ICT research & industry in CEE: status quo (cross-country)

 

Vertes, Andras

This presentation investigates the productivity performance of CEE countries to detect sources of convergence in the ICT sector. The presentation shows that changes in labour intensity have been an important source of productivity convergence in the last 15 years, and are likely to remain so in the near future. It is also found, that despite lower income levels (compared to EU-15), ICT capital in new EU members CEE countries (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia) has contributed as much to labour productivity growth as in the EU-15. In CEE countries manufacturing industries that have invested heavily in ICT played a key role in the restructuring process. ICT industries therefore have been an important but probably temporary source of convergence. In the longer run the impact of ICT on growth will have to come primarily from its productive use in services.

In the CEE New Member States major projects to upgrade IT infrastructure to meet EU norms were undertaken in the public sector, particularly in the areas of tax administration, customs, law enforcement and justice. Following accession, new Member States began to implement their National Development Plans (NDPs), which detail how EU structural funding will be used. These will have a significant impact on the ICT market through to 2006, acting to stimulate spending principally in the government (both central and local), education and SME sectors.

The telecom markets of CEE have continued their marked shift from fixed-line to mobile in the wake of further liberalisation, the lowering of tariffs, a boom in mobile penetration rates and the rollout of new services. UMTS and EDGE (and to a lower extent CDMA2000) have appeared in Hungary as well and become available on a widespread basis across the country (like in other CEE countries). Broadband Internet access is now poised to become mainstream across most countries in the CEE region, opening the door for broadband-oriented content services in 2005, particularly streaming video. Nevertheless, the ratio of IT investments to GDP and per capita IT spending by country indicate that a major gap in usage persists between the New Member States and the former EU 15 countries.