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SEE Counties Among The Strongest Improvers In Digitalization. But Still Lagging Behind Europe

© Unsplash
© Unsplash

Bulgaria gains 10 positions in the Enabling Digitalization Index (EDI) this year and thus is the strongest improver throughout Central Eastern Europe, followed by Serbia that gains 4. Yet, the countries rank respectively 47th and 50th, with Romania being even 56th in the world. The index by Allianz and Euler Hermes measures the ability the countries have to help digital companies thrive and traditional businesses benefit from digital technologies. The EDI score is based on five components: regulation, knowledge, connectivity, infrastructure, and size.

The top three performers globally among the 115 included countries are the US, Germany and Denmark. 

CEE needs regulation

CEE countries could be found spread between the 26th and 70th rank so it’s hard to draw a clear conclusion on the region. Most of them, lacking real market potential because of their size, are putting efforts on infrastructure, connectivity and knowledge. And not least, they are focused on export, which in some cases, however, has an impact on the local market. One example is e-commerce, the development of which is also taken into account in the measurement. Also in many cases, like in Bulgaria, where the tech sector is export-oriented domestic legacy industries remain far behind in the digital transformation process. 

Across the CEE region, Estonia stands out thanks to its economic and structural reform that made the country a European model for digitalization at the business and state level. It maintained its first position in the region (26), followed by the Czech Republic (27) and Slovenia (31). These three are also the most advanced economies in Central and Eastern Europe in terms of gross national income per capita. 

The strongest improvers in 2019 compared to 2018 are Bulgaria, Serbia, and Hungary. Bulgaria, Croatia, and Romania, being the youngest EU members are however still behind the EU members and even Russia (37). According to the authors of the index, these countries have the potential to improve their position in the ranking by improving regulation.

Facing the truth and the local laggards

The low digitization of local markets despite strong tech sector development, still draws these countries back.  Despite often being named a technological R&D hub and one of the emerging digital technology hotspots in Europe, and despite the size of Romania as market, the two counties are holding last positions also in the DESI Index of the European Commission. The Digital Economy and Society index measures the levels of internet connectivity, digital skills of workers, number of ICT specialists, usage of digital services by citizens, digitalization of traditional businesses, and integration of digital public services.

Bulgaria (28th) performs relatively well in connectivity, especially as regards the wide availability of ultrafast and mobile broadband networks. It has also made significant progress with the e-government dimension, with a growing number of users and a high score for the provision of digital public services to businesses. However, Bulgaria is below the average in Human capital: the overall level of digital skills being among the EU’s lowest. People with at least basic digital skills account for 29 % of the total population, whereas the EU average is 57 %. The country also performs well below the average in integrating digital technology: companies are not taking full advantage of the possibilities offered by  e-commerce with 6 % of SMEs sell online (against the 17 % of the EU average), 3 % of total SMEs are selling cross-border and an only 2 % of their turnover comes from the online segment. 

Although Romania shows slight improvements in performance in almost all of the DESI dimensions measured, its ranking remained stable given that the overall progress was slow. Romania performs best in the Connectivity dimension, thanks to the wide availability of fast and ultrafast fixed broadband networks (especially in urban areas). But the digitisation of the economy is lagging behind. More than 20% of Romanians have never used the internet, and fewer than a third have basic digital skills. When it comes to Digital public services, Romania has the lowest performance among the Member States, despite the large share of e-government users (7th in the EU). On the other hand, 45 % of Romanian homes subscribe to ultrafast broadband, which is the 3rd highest figure in the EU. As regards female ICT specialists, Romania is well-positioned as it ranks 16th, with 1.3 % of Romanian women in employment.

 

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