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Introduction to a policy for a sustainable digital economy

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The digital economy refers to the economic, social and cultural activities that are based on digital infrastructure, enabled by computing technologies to create and distribute online value added products and services. Thus, in digital economy (not mutually exclusive with manufacturing economy), intellectual property and skilled workforce (expertise and know-how) are the critical and scarce resources. Furthermore, the digital economy is the demonstration of how the whole (collective intelligence) is greater than the sum of its parts.
Therefore, the strategy and associated policies related to the digital economy have to take into account all these components in a convergent manner. The digital and knowledge economy cannot achieve any results without the technological infrastructure (ICT, Smart-city) with a high level of sophistication. In addition, the development of e-business for the production of services and information plays a key role to foster the transformation towards the digital economy and support the growth and the sustainability of the overall knowledge economy. We focus in this context on some of the areas that represent the backbone of the e-business sector in the digital economy, such as government transactions, health and learning, as well as online distribution (commerce and content).

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Introduction to a policy for a sustainable digital economy

  1. 1. Mohamed Bouanane D i r e c t o r – M a n a g e m e n t C o n s u l t i n g F e b r u a r y 2 0 1 6 The digital economy refers to the economic, social and cultural activities that are based on digital infrastructure, enabled by computing technologies to create and distribute online value added products and services. Thus, in digital economy (not mutually exclusive with manufacturing economy), intellectual property and skilled workforce (expertise and know-how) are the critical and scarce resources. Furthermore, the digital economy is the demonstration of how the whole (collective intelligence) is greater than the sum of its parts. Therefore, the strategy and associated policies related to the digital economy have to take into account all these components in a convergent manner. The digital and knowledge economy cannot achieve any results without the technological infrastructure (ICT, Smart-city) with a high level of sophistication. In addition, the development of e- business for the production of services and information plays a key role to foster the transformation towards the digital economy and support the growth and the sustainability of the overall knowledge economy. We focus in this context on some of the areas that represent the backbone of the e-business sector in the digital economy, such as government transactions, health and learning, as well as online distribution (commerce and content). Introduction to a Policy for a Sustainable Digital Economy
  2. 2. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 2 Table of Contents 1 Introduction to Digital Economy ..................................................... 3 2 Vibrant Digital Infrastructure.......................................................... 5 2.1 ICT Sector ....................................................................................... 5 2.2 Smart City....................................................................................... 6 3 Enabling E-Business............................................................................ 6 3.1 E-Government................................................................................. 7 3.2 E-Health.......................................................................................... 7 3.3 E-Learning ..................................................................................... 8 4 Online Distribution ............................................................................ 9 4.1 Digital Content.............................................................................. 9 4.2 E-Commerce.................................................................................... 9
  3. 3. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 3 1 Introduction to Digital Economy The digital economy1 refers to the economic, social and cultural activities that are based on digital infrastructure (i.e. super-fast speed optical networks, cloud, mobile broadband, sensor networks, etc.), enabled by computing technologies (information and communications, e-business: computerized / networked processes, search engines, smart and mobile devices, powerful servers, big data, etc.) to create and distribute online (e-commerce) value added products and services. Thus, in digital economy (not mutually exclusive with manufacturing economy), intellectual property and skilled workforce (expertise and know-how) are the critical and scarce resources. As digital convergence brings disparate technologies together to a point where the whole is greater than the sum of its parts, the digital and knowledge economy must adjust to a new paradigm. A paradigm of convergence that is itself driving disparate technology based on socio-economic drivers, e.g. e-health, e- government, e-commerce, e-cities, etc. and the policies that aim to accelerate their development towards ever greater convergence. The final stage of transformation into the knowledge-based economy must be to converge the associated policy directives onto a single target. This will not happen by accident (at least not in a timely manner) but by proactive, coordinated, goal congruent design and commercialization. Most of the goods produced in the digital economy are services and information (as opposed to material and tangible goods) by means of electronic business (e-business, activities enabled by web-based technology). Online services (e-services) are a subset and a main driver for the e-business strategy that a government and the private sector can develop to enable the digital economy and increase its size. In this context, we focus on some e-services that represent the backbone of the e-business sector, such as e-government, e-health, e-learning, e-commerce, e-cities and e-content. Commercialization results from recognizing the virtuous cycle that exists between advanced domestic e- services developments for the knowledge economy and international earnings from exporting concepts, ideas, content, e-learning modules, etc., as well as indirectly through advanced e-developments in sectors such as renewable energies, desalination, etc., that promote greater efficiencies and have high export potential. Commercialization, itself having two distinct strands that should be seen holistically:  Direct commercialization of the intellectual property associated with both the high value and low value components of the value chain2 associated with the products and services needed to build the digital economy in the first place. 1 The digital economy has been a major driver of growth in the past two decades – in 2013 the European Commission stated that the digital economy is expected to grow 7 times faster than overall GDP in coming years 2 Porter et al – US and UK policy setting advice.
  4. 4. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 4  Indirect commercialization based on the high value and low value components of the value chain/s associated with the use and deployment of products and services in all sectors of the economy – low, medium and high tech sectors3 . Both commercial strands offer synergistic opportunities to countries at a domestic and a global level with the latter supporting the development of the former at an ever increasing rate – a virtuous cycle. Korea has embedded this into their e-strategy planning – success globally means success at home and vice versa. The most promising policy directions4 that may have more universal application to a unified strategy are:  Establish a unifying (ubiquitous) vision and instantiate it, through culturally aware communications and marketing, and the integration of e-domain strategies, e.g. u-Korea that equally embraces both the public and private sectors.  Establish arms-length semi-autonomous NGOs to coordinate delivery.  Establish greater synergies (and the associated collaborative mechanisms) between top down planning for national outcomes and bottom up delivery initiatives and innovation, i.e. plan globally and implement locally.  Ensure sustainability and private sector engagement of (larger companies in key export sectors) through policy designed to create and maximize the effect of the virtuous cycle that exists between domestic development and international export opportunity.  Direct policies at exploit the international export opportunities from both the hard and soft products.  Undertake horizon scanning and intensive research into the structure of the nation’s economy, value chains in key (high impact sectors) and the best involvement of SMEs to provide a balance portfolio of initiatives for maximum impact on the economy. According to the definition above of the 'Digital Economy' concept, three main components can be identified: supporting infrastructure; enabling e-business technologies and online distribution of value added products and services. Therefore, the strategic development and accompanying policy making associated with the digital economy should take into consideration all these components in a convergent way. As part of a national framework to foster the transformation towards the digital economy and support the growth and the sustainability of the overall knowledge economy, we have selected the 3 AIRC – Australian State and Federal policy setting advice. 4 While most of the major recommendations are highly reflective of the developed countries approach (Korea, UK and Australia) and considering the cultural and industrial differences between them and other economies, we would contend that the principles are the same, the way of achieving them will differ.
  5. 5. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 5 following domains (public administration, health, learning, commerce, smart city, content and ICT) as of high priority. 2 Vibrant Digital Infrastructure 2.1 ICT SECTOR The digital and knowledge economy cannot deliver its benefits without a world-class ICT infrastructure. Thus, the ICT sector plays a vital role in economic and social development as a critical enabler of growth, development, and modernization of the information society and the digital economy. It has proven instrumental for increasing productivity (contributing between 25% and 50% of productivity growth), improving economic efficiency and enhancing competitiveness of the entire country’s economy (individuals, businesses and government). Enjoying a developed ICT sector with high services availability and affordability requires a strong government and regulatory entity commitment. To achieve and maximize the ’digital economy’ benefits, a comprehensive and coherent strategy needs to be undertaken by the government, regulator entity and the industry. Success of such strategy can be attributed to the following key factors leading to high advanced and competitive market and introducing more choices in terms of providers and variety of affordable services to the benefit of the end users:  Build human capital5  Support the development of ICT industry6 and research and development7  Adopt convergent regulatory framework and provide new generation infrastructure8 (e.g. super- fast broadband strategy9 ) 5 E.g. Build high skilled ICT workforce by increasing and improving the teaching of ICT in schools and VET institutions (curricula development, producing ICT teaching materials and e-learning resources...) and raise awareness through training programs (ICT skills literacy, e.g. International Computer Driving License ICDL). 6 Involve actively the public sector (universities, ICT research institutions…) and the private sector (small and medium businesses) in organizing workshops on Free/Open Source Software Technologies (FOSST) aiming to show how FOSST may contribute toward the economic development. 7 E.g. Direct a significant portion of Gross Domestic Product (e.g. 0.5%-0.75% of GDP), e.g. through Venture capital, Sovereign Wealth Fund, inflow Foreign Direct Investment, to support the technology research in general and the ICT industry in particular. 8 Australia is building a national broadband network (wholly Government owned and wholesale-only provider) connecting 90% of homes, schools and workplaces with fiber at speeds up to 100 Mbps in urban areas. Rural areas will be connected through a mixture of next generation wireless and satellite technologies delivering speeds of 12 Mbps or better.
  6. 6. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 6  Improve the readiness and stimulate usage 2.2 SMART CITY The e-city is the ultimate manifestation of a ‘smart place’; other examples include science parks, multi function polis, industry cluster, etc. E-cities are an economic engine which brings together all e-strategies into a synergistic environment that epitomizes the information society in general and the digital economy in particular. However, it should not be forgotten in the rush to develop smart cities, that rural communities and environments are equally important engines of growth. Neither should it be forgotten that old cities are as important as brand new cities when it comes to laying out the intelligent infrastructure for tomorrow – possibly more important unless we intend to abandon them to the problems and issues associated with the industrial age in which they grew and matured. E-city’s common strategic direction has to focus on reaching a tipping point where knowledge intensive occupations reach the level where they have a significant impact on the city’s economy or on the surrounding area. Typically, an e-City framework seeks to establish a sustainable environment where the knowledge intensity and traffic is facilitated by the cities communications infrastructure, facilities and services. Therefore, digital and knowledge based industries can benefit from the outflow of innovation, R&D, funding and highly skilled knowledge workers from universities and research establishments in the area. Furthermore, E-cities often focus on the establishment of industry clusters that are developed around a new industry with inherent natural advantages, e.g. a sea port based on geographical advantages; a pre- existing industry, e.g. film production or petro-chemicals; or given an economic advantage such as favorable tax environment, e.g. economic free zone. 3 Enabling E-Business E-business strategies are in a state of flux10 , and are in transition as they race to catch up with technical developments that drive them. Benchmarking has provided a valuable snap-shot of the current state of policy direction in key areas of the world – trends are discernible. For example, the UK has increased its efforts to scan ahead in its horizon scanning initiatives. Like a ship, we need to constantly monitor how far we have travelled and look ahead for safe harbors. 9 New Generation National Broadband Network – A Public-private-partnership for an Open Access Model (http://www.slideshare.net/medbouanane3/national-broadband-network-development-a-ppp-for-an-open-access- model). 10 Ref; to Australia’s (USA and UK) sustainability agendas representing a new direction.
  7. 7. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 7 3.1 E-GOVERNMENT E-Government is pivotal to developing an information society and a digital economy. E-Government is not simply about e-enabling existing services in more customer-centric ways, it is central to government reform and its future role in the knowledge economy. E-government underpins the entire information society and is both fundamental to, and a major catalyst for the development of the digital economy that sits atop it – its productivity, innovation, lifestyle and prosperity. E-enabled government services impact all other e-domains. The need to integrate e-domain strategies to align with national aspirations and priority outcomes is imperative. As such, the nation’s e-government program should be a catalyst for widespread e-enabled changes in e- learning, e-health, e-commerce and the development of e-enabled sectors of the digital economy, e.g. e- cities, e-rural communities, etc. that ultimately impact the country’s socio-economic well being. To maximize this e-advantage; a country should start to think holistically about e-enablement and begin to define key national priority outcomes for its e-government program, the changes that are needed at all levels and the best way to accomplish that change. The main drivers and critical success criteria for e-government strategy and its subsequent development that can be observed from the international benchmark are broadly concerned with the following seven pillars:  Developing customer centricity  Managing the evolution of e-service capabilities  Transitioning to whole-of-government operations  Radical re-engineering and reform of government  Planning the accessibility of government services  Managing procurement and delivery of e-services  Ensuring change and adoption of services 3.2 E-HEALTH The digitization of healthcare systems facilitates the rapid identification of diseases spread, enables an efficient fight against epidemics, and supports the conduction of scientific researches. Also, the technology – connected devices and telemedicine – facilitates remote contact with patients (especially the chronically illness), improves medical diagnosis and characterization, and the provision of health care quality in rural areas and those least equipped.
  8. 8. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 8 Among all the e-strategies, e-health is by far the hardest to succeed with. Hence, the need for an overarching strategy or complete refresh of existing strategies to coordinate initiatives and leverage them where possible (e.g. CCHI initiatives in the UK, Canada, USA, Korea, Australia). Many of the worldwide e-health strategies’ goals are the same as e-government, e.g. reducing costs, sharing resources, moving staff out to where they can provide more effective and convenient services, streamlining processes and providing more customer-centric services. The major outcome is to provide a stream of health related information to central government and national health authorities to help counter pandemics and other mass afflictions. In addition the need to exchange clinical information between numerous healthcare providers and to be able to move healthcare records with the patient is a primary driver. The clinical information exchange should mirror the movement of the patient within a healthcare facility and between primary, secondary and tertiary healthcare providers irrespective of whether they are public or private. The aim being to track all significant episodes in a patient’s life and ensure that a patient can contribute to their records and participate in some of the key decisions necessitated by their condition, e.g. access right to information, donor information, etc. To complete the achievement of the change, a country should focus on the integration and interoperability required to run health services at both national and local levels, as well as on delivering benefits to practitioners and citizens (e.g. reducing waiting time, speed up payment between healthcare operators, exchange of expertise and e/distance diagnosis, etc.). Such change should rely on the use of innovative tools – Web 2.0, e-learning and greater private sector engagement. 3.3 E-LEARNING E-learning is a vital component of all e-strategies and is fundamental to the development of a knowledge economy. An appropriate national e-learning policy that covers all domains, sectors and market segments in an integrated, coordinated and synchronized way that supports continuous lifelong learning is of paramount importance when building a digital economy and its development into a knowledge based economy. It enables distance learning offering a suited support to innovation and entrepreneurship. E-Learning is a domain that should be considered as an integral part of other e-domain strategies, e.g. e- government, e-health and e-commerce; as such it also requires holistic planning and treatment. Most importantly, e-Learning can act as a powerful tool for change and adoption within these other domains, in particular in the building of a knowledge base and its dissemination and management within schools, higher education, vocational training, and businesses or to the population as a whole. E-Learning is thus a vital tool for the digital economy and its development into a knowledge based economy. It enables distance learning and continuous learning offering a suited support to innovation and entrepreneurship.
  9. 9. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 9 4 Online Distribution 4.1 DIGITAL CONTENT The digital economy brings benefits to businesses, culture and society in general when it delivers useful content and services, anywhere and anytime they are needed. Culture, heritage and human knowledge are important assets in a globalized and digitized world; thus the availability of digital content that represents a nation’s culture and history is the foundation of its digital civilization. Therefore, the challenge is to create more valuable local digital and rich content and make it more accessible, usable and exploitable by the maximum number of citizens and users. Indeed, the production and distribution of digital content was a key driver of the digital economy’s growth in the past decade and will contribute significantly to ensure high levels of economic wealth (growth, employment and high wages jobs) and export capacity in the coming decades. Supporting the digital content11 and more generally the creative industries12 will improve the citizens’ quality of life through cultural activities and impact productivity in other important sectors (e.g. e-health, education, e- learning) while enhancing the national economy competitiveness. The digital content industry is composed of a fragmented base of sub-sectors13 often working in isolation from each other despite their common interests and shared needs for investments, R&D and skills development. Collaboration is essential for better and more innovative products as well as the chances for achieving economies of scale in meeting common needs for the benefit of the industry. A broad and coherent policy towards the development of digital content and creative industries is then highly recommended. This policy should address skills development, research and innovation, promotion, and copyrights protection to increase wealth and jobs through developing intellectual property in the related industries (including but not limited to) such as software, computer and video games, electronic publishing and broadcasting (UK, KR, AU). 4.2 E-COMMERCE E-commerce is broadly applicable although it is more generally associated with the private sector. It provides the means to shop on-line using the Internet, to search product catalogues, order via shopping cart solutions and generally manage the procurement process. In this respect, it is equally applicable to the public sector. E-procurement establishes marketplaces for government agencies to make online 11 The perimeter of the digital content industry is not the same from one country to another. 12 The creative industries include advertising, architecture, the art and antiques market, crafts, design, designer fashion, film, interactive leisure software, music, the performing arts, publishing, software and computer services, television and radio. 13 Mainly: video and online games, music, animation & image, educational content, software, audiovisual production, electronic publishing and broadcasting, digital archiving...
  10. 10. Introduction to a Policy for a Sustainable Digital Economy M. Bouanane 10 purchases, and as such, it is a central plank of e-government and a significant factor in achieving productivity gains and savings within the public sector. Conversely, the e-commerce provides users the capability to sell products and services online via a virtual shop front on the Internet. However, behind this simple concept lies a plethora of related e- enablement tools that further virtualizes the trading process such as pay-per-click advertising (PPC), affiliation payments, covert marketing and sales analysis, virtual call centers, supply chain management, automated payment and billing… etc. E-commerce plays a key role in the innovation-driven economies. And much can be done to further expand e-commerce base for developing countries to implant seeds of development in the digital economy. E-commerce has its own momentum; it encourages large companies to adopt it to meet the needs of their customers. However, the greatest opportunities are in small and medium enterprises, as well as in the establishment of new companies specialized in the field of online business. As such e-commerce provides countless opportunities for the entrepreneurs. The adoption of e- commerce depends on the twin effects of market forces and the development of e-strategies in health, government and education etc., which will likely provide both the ongoing impetus and underlying foundation for organic and exponential growth in e-commerce. A dedicated professional with over 20 years of consulting experience across Europe and the Middle East. He has high expertise in the field of strategic management consulting with an in-depth experience and a particular focus on TMT, digital and knowledge economy sectors (government and public policy, telecom operator, regulator, corporate strategy). He is a leader in designing unified policies and convergent planning across multi-sectors and involving multiple private and public stakeholders. He brings his strategic thinking and his balanced management approach with the ability to recommend pragmatic and innovative policies, viable business cases and action plans that enable the creation of greater and sustainable value.

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