key services completely online. Estonia, Denmark, Finland and Malta have the highest scores for digital public services in DESI, while Romania and Greece have the lowest.
In 2020, 64% of internet users interacted with public administration online, compared to 58% in 2015. The online availability of public services has grown steadily over the last decade, and accelerated greatly as a result of the COVID-19 pandemic, during which digital interaction became prevalent. A number of Member States are already close to this target, but progress is uneven across and within Member States, with services for citizens less likely to be available online compared to services for businesses.
How are the EU’s targets for the 2030 Digital Decade reflected in this year’s DESI, and will that change in coming years?
11 of the 33 DESI 2021 indicators measure the progress made towards reaching some of the Digital Compass targets. Going forward, DESI will be further aligned with the Digital Compass to ensure that all targets are considered in the report. As a part of the structured cooperation with Member States contained in the proposal on the Path to the Digital Decade’ policy programme, a monitoring system based on DESI would measure progress towards the 2030 targets, and it would be accompanied by an annual report on the ‘State of the Digital Decade’, in which the Commission will evaluate progress and provide recommendations for actions.
Digital Compass targets in DESI 2021 in relation to the four dimensions of the index
|DESI dimension||DESI indicators related to the Digital Compass targets||2030 Digital Decade target|
|1 Human capital||At least basic digital skills ICT specialists Female ICT specialists||ICT Specialists: 20 million & Gender convergence Basic Digital Skills: minimum 80% of population|
|2 Connectivity||Gigabit for everyone (Fixed very high capacity network coverage) 5G coverage||Connectivity: Gigabit for everyone, 5G everywhere Cutting edge semiconductors: double EU share in global production Data – Edge & Cloud: 10,000 climate neutral highly secure edge nodes Computing: first computer with quantum acceleration|
|3 Integration of digital technology||SMEs with a basic level of digital intensity AI Cloud Big data||Technology up-take: 75% of EU companies using Cloud/AI/Big Data Innovators: grow scale-ups & finance to double EU unicorns Late adopters: more than 90% of SMEs reach at least a basic level of digital intensity|
|4 Digital public services||Digital public services for citizens Digital public services for businesses||Key Public Services: 100% online e-Health: 100% of citizens having access to medical records Digital Identity: 80% of citizens using digital ID|
Are you publishing the International Digital Economy and Society Index (I-DESI) this year?
We are not publishing the I-DESI as this is published every second year only. The last I-DESI report was published in 2020.
Part II – DESI methodology
What are the sources of data?
The majority of DESI indicators come from Eurostat, the statistical office of the European Union. Some broadband indicators are collected by the services of the European Commission from the Member States through the Communications Committee. Other indicators, such as some e-government and broadband indicators, are based on data derived from studies prepared for the Commission. The full list of indicators, exact definitions and sources is available here.
Contributing data is also taken from the eGovernment Benchmark 2021, which surveys citizens in 36 European countries on their use of digital government services. The Commission is also publishing the 2021 women in digital scoreboard, which confirms that there is still a substantial gender gap in specialist digital skills. Only 19% of ICT specialists and about one third of science, technology, engineering and mathematics graduates are female.
Another relevant report published today is a survey on the contribution of ICT to the environmental sustainability actions of EU enterprises, which reveals that more than half of surveyed companies said that they use ICT solutions as a way of reducing their environmental footprint. The Commission is also publishing today studies on Mobile and Fixed Broadband Prices in Europe 2020, Broadband Coverage up to June 2020, and on national broadband plans.
How is the DESI score calculated?
To calculate a country’s overall score, the Commission gives a specific weighting to each set and subset of indicators. Weights are also assigned at the sub-dimension and individual indicator level. Compared to the previous edition of the report, mobile broadband has a higher weight, as 5G coverage is now included in the index. For the integration of digital technology dimension, a new sub-dimension has been added to report on the target on digital intensity. In addition, the weight of the digital technologies for businesses sub-dimension has been increased, as this sub-dimension includes 3 indicators measuring targets of the 2030 Digital Compass. The majority of individual indicators within each sub-dimension were considered of equal importance and therefore weighted equally within the respective sub-dimension. However, indicators measuring the targets of the 2030 Digital Compass were considered to have higher importance and they therefore have double weights within their sub-dimension. More details are available in the DESI methodological note.
Has anything changed in terms of methodology in comparison to the 2020 edition of DESI?
The structure of the DESI has been aligned with the four cardinal points of the Digital Compass, and the indicator list has been revised to include as many indicators that are proposed in the Digital Compass as possible.
Why do you no longer include the indicator on the ‘use of internet’ like you have in previous years?
The dimension on the use of internet has been dropped from the analysis this year as one of the key policy areas, as the structure of the DESI is being aligned to reflect that of the Digital Compass. Indicators that were reported in this dimension of the index, however, are still collected and published in the data visualisation tool.
Part III: Recovery and Resilience Facility (RRF) and DESI
How are the national RRF plans reflected in the analysis that you have published?
The DESI country reports analyse the performance of EU Member States based on the index, identify their key challenges, and then describe the most important digital policy initiatives per country. Given the scale and importance of the RRF, and the crucial role that this funding can play in addressing these challenges, the DESI country reports include a summary of the digital aspects of the national recovery and resilience plans, where these have been approved.
When will you publish information on the remaining EU Member States on the RRF?
Once the Commission completes the analysis of a national recovery and resilience plan, it publishes its assessment.
Amidst Strong Economic Rebound in Russia, Risks Stemming from COVID-19 and Inflation
Following a strong economic rebound in 2021, with 4.3 percent growth, Russia’s growth is expected to slow in 2022 and 2023, with a forecast of 2.4 percent and 1.8 percent growth, respectively, according to the World Bank’s latest Regular Economic Report for Russia (#46 in the series).
The Russian economy has now recovered to above its pre-pandemic peak, with growth driven by a strong rebound in consumer demand. In 2022, growth will be supported by continued strength in commodity markets, but will likely also be hampered by COVID-19 control measures and tighter interest rates.
Household consumption in the second quarter increased to more than 9 percent on the previous quarter (seasonally adjusted), showing the fastest rate of growth in a decade. Labor markets also saw a substantial upswing, with unemployment falling to a four-year low and real wages growing.
Russia’s current account surplus has also been exceptionally strong, on the back of high commodity prices and low levels of outbound tourism. The federal budget has been consolidated, led by a strong growth in revenue, and is on track to meet the authorities’ target of meeting the fiscal rule next year.
“This surge in spending resulted from the release of pent-up demand created by pandemic restrictions,” said David Knight, Lead Economist and Program Leader, World Bank. “It was aided by increased credit, Russian tourists staying at home for the holidays this year, and resource inflows via the energy sector.”
The report assesses the short-term risks weighing on Russia’s growth and finds that low vaccination rates are necessitating stricter COVID-19 control measures that may reduce economic activity, while more persistent inflation will likely call for tighter interest rates for a longer period, limiting the growth outlook.
The report also analyzes how Russia could be impacted by global economic growth under three different green transition scenarios, and suggests that domestic climate action can help mitigate some of the possible impacts of a global green transition and create new opportunities for Russia.
The country’s new low-carbon development strategy, which aims for a 70 percent reduction in net emissions by 2050 and net carbon neutrality by 2060, will become an important first step for Russia. A focus on enabling the transition to a more diversified and faster growing economy will call for strengthening of a broad range of assets including human capital, knowledge, and world-class market institutions.
“Environmental sustainability is becoming central to the global economic agenda. Increased commitments by countries and firms to carbon neutrality signal that wholesale changes to policy frameworks will be needed in the coming years,” said Renaud Seligmann, World Bank Country Director for Russia. “With Russia’s pledge to become carbon neutral by 2060, the country now needs to take concrete actions of moving towards decarbonization.”
To accomplish these goals, the report recommends the implementation of carbon pricing and the consolidation of energy subsidies for consumers in Russia. At the same time, measures should be taken to ensure people are protected from the costs and any adverse impacts of the transition.
The report estimates that consumer energy subsidies on electricity, gas and petroleum in Russia amounted to 1.4 percent of the country’s GDP in 2019. By redeploying these resources, the authorities could increase GDP and ensure that no consumers are left worse off. At the same time, this would help reduce greenhouse gas emissions and move Russia closer to its goal of a green and sustainable economy.
World trade reaches all-time high, but 2022 outlook ‘uncertain’
Global trade is expected to be worth about $28 trillion this year – an increase of 23 per cent compared with 2020 – but the outlook for 2022 remains very uncertain, UN economists said on Tuesday.
This strong growth in demand – for goods, as opposed to services – is largely the result of pandemic restrictions easing, but also from economic stimulus packages and sharp increases in the price of raw materials.
According to UN trade and development body UNCTAD, although worldwide commerce stabilized during the second half of 2021, trade in goods went on to reach record levels between July and September.
Services still sluggish
In line with this overall increase, the services sector picked up too, but it has remained below 2019 levels.
From a regional perspective, trade growth remained uneven for the first half of the year, but it had a “broader” reach in the three months that followed, UNCTAD’s Global Trade update said.
Trade flows continued to increase more strongly for developing countries in comparison to developed economies overall in the third quarter of the year, moreover.
The report valued the global goods trade at $5.6 trillion in the third quarter of this year, which is a new all-time record, while services stood at about $1.5 trillion.
For the remainder of this year, UNCTAD has forecast slower growth for the trade in goods but “a more positive trend for services”, albeit from a lower starting point.
Among the factors contributing to uncertainty about next year, UNCTAD cited China’s “below expectations” growth in the third quarter of 2021.
“Lower-than-expected economic growth rates are generally reflected in more downcast global trade trends,” UNCTAD noted, while also pointing to inflationary pressures” that may also negatively impact national economies and international trade flows.
The UN body’s global trade outlook also noted that “many economies, including those in the European Union”, continue to face COVID-19-related disruption which may affect consumer demand in 2022.
Semiconductor stress test
In addition to the “large and unpredictable swings in demand” that have characterized 2021, high fuel prices have also caused shipping costs to spiral and contributed to supply shortages.
This has contributed to backlogs across major supply chains that could continue into next year and could even “reshape trade flows across the world”, UNCTAD cautioned.
Geopolitical factors may also play a role in this change, as regional trade within Africa and within the Asia-Pacific area increases on the one hand, “diverting trade away from other routes”.
Similarly, efforts towards a more socially and environmentally sustainable economy may also affect international trade, by disincentivizing high carbon products.
The need to protect countries’ own strategic interests and weaknesses in specific sectors could also influence trade in 2022, UNCTAD noted, amid a shortage of microprocessors called semiconductors that “has already disrupted many industries, notably the automotive sector”.
“Since the onset of the COVID-19 pandemic, the semiconductor industry has been facing headwind due to unanticipated surges in demand and persisting supply constraints…If persistent, this shortage could continue to negatively affect production and trade in many manufacturing sectors.”
Small Businesses Adapting to Rapidly Changing Economic Landscape
The World Economic Forum has long been at the forefront of recognizing the strategic importance of sustainable value creation objectives for business. While interest has mostly focused on how large corporations contribute to the global economy and sustainable development objectives, small and mid-sized enterprises (SMEs) are often overlooked as major drivers of economic activity, as well as social and environmental progress around the world.
A new report released today finds factors that previously disadvantaged SMEs can lead them to new opportunities. Nine case studies from multiple industries and regions highlight what SMEs can do to increase their future readiness.
Developed in collaboration with the National University of Singapore Business School, the University of Cambridge Judge Business School and Entrepreneurs’ Organization, the report also finds that SMEs are lagging behind in terms of societal impact. Although there is a clear need to operate in line with sustainability goals, many SMEs have yet to include explicit strategies and performance measurement centred on societal impact.
The top challenges cited by SME executives include talent acquisition and retention (for 52.5% respondents), survival and expansion (43.8%), funding and access to capital (35.7%), non-supportive policy environment (21%), the difficulty of maintaining a strong culture and clear company purpose and value (20%).
SMEs can leverage their size, networks, people and the strengths of technology to support their goals of sustainable growth, positive societal impact and robust adaptive capacity. While it is essential for SMEs and the wider economy to increase their future readiness, they can thrive only insofar as the necessary supporting infrastructure and regulatory frameworks exist.
“We hope this will inspire and encourage SMEs and mid-sized companies to harness their potential in becoming a major driver of sustainable and inclusive economic growth and innovation by focusing on several core dimensions of future readiness,” said Børge Brende, President, World Economic Forum.
“Through this report, the Forum aims to highlight the significant role SMEs can play not just locally but also globally. The New Champions Community is a step towards bringing these smaller companies into the forefront of global discourse around socioeconomic development and engaging them in a community of forward-thinking companies from across the world,” said Stephan Mergenthaler, Head of Strategic Intelligence and Member of the Executive Committee, World Economic Forum.
The report aims to develop a deeper understanding of organizational capabilities and orientations needed for SMEs to successfully generate lasting financial growth, affect society and the environment positively, and develop high levels of resilience and agility.
It relies on robust research methods and combines rigorous primary and secondary research. The takeaways and conclusions presented in the research have been derived from an analysis of over 200 peer-reviewed articles and engagement of more than 300 CEOs and founders of SMEs through surveys and in-depth interviews.
Best Extracurricular & After-School Activities to Reduce Stress
Being a student is a fun and exciting experience. However, it is also tightly connected with constant stresses. The lack...
Workers with HIV-AIDS continue to face stigma, discrimination
“Myths and misconceptions” about HIV and AIDS continue to fuel stigma and discrimination in the workplace, the International Labour Organization (ILO) said on Tuesday. Despite some improvement...
What can I do with an Economics degree?
A degree in economics will increase your employability in any industry. High-skilled graduates are in high demand worldwide. The wide...
Israel-Palestine: Risk of ‘deadly escalation’ in violence, without decisive action
With violence continuing daily throughout the Occupied Palestinian Territory, the Special Coordinator for the Middle East Peace Process urged the Security Council on Tuesday to adopt...
Amidst Strong Economic Rebound in Russia, Risks Stemming from COVID-19 and Inflation
Following a strong economic rebound in 2021, with 4.3 percent growth, Russia’s growth is expected to slow in 2022 and...
COP-26 Results: High Hopes for Low Temperatures
The 26th Conference of the Parties (COP-26) to the United Nations Framework Convention on Climate Change (UNFCCC) was held in...
An Uneven Recovery: the Impact of COVID-19 on Latin America and the Caribbean
Employment rates in some Latin American and Caribbean countries have experienced a relative recovery, although in most, rates fall short...
Science & Technology3 days ago
Digital Child’s Play: protecting children from the impacts of AI
East Asia4 days ago
The Chinese diplomatic force in the IAEA to confront Western leadership
Middle East3 days ago
Testing the waters: Russia explores reconfiguring Gulf security
East Asia4 days ago
Summit for Democracy Attempts to Turn Multicolor Modern World into Black and White Divisions
Africa3 days ago
Xi Jinping’s Global Development Initiative and the Sustainable Development Agenda of China-Africa in 2030
Americas3 days ago
Russia and the United States Mapping Out Cooperation in Information Security
Tech News4 days ago
Industrial innovation to accelerate transitions towards greener and digital economies
Economy3 days ago
A Good Transport System Supercharges the Economic Engine