transforming production in europe – comparing with us transforming enterprise conference...
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Transforming Production in Europe – comparing with US
Transforming Enterprise ConferenceDepartment of CommerceWashington D.C., 27 January 2003Olli Rehn, University of Helsinki
1. Not a ”revolution”, rather a long-lasting economic transformation
IT-enabled change did not begin with the internet or e-commerce – got off the ground before
cf. Robert Bosch in the 1980s & Mikkelin Autotarvike
cf. Alfred Chandler: a life span of an industrial revolution is not 2-5 but rather 25-50 yearscontemporary digital transformation will only take full effect once IT in all its senses will be part of daily activities in business, government, lifee-business is primarily technology- and business-driven, but public policy can either facilitate or hinder progress
2. Not mere IT, but process and managerial innovations
to simplify: ”the Wal-Mart effect”; cf. EU Commission 2002: ”Wal-Mart is credited with directly causing the acceleration of labour productivity by developing a successful format based on ongoing managerial innovations and intensive use of IT.”
Forced competitors to copy Wal-Mart’s best practiceEurope trails behind the US, where productivity grew fast both in industries that produce and use IT (and IT-using industries tend to be dominated by service sectors)in Europe: Finland, Ireland and Sweden match with the US productivity gorwth – all are producers of IT (EU dualism!)catch-up potential Euro, Single Market in services ...
3. Yet, Europe is making progress, and its fundamentals are right
Enlargement speeds up cross-national production networks: Philips: R&D of electronics to ShanghaiNokia: a global network of electronic and component producers
e.g. Elcoteq (MBO 1991; est. 1984): the biggest employer in Estonia cf. Tallinn in 1983: nuclear warheads; in 2003: production outlets!
Fundamentals of digital transformation: steady progrebssmobile penetration 75%internet penetration 45-50%BUT: broadband only 4% competition in local telecom markets
the European social model to be revisited:basic education and digital literacy are Europe’s strengthsstructural reforms needed, and revival of entrepreneurship
EU mobile subscribers and average penetration
69
115
194
265 28
4
18%
31%
52%
75%70%
0
50
100
150
200
250
300
1998 1999 2000 2001 2002
Mill
ion
of s
ubsc
riber
s
0%
10%
20%
30%
40%
50%
60%
70%
80%
EU a
vera
ge p
enet
ratio
n ra
te
Subscribers Penetration rate
Mobile penetration in the EU
Household penetration of internet access 2001-200211
,7%
23,4
%
23,4
%
32,9
%
26,2
%
34,7
%
37,9
%
46,5
%
46,2
%
46,2
%
48,1
%
43,6
%
64,3
%
58,9
%
58,5
%
9,2%
29,5
% 35,4
% 40,9
% 45,0
%
47,9
%
49,1
% 53,7
%
64,2
%
64,5
%
65,5
%
30,8
% 35,5
%
43,7
%
55,0
%
0%
10%
20%
30%
40%
50%
60%
70%
EL E P I F B D UK IRL A FIN L S DK NL
JUNE 2001
JUNE 2002
Internet penetration in the EU
Availability and penetration rate of incumbent's and new entrants' retail broadband access to internet
2%
7%
4% 5%
4%
2%
2%
7%
1%
8%
1%
4%
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
1.600.000
EL IRL P FIN A S DK I B E NL F UK D
Nº o
f lin
es
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
% o
f pop
ulat
ion
with
bro
adba
nd
acce
ss
Availability of incumbent's and new entrants' retail broadband access to internetBroadband penetration
D: Not to scale.Value:3,376,013
Broadband penetration in the EU
3. Yet, Europe is making progress, and its fundamentals are right
Enlargement speeds up cross-national production networks: Philips: R&D of electronics to ShanghaiNokia: 15 major subcontractors, a global network
e.g. Elcoteq (est. 1993, FIN): the biggest employer in Estonia cf. Tallinn in 1983: nuclear warheads; in 2003: production outlets!
Fundamentals of digital transformation: steady progrebssmobile penetration 75%internet penetration 45-50%BUT: broadband only 4% competition in local telecom markets
the European social model to be revisited:basic education and digital literacy are Europe’s strengthsstructural reforms needed, and revival of entrepreneurship