When it comes to CEE’s digital competitiveness, DESI suggests that connectivity, digital skills and use of the internet are not the major challenges for the countries of the region. Instead, DESI exposes CEE’s digital Achilles heel to be the region’s low level of digital public services. Not only do all CEE countries lag behind the EU average in this indicator of eGovernment offerings, but the size of their individual gaps to that average are also the largest in this subcategory. According to the Commission, Hungary, Croatia and Romania collectively form the bottom of the ranking for digital public services.
“The CEE countries have lots of room to improve in the field of eGovernment services. They should be heavily motivated to do so, because expanding the scope of the digital public services they offer has a strong spillover effect into other areas of the economy and ultimately contributes to their level of prosperity,” points out co-author Zoltan Arokszallasi, Chief Analyst of the CEE Macro/FI Research team. “Using the internet to interact with public officials helps to lower perceived corruption levels and supports transparency in government rules and policies. More generally, digitalisation can lead to more structured and faster processes that in turn bring about both cost savings and higher overall satisfaction in society.”
Erste Group Research also addressed the link between the penetration of internet banking usage and the degree to which citizens actively make use of digital public services to communicate with authorities by filling out forms. While generally lying in the middle field amongst internet banking users, the CEE countries stand out on account of the outsized share of their citizens who only use eGovernment offerings to gather information, but not to complete forms or otherwise communicate with governmental bodies. The continued spread of internet banking usage in the region is also likely to contribute to a more active uptake of digital public services.
Pushing forward digitally
The region’s lag in eGovernment is a problem in both governance and strategy. In contrast to the sterling example provided by Estonia, all of the CEE states have so far failed to develop strategies that would lead to the creation of a common platform at the national level that would enable the secure exchange of information between decentralized systems.
With DESI showing some lag in CEE in digital skills (especially in Romania, but also to some extent in Croatia, Hungary and Poland), the region’s economies are also well advised to invest in human capital with the aim of developing highly-skilled workers who are able to use advanced and digitally-orientated technologies -- instead of focusing primarily on manufacturing jobs. DESI scores also suggest that the integration of digital technology is relatively low in Hungary, Poland and Romania, while evidence from Eurostat indicates that CEE is generally lagging behind in enterprises using ICT technology in their operations. For example, corporate resource planning with ERP (enterprise resource planning) software is below the EU average in all CEE countries.
The question whether being more digital leads to stronger growth or if wealthier countries can simply afford to be more digital remains open. However, the Erste Group Research analysts believe that in the longer term, digitalisation could foster the development of growth-positive factors. “For CEE countries, going digital is a must in order to maintain an affordable pace of economic convergence. This would help them to counterbalance challenges stemming from increasing input costs and demographic developments,” Kotian concludes.
Excerpts from the Erste Group Research press conference on “CEE going digital on the way to prosperity”
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