Measuring The Digital Economy

By on 14/10/2014 | Updated on 14/10/2014
A 150-page report from the OECD covering 34 countries.

A new report gives a fully researched insight into how nations within the OECD are using and benefitting from – our losing out to – the digital economy. Measuring the Digital Economy: A New Perspective shows how governments can better engage with their citizens through the medium of online communication. The report will be published in November.

Developments like cloud computing, mobile technology, social networking and big data analytics are making possible the future of what the report calls ‘smart everything’. By this they mean homes, energy, healthcare, business processes, transport, grids and of course governments.

All of these processes rely on fixed and wireless broadband networks. This is something we all know is going to grow massively. The number of connected devices in households in the OECD area is currently around 1.7 billion. By 2022 that is projected to rise to 14 billion.

It is all happening so fast that there are obvious problems with collecting the data while it is still valid, and working out consistent methods of analysing that data even while the technologies are evolving. So the 150-page OECD report is a valuable tool in analysing what people in the 34 member countries are doing and what they are going to need.

Age and Education

One of the main findings, which underlines other research, is that use of the internet is linked to adults’ education and age. And the way they use the internet, as much as how much they use it, is affected by upbringing, social values and much more. Clearly this something all governments will have to understand and engage with if they want to move more services online.

Age is a key factor. The young have an almost universal uptake of the internet, but age increases the differences. For example, in countries like Denmark, The Netherlands and Sweden, more than 75% of 55-74-year-olds used the internet in 2013. In Mexico and Turkey the equivalent figure was just 10%.

Those figures are not purely the result of age. Educational standards also make a difference. People in the 55-74 age bracket who have a good educational background have similar internet usage to those in the 16-24 bracket in some countries. So those who are older and less well educated, who are often the people requiring government services, are the least likely to go online to engage with those services. As the report says, ‘they are thus a potential focus of strategies to foster digital inclusion’.

Earning Trust

A key issue for any government wanting to engage with citizens online is to ensure the users trust the experience. And that trust is partly based on what other experience people have had online. For example, 70% of people reported reading news online. About 80% used the internet to obtain information on goods and products. And nearly 90% sent emails.

There was little variation in these figures across the countries surveyed. But where the divergences were greater was in more sophisticated use of the internet. The report singles out e-commerce, e-government and online banking as three examples.

Online banking displays huge disparities within the OECD. In Estonia, Finland and Norway, for example, over 90% of people reported banking online. But this figure falls to less than 20% in Chile and Greece. Income and wealth levels are contributing but not the only factors.

As the report states: ‘Country uptake patterns for sophisticated activities tend to be similar. For example, online banking is positively correlated with the use of e-government services (also requiring trust, familiarity and infra-structural development), software downloading and, to a lesser extent, e-purchases, audio-video streaming and online gaming.

‘Hence, other elements are likely to come into play, including familiarity with online services, trust and skills, together with country-specific elements.’

Early Adopters

It is well known that children are easy and early adopters of the internet. Data shows that 99.5% of 15-year-olds have used the internet. While this has many positive outcomes, and ensures the next generations will have no barriers to entry to using services online, there are aspects that require caution, as the report highlights:

‘While access to information via the Internet may bring considerable benefits for children’s education, it also exposes them to online risks such as access to inappropriate content, harmful interactions with other children or adults, and exposure to aggressive marketing practices. Children online may also put at risk the computers they use and inadvertently disseminate their own personal data.’

Protection takes many forms, some of them parental, some of them down to governments and service providers. But all aspects are provided with huge discrepancies in their application. Web-filtering or paternal control software is readily available but even in countries close together there is no clear correlation. For example in Slovenia, 22.5% of parents used protective software, but in the Slovak Republic the figure was 2%.

Clearly there is more here for governments to do. As the report concludes: ‘Protection of children online is an important public policy concern in many countries.’

Computers and Citizens

For adults, the world of online, and sometimes simply the ability to use a computer, can be both a challenge and a blessing. As computers become an integral part of a higher and higher percentage of jobs, so individuals need to maintain or hopefully improve their computer skills to be competitive in the jobs market.

Given that, the research in the OECD report does not offer grounds for complacency for governments who want their workforce to be dynamic and computer literate, and who want to engage with those citizens online. The report lays out the data:

‘Job mobility is an important driver of knowledge transfer and spillovers, which in turn foster innovation and growth in the digital economy. However, in 2013 only 39% of individuals in the EU labour force judged their computer skills to be sufficient to look for a job or change job within a year. Among the European countries, this percentage varied between 60% in the Netherlands and 25% in Greece. In all countries, individuals with a higher level of formal education report higher confidence in their computer skills, as compared to those with no or low formal education. The gap between these two groups exceeds 60 percentage points in Poland and Turkey.

‘Education and labour policies play a crucial role in the acquisition of ICT skills, their use at work and also their obsolescence if they remain unused. Governments need to craft policies that sustain a skilled labour force, are able to meet current labour market needs and easily adapt to changing skills demands over time.’

Fixed and Mobile

While education in ICT remains critical, so too does the actual availability of the internet itself. As the internet expands so the discrepancies diminish between countries and age groups in their use of the technology. Wireless broadband subscriptions in the OECD increased from 250 million in 2008 to 850 million by 2013.

But the key to the expansion of internet services to much of the world has not been the fixed routers and hubs in people’s homes and offices but mobile broadband. Africa and Asia, with relatively low levels of fixed broadband deployment, have based their growth on mobile broadband, a technology most European countries use for convenience rather than necessity.

For example, in Sub-Saharan Africa, mobile subscriptions grew from 14 million in 2010 to 117 million in 2013.

In Africa and Asia page views by mobiles rose from 15% in 2012 to 40% in 2014. A metric is to measure views of Wikipedia. This has roughly 20 billion page views per month. Page views on handheld devices (tablet and smartphone) rose from 1 billion in 2011 to 4 billion in 2013. As the report states: ‘Much of this growth came from views of pages in languages other than English.’

This is an important aspect of all government websites. To be viewed clearly across all platforms the sites must be built in a ‘responsive’ way, that is they display differently on a smartphone compared to a large laptop, otherwise mobile delivery can appear small and confusing.

The Cloud

The cloud is being used by increasing numbers of individuals, companies and governments, wherever they are located and whatever technology they are using. The report views this development positively, saying that cloud computing ‘is considered one of the most promising applications. Cloud computing is becoming a more viable alternative for storage and computing capability.’

Perhaps of more concern is the claim that ‘Cloud services are a substitute for investment.’ The aspect of security around cloud computing is not specifically addressed in the report, although this is an area that has been discussed by Global Government Forum.

Crime Online

However, Measuring the Digital Economy does talk about the problems around online transactions. Elsewhere in the report, as mentioned, it says explicitly that ‘online banking is positively correlated with the use of e-government services’. But the other side to this is that online transactions, which can be anything from transferring funds to purchasing items from third-party websites, is not a risk-free activity. This is particularly true of cross-border transactions.

The cost to individuals alone, excluding business, of online fraud and theft is estimated for 2013 at $110 billion. The report quotes a cybercrime report by Symantec which sets the number of victims at 400 million. The whole area of online transactions and mobile payments, says the report, ‘pose a number of issues for consumer protection.’

Interacting with Government

But, despite some serious security concerns, it is clear that more governments want to increasingly use the cloud and move more services online. The report highlights how this is not a ‘one size fits all’ seamless progression.

However, it does highlight the clear advantages: ‘ICTs can play a considerable role in simplifying interactions with public authorities, while simultaneously saving taxpayer resources, thanks to the digitisation and automation of many processes. For both individuals and businesses, online interactions can include simple document browsing, downloading of forms, and the completion of administrative procedures.’

The report separates those interacting with the government into two groups, business and personal. For citizens, the numbers using online services generally has increased, but there are wide disparities between countries. So 70% of people in Iceland have used the internet to perform administrative procedures, but this figure is just 10% in Chile.

There are differences that may not seem obvious. For example citizens in both Germany and the United Kingdom, who use the internet a lot, have a relatively low propensity to use online government services. But the Nordic countries, Korea and the Netherlands all use the internet a lot yet also make good use of online government services.

The report puts forward several theories as to why these patterns exist, everything from cultural or economic factors, to the perception and utility of services provided by public authority websites. More research is needed, but, as the report states: ‘Ease of access and use of a website appear to be strategic factors to foster usage and user satisfaction.’ And those parameters are further complicated when it is remembered that age and educational background are also factors in how citizens even approach these sites.

Businesses interact more with governments online, but this can be down to everything from the need to do more administrative tasks anyway, to a legal requirement in some countries. Overall businesses are interacting more with governments with each passing year, but there are still quite large differences. This varies from 95% of businesses in Ireland in 2012, to 58% in Italy.

Getting Engaged

This large report covers a wide range of topics but several threads emerge. More people are using more ways to use the internet. For fully engaged and responsive citizens, governments need to help those citizens improve their ICT skills and help keep them safe. Public bodies also need to ensure their own efforts to interact with their citizens are relevant, flexible and easy to use for a broad cross-section of the population. And that those interactions work across a range of platforms.

As time passes, increased use should diminish the differences between age groups, nationalities and educational standards. But for now, governments must put great efforts into helping all their citizens become digital citizens. Both governments and citizens can then reap the rewards.


OECD (2014), Measuring the Digital Economy: A New Perspective, OECD Publishing.

About Graham Scott

Graham is an experienced editor and publisher and an award-winning writer. He has travelled extensively and is interested in world cultures.

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