Baltic Sea Region digital cooperation a key to speed up EU development

The Baltic Sea Region countries are at the forefront of digitisation in Europe. At the 7th Strategy Forum of the EUSBSR we will address the potential of cooperation in digitisation for the benefit of the whole of the EU. The digital economy is a driver of growth, but is dependent on the wider EU market to keep up with other parts of the world. In a recent report, the Boston Consulting Group finds worrying signs of a European Union not keeping up the pace. When we ask Fredrik Lind, the Managing Director of Boston Consulting Group, about this, he points to the important role of the frontrunners in the Baltic Sea Region to cooperate and show the rest of the EU what can be done.

Why is the digital economy important in the Baltic Sea region? How would you assess its performance?
‘The digital economy in the Baltic Sea Region is approaching 10 per cent of GDP, but growing at four to five times the pace of the remaining “non-digital” economy. This means the digital economy is driving much of the overall growth in the region. The frontrunner countries in the Baltics are also heavily dependent on access to a large digital export market, given their small sizes.
‘The digital economy can furthermore be seen as the economy of the future. With talent and capital flowing into the sector, and new companies with novel business models being created at a fast pace, it has the potential to disrupt many more traditional industries. Combining a larger digital market in Europe with the potential of emerging digital technologies such as the internet of things and big data analytics could boost the growth of the frontrunner economies by more than 80 per cent, placing them among the fastest growing nations in the world. It is therefore fundamental for our future prosperity to embrace digital.
‘Today, we see some worrying signs that the frontrunners are not fully capturing the digital potential. The European plans to create a digital single market are currently not ambitious enough, and many nations are resting on old merits when it comes to national digitisation. At the same time, Asian countries in particular are on a rapid rise, digitising their governments and businesses at a very high speed. Should this trend continue, we will be surpassed by those countries within the next few years, with the risk of placing us in a digital backwater.’
In the report you highlight that frontrunners have the potential to shape the development of digital services around the world. How do we unlock this potential?
‘Primarily by doing a combination of four different things:

  1. Cooperate on the highest level. Engage in an international collaboration with like-minded peers to push the development of an open and digitised economy in Europe and globally; that is, set up a vocal digital frontrunner cooperation.
  2. Drive the European agenda. Help drive the digitisation agenda in Europe, to ensure the development of the digital single market, smart policies, deregulation, digital education, removal of trade barriers, and the digitisation of business.
  3. Lead by example. Adopt a comprehensive national digital agenda with well-targeted initiatives to facilitate growth of domestic businesses and ensure competitive strength.
  4. Share and benchmark. Initiate transparency of initiatives and outcomes, to be shared with frontrunners and other interested nations. Yearly benchmarks could be set up to compare insights and best practices.

You stress that frontrunners have to work together. Why is this a key to growing the digital economy?
‘Because many of the initiatives that are needed to unlock the full potential of the digital economy require cross-border agreements and policies on (at least) a European level to have a sufficient impact.

‘Individually, the frontrunner nations are too small to have a real impact in changing the necessary policies and to drive a more ambitious digitisation of Europe. But by joining forces, showing leadership and cooperating on the highest political level, the frontrunners can provide one united strong digital voice, leading Europe into a more digitised future, for the benefit of all.’
About the report Digitizing Europe
Digitisation constitutes a transformative shift in technology across industry and society in general. Europe’s digital frontrunner countries must make faster and broader digitisation a top priority and provide strong European leadership at the highest political levels to guide cooperation across nations to secure future growth and employment. While the positive impact of digitisation is expected to benefit the entire continent, some EU nations stand to gain more than others and therefore should help pull Europe toward a more digitised economy for the benefit of all.

Fredrik Lind, Senior Partner & Managing Director at Boston Consulting Group
Fredrik Lind, Senior Partner & Managing Director at Boston Consulting Group