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Mr Erkki Liikanen

Member of the European Commission, responsible for Enterprise and the Information Society

"The race to productivity and knowledge: Where does Europe stand?"

IST 2002 Conference

Copenhagen, 4 November 2002


Ladies and gentlemen,

It is a pleasure to welcome you to the opening session of the 2002 IST conference.

This year's IST conference has a particular importance for all of us. The Commission will be launching in the next weeks the first calls for proposals in the sixth research and development Framework Programme. It is therefore an important opportunity for the IST community to get together, to build partnerships and reflect on the developments of the field.

The last 2 years have been difficult times for the ICT sector. The Internet bubble burst. The subsequent over-capacity led to cuts in investments. There has been little visibility in the sector.

However, the uncertainties regarding market trends in the short term do not change the fundamental role of ICT in the development of the economy and the society.

This year's conference is therefore the right time to take stock of the situation. Apart from the "highs" and "lows" of normal business cycles, there are certainly lessons to be learned from the current crisis.

ICT and economic development: Addressing the productivity gap

There is at least one lesson that we tend to forget during moments of over-heated booms:

The value of technology development and innovation is not in the technology itself but in its benefits for citizens, for businesses and the society as a whole. Business models built on "technology for the sake of technology" will not be sustainable.

The critical issue here is the productivity development. Because only the growth of productivity can:

  • lead to higher GDP per capita, leading to higher real income;

  • improve the competitiveness of companies; and

  • guarantee the financing of public services.

The GDP per capita of the EU is 70% of the US. This is due to two reasons; lower productivity and lower employment rate.

Regarding the productivity measured as GDP per employed person, the EU narrowed the gap with US until mid-1990's. Since then there has been no improvement. Why?

The main changes affecting productivity improvements have been in the area of investment in R&D and in the use of ICT. Here the US has been stronger than the EU.

R&D intensive industries have been the driving force behind the productivity growth since the mid 1990'ies. Investment in R&D and innovation have led to continuous improvements in value creation.

The second main element behind the drive to improve productivity has been investments in ICT. But for this strategy to be successful, three elements need to come together simultaneously.

One needs to:

  • invest in ICT use,

  • reorganise the enterprise intrafirm and inter-firm relations - the same logic applies to the public sector, and

  • invest in skills.

If you do not do all these three things at the same time, the full benefit of ICTs will not be achieved.

Europe's investments into R&D is in general lower compared to US and Japan. It confirms how importants the Barcelona target of 3% of GDP in R&D is.

This applies particularly to research in the ICT sector. US invests three times more in research in this sector. There is a major difference in private sector spending.

So how can we catch up?

First, we need to increase the level of support to Research and development, also in the private sector. This is true for all research fields and in particular in ICT. Investments need to be made now to master the next generation of technologies and applications.

Second, a sustained effort is needed in the public and private sector to make the best use of ICT:

  • you need more investment in ICT but, at the same time, as said before, you need to reorganise the back office and business processes.

  • ICT can be used as tool to modernise governments and public sectors.

  • to get, and keep, everyone on-line we need to develop high value-added products and services.

eEurope 2005 is one reply to these challenges. I come back to it later.

Finally, we need to support innovation and entrepreneurship and improve our schemes for education and learning.

The role of ICT

So ICT is at the heart of what should be done to overcome the productivity gap and prepare for the future.

But to succeed we should keep our focus on the main objectives of technology developments. We should ensure a better co-evolution of technology and its applications in businesses and for citizens.

ICT can help to find solutions to key societal challenges. By using ICT we can build more efficient health systems and more accurate and faster risk management. When we get the policy right, it enables a wider inclusion of all citizens in social and economic developments.

ICT is also key for the development of all major science and technology fields, such as biotechnology or nanotechnology. It provides the tools for progressing science and for easier collaboration across disciplines and boarders.

This is why "placing the users, people and businesses first" in the development of the information society is what we should keep in mind to succeed. It is one of the key lessons from the current crisis.

What needs to be done at European level?

Our strategy, is based on a set of policy initiatives and actions. For ICT, the strategy is clear: It is about the close articulation between a policy initiative and research to prepare the future on the other side.

eEurope 2005 action plan has here a key role.

The eEurope 2005 Action Plan

eEurope 2005 will concentrate on five actions:


    eHealth and eLearning



    security of networks and information

    The first action will aim at the development of interactive electronic government services

eGovernment is above all about improved public services to citizens and businesses. It is also about cutting red tape, cost-saving and restructuring of administrative processes.

    Here we need a clear vision and top level political commitment. But in applications start small, learn as you go and scale fast. The additional challenge for the public sector is that it must guarantee efficiency and equity at the same time.

    We need safe, easy-to-use technologies and interoperability.

    But parallel reforms in organisations are fundamental. There is no technology-fix without back-office reform in eGovernment.

      The second action is about building fully developed eHealth and eLearning services

    Health and education are using the major part of public budgets.

    There are three main aspects for our policy approach in eHealth and eLearning which touch not only on the efficiency, but also on the organisational set-up of these services. These are

    • wider inclusion

    • better networking and

    • more content.

    The third action addresses businesses and aims at establishing a dynamic eBusiness environment

    The objective of this action is to create a favourable, reliable and open environment, which encourages enterprises, in particular SMEs, to invest in information and communication technologies as well as in the human resources to reap the benefits in eBusiness.

      The fourth action aims at the widespread availability of broadband access to the Internet throughout the EU

    Broadband is needed to increase the functionality and performance of services and to further extend the usage of Internet. The rationale for a broadband initiative is convergence. We want to create a level playing field for all technologies.

    The objective is to reduce uncertainty, remove obstacles, and help improving demand in order to stimulate investment in broadband access networks.

      The fifth action addresses the critical point of trust and security

    The EU economy is increasingly dependant on an information infrastructure, which underpins any business process and transaction.

    The research effort will be strengthened in the next framework programme. We are also taking a new policy initiative in this field in the next few weeks.

Putting the user, people, in the centre of future developments: The research approach

Ladies and Gentlemen,

The importance given to IST research by the Research Council and the European Parliament is reflected also in budget terms. The IST budget amounts to 3.625 billion Euro to which up to 200 million Euro has been added for Research Networks, including GEANT and GRIDs.

This renewed effort in RTD in IST is essential to ensure European technological leadership.

It is even more important at this time of crisis. Any reductions would have serious effects on industrial competitiveness for the years to come.

We are still far from taking full advantage of the possibilities that IST can offer. Costs, complexity, unavailability and unreliability are often preventing the further development and broader deployment of the knowledge society.

The digital divide is still a fact. Even in developed countries, only a minor fraction of the possibilities of IST is actually used.

Research in IST should aim at new avenues that will not only extend the scope, functionality and efficiency of ICT applications and services.

Research should make them available, in the most natural and trustful way, to citizens and businesses whoever they are, anywhere and anytime.

Technology should be almost invisible, embedded in our natural surrounding. It should be present whenever we need it. Interaction with the technology should be simple and effortless.

The IST priority in the next framework programme puts the user, people at the centre of the development of future IST and aims at "designing technologies for people and not make people adapt to technologies".

This vision provides a clear opportunity for European industry to build on, and to strengthen its leading position in areas such as mobile communications, consumer electronics, home appliances and microelectronics.

It will help reinforce the competitiveness of all industrial sectors by making access to ICT easier and by providing new business applications. They should enable more efficient process integration and support to value creation.

The IST priority in FP6 and eEurope have inter-linked objectives and operate at different time-scales.

The combination of the two actions enable us to build a coherent approach for addressing the key economic and societal challenges.


Let me conclude:

We need to invest further in ICT but, as I have mentioned, "Technology for technology" does not bring value. We have to drive further technology development and deployment by the needs of citizens, businesses and society.

Europe has developed a key asset that has been instrumental to build industrial and technology leadership in many ICT fields. This asset is the ability to collaborate and build partnerships between all major actors so that together they can address hurdles.

The EU ICT programmes have played a key role in forging such partnerships.

The next framework programme should build on this experience and mobilise even more resources and aggregate new efforts across Europe.

Thank you for your attention.

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