Ireland is only average, not a leader, in the digital economy

9 Nov 2011

Anna Maria Darmanin, EESC; Pat Rabbitte, TD, Minister for Communications, Energy and Natural Resources; Sinéad Gibney, Google Ireland; Lord Mayor Andrew Montague and Thomas McDonogh, EESC. Photo by Conor McCabe

If Ireland wants to better its economy and its society and be seen as a digital leader, it needs to up its game in terms of broadband, e-inclusion and skills. A Boston Consulting Group (BCG) study ranked Ireland 22nd out of 50 countries in terms of digital inclusion.

Despite the country’s prowess in attracting some of the biggest names in technology, from Intel to Apple, Twitter, Google and Facebook, that success is not permeating fast enough into the local economy in such a way that would better people’s lives, socially and economically. Worse still, Irish SMEs are lagging their counterparts in the UK and on mainland Europe in terms of embracing e-commerce.

Skills, connectivity and inclusion are critical, Boston Consulting’s senior vice-president David Dean told the Future Forum think-tank co-hosted by the European Economic and Social Committee and Dublin City Council at Farmleigh in Dublin this morning.

Dean pointed out that economies such as the UK can boast 7pc of GDP currently coming from the digital economy while Ireland at best could be hovering around 3pc.

Ireland ranks 16th of the 50 countries researched in terms of the willingness of consumers, businesses and governments to use the internet. This takes into account a variety of factors, including the percentage of the population who use the internet (Ireland ranks 20th); the percentage of individuals using the internet for directories and resources (ranking sixth); percentage of individuals using the internet for retail (also ranking sixth); and the percentage of individuals using the internet for news and information (ranking 12th).

However, the ranking for the availability of internet access in schools shows Ireland ranking 38th out of the 50 countries.

The research shows that the internet is having an increasingly large impact on GDP, growth and job creation.

The BCG research estimates as much as 5-7pc of GDP in advanced economies can be attributed to the internet and perhaps a quarter of GDP growth. The BCG research (the “e-Intensity Index”), argues that the promotion of the use of the internet by small and medium Irish companies could help growth and economic recovery.

The natives, the players, the aspirants and the laggards

Dean said that in Boston Consulting’s study of world economies, the leaders in the world are what he would call the digital natives, which include South Korea, Sweden, the UK, the Netherlands, Iceland, Denmark and Japan.

Nascent natives include the Czech Republic, Estonia, Portugal, Poland, Slovenia and Hungary, while China, Malaysia, Russia and Brazil are aspirants.

In the middle are the players, countries who are firmly in the digital economy but which don’t fit the digital native description with a firm line dissecting those who are above the line in terms of breaking through and those below the line, who have a lot of work to do.

Ireland, along with Singapore, Austria, Switzerland, Norway, Belgium and Spain, is below the line.

“Nations that are performing well in terms of their population’s grasp of the digital economy, infrastructure and available digital services are above the line. Ireland is below the line and it would be great to see Ireland in a place within two years where it would be close to Finland.

“The digital natives today are the UK, Denmark and South Korea. In Europe, Italy would be a laggard in the digital economy.

“The digital economy is accounting for 5pc to 7pc of GDP in some countries. Seven per cent of the UK’s GDP comes from the digital economy. Germany is at 3.5pc. Ireland could be just a little higher than 3pc of GDP. So how can we encourage the country to up its game?”

Dean said that in most advanced economies, e-commerce is now at 10pc of retail sales revenues. “In the UK, households that shop online are saving stg£1,000 a year.

“In the UK, SMEs are increasingly embracing the internet. Companies that are high web users are growing significantly faster than those that are not.

“Top of their list of requirements are access to the skills that enable them to do more online. So talent, not bandwidth, is actually critical.

“What I want to know is does Ireland have a digital Ireland master plan? Ireland does less well internationally when it comes to internet access in schools.

“And to encourage consumer online spending, it is not easy in difficult times, but what are the hurdles for online shopping in Ireland when clearly there are savings that can be achieved?”

A vision of digital Dublin

Dublin City Council director Peter Finnegan presented a vision of the kind of city Dublin could become if it made broadband connectivity, knowledge and digital skills more pervasive in the community.

He pointed out that cities are the future and the Dublin city and region needs to benefit and capitalise on the opportunities of the digital age.

“Dublin is rich in the number of cutting-edge companies it has, but we need to engage with communities and involve people. We need to shape the digital society, we need Dublin to become a digital city and ensure it is digitally connected in every way and use this to give us the edge.

“We need to ensure that skills are continually being enhanced. We need to make Dublin a global example and show digital communities of people working in the digital economy, enjoying a digitally connected city.”

Irish Internet Association chief executive Joan Mulvihill told the think tank that as well as skills and digital delivery, a key opportunity needs to be grasped in ensuring we make the most of the open data opportunity to provide better services to citizens via devices they understand, from smartphones to tablet computers.

“We need to move beyond each Government department saying that certain data belongs to a different department. Delivering services drives digital engagement,” she said.

Finnegan pointed to the recent Dublinked initiative that will see some 160 datasets made available to interested entrepreneurs and software developers.

“If you deliver the infrastructure, the services will follow. But we also believe that you need to put pressure on the infrastructure to catch up. We also need a digital champion to push these issues, the unpopular issues.

“The second element is to ensure proper skills and training. Collaboration is the key going forward. Teachers are products of their generation; prisoners of the curriculum and the school. We need to break down those barriers,” Finnegan said.

Boston Consulting

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years