Prepare for some 'digital tension'

As global competition in IT picks up pace, Europe is being left behind. Simon Moores shares some suggestions for how the continent can become a tech contender.

What decisions will shape the landscape of the European digital economy of 2020?

The question should be a matter of concern to our own Prime Minister in waiting, probably Gordon Brown. It was also the subject of a working party I took part in at the European Ideas Network 2006 (EIN) Summer University in Lyon, which assembled many of the continent's leading politicians, European Commission president José Manuel Barroso, businesses and centre-right research groups to explore the future of Europe in a globalised network economy.

Chaired by Malcolm Harbour, MEP, with SAP vice president Andreas Tegge as 'rapporteur', the Digital Economy Working Policy Group was tasked with identifying critical policy issues that require the further attention of the European parliament.

Significantly, it was agreed that Europe is falling behind in both ICT development and exploitation, in spite of the commitments of the 2000 Lisbon Agenda which set the European Union the goal of becoming "the most dynamic and competitive knowledge-based economy in the world" by 2010.

The US boasts twice the EU's research and development investment and both China and India are making significant long-term investments in skills and research, with the energetic Chinese telecoms company Huawei Technologies filing 2,000 patents in 2005 alone and generating sales of $8.2bn - a remarkable increase of 47 per cent year-on-year.

ICT a proven ingredient of economic growth and the world economy is projected to be 80 per cent larger in the year 2020 than it was in 2000. Yet Europe in contrast appears top-heavy, opaque and unwieldy, lacking the regulatory flexibility and agility required to compete on equal terms with its principal economic rivals which are investing heavily in imagination.

To quote from the "Red Queen Principle" which was discussed at the conference: "For an evolutionary system, continuing development is needed just in order to maintain its fitness relative to the systems it is co-evolving with." This statement hardly describes the continent in which we live.

Where once we had a digital divide to contend with, today we have emerging its progeny: 'digital tension'. This term describes Europe's policy position in regard to pervasive technologies and its concerns surrounding security, privacy and intellectual property legislation - both are squeezed between the frequently conflicting commercial interests of China and the US.

The working party agreed in its summary report that there exists huge potential in development of more efficient, citizen-oriented public services but stated: "Bold political leadership is required to transform organisations rather than mechanise existing processes."

The report added: "Organised leadership is needed to optimise the exploitation of ICT but it must balance inspiration and positive intervention without the risk of being over prescriptive or stifling innovation."

So what were the conclusions? Can Europe compete aggressively enough to ensure the survival of its technology market in a future dominated by Asia? The working party made a number of recommendations.

Firstly Europe needs to promote common principles of privacy and security at an EU and possibly global level while respecting national approaches on important issues such as identity cards.

Europe must also, like the UK, facilitate a dramatic upgrading of its 'e-skills' and an interest in science and technology with particular attention to the digital divide problems common to all age and income groups.

Where the European economy is concerned, the EU must support a regulatory environment to foster ICT investment, spectrum policy being a critical issue, Harbour pointed out.

The intellectual property environment remains a challenge and Europe must maintain rigid criteria for patentability and the quality of patents while enhancing awareness on the role of patents as an incentive for investment.

Europe's own internal constraints, especially labour law restrictions, need to be removed through the reform of its social models and priority must be given to ICT and innovation in products and services, through both the availability of venture capital and innovative public procurement.

The discussion left the working party with three unresolved questions in need of further discussion:

• What is the enabling framework required to raise the uptake of ICT by private and public sector?

• What needs to be done to enhance the relevance to the citizen of digital innovation and what safeguards are required to overcome resistance?

• How can the public sector focus on improving citizen value and deliver transformational and innovative solutions rather than recycle its older and frequently inefficient organisational models with a digital front end?

While the EIN meeting shed important light on the many different policy challenges facing an expanding European Union in a competitive, globalised environment, I was left wondering whether the EU - struggling as it is with internal market and regulatory issues - has the energy, determination and ability to attack the very real technology challenges it faces before it's too late to act.

Wrapped in procedure and regulating by compromise, I felt that a better strapline for the continent might be: 'Inventing the future, caught in the past.'

The Europe of 2020 is only 14 years away and with every day that passes the world position we enjoy is being chipped away by nations with different priorities to our own.