Page 21 - bne IntelliNews monthly magazine May 2024

bne May 2024 Companies & Markets I 21
In 2022, the cumulative value of ICT goods exports in Central and Eastern Europe surged to $98.6bn, a 185% increase from 2005. Conversely, ICT goods exports in Western Europe declined by 9.5% over the same period, potentially due to the relocation of ICT equipment manufacturing to the CEE region, driven by lower labour costs.
Czechia and Slovakia lead in ICT goods exports per capita, boasting robust manufacturing sectors in computers, peripherals, communication and consumer electronic equipment.
Lagging behind
On the other hand, the report points out, ICT enterprises in Western Europe tend to have higher labour productivity with €135,512 in value added per employee, compared to €45,351 in the CEE region.
CEE countries have also shown weaker results in digitisation of enterprises and individuals, such as e-commerce sales, cloud services and big data use and e-government activities of individuals, the report adds.
There are also significant differences between countries in the region, as shown by their performance on the Digital Economy and Society Index (DESI) that evaluates the digital connectivity, proficiency in digital skills, online engagement, and provision of digital public services.
Based on the DESI for 2022 only three out of the 11 CEE countries – Estonia, Slovenia and Lithuania – exceed the EU average. Most of these nations are positioned in the lower half of the index. Notably, Estonia emerges as a standout leader
in digitisation among CEE countries, distinguished for its exceptional digital services within public administration.
When it comes to R&D spending, Slovenia leads among the CEE nations, dedicating 2.11% of GDP, albeit falling below the EU average of 2.23%. Ranking eighth in the EU, Czechia and Estonia allocate over 1.5% of GDP. Bulgaria, Latvia and especially Romania lag behind.
Sectors to watch
The rapid evolution of the business landscape has hastened the rise of emerging trends poised to shape the digital economy's future. Key among these are artificial intelligence, cybersecurity and cloud technology.
AI is expected to exert a growing influence across the region, impacting not only the ICT sector but also various industries through its applications.
“Amidst diminishing significance of traditional growth drivers, many pin their hopes on artificial intelligence (AI) as a source of sustained economic growth and increased productivity in CEE, Western Europe and globally,” says the report.
According to PwC, AI has the potential to contribute up to $15.7 trillion to the global economy by 2030. With its ability to transcend traditional limitations of capital and labor, AI
is seen as a transformative force that can assist decision- makers, business leaders, and industry experts amidst significant challenges such as aging populations, inadequate R&D investments, regulatory complexities, stagnant productivity, and talent shortages. Effectively embracing AI-based solutions offers the CEE region and the EU a crucial opportunity to bolster economic competitiveness and confront these challenges directly.
The cybersecurity sector, driven by escalating market demand stemming from hybrid threats like those posed by Russia, is also likely to witness significant growth in the near term.
"In recent years, the Central and Eastern European countries have experienced a rapid evolution of the cybersecurity landscape. With intensification of hacker attacks and emergence of novel forms of cyberthreats, the environment became riskier and more difficult for both public and private actors to navigate,” says the report.
“Due to growing interdependencies, critical infrastructure has been embracing more and more areas. Once it used
to be bridges and buildings, but now, it is covering ICT systems and apart from usual sectors like healthcare, energy or finance, also new ones like agriculture, chemical and electromechanical sectors are added. Hence the growing importance of cybersecurity. Current national and regional legislative efforts must be aimed at mobilising key actors to ensure that their operations are secured and businesses are ready for threats of the future,” commented Karol Okonski, director, PwC and CEE leader for cybersecurity in public sector, as quoted in the report.
Meanwhile, cloud technology is anticipated to serve as the backbone supporting the advancement of both AI and cybersecurity.
Strategic measures needed
Looking forward, the report points to the need to advance the ICT sector through several strategic measures. These include raising awareness about the digital economy and actively embracing emerging tools and technologies. CEE countries are grappling with a shortage of skilled ICT professionals, stemming from a gap between educational offerings and current industry demands, as well as a rising need for digital experts like robotic engineers, operators, and cybersecurity specialists.
In light of these challenges, fostering cooperation among
all CEE nations is essential, the authors argue. This involves developing shared priorities and coordinating regional technology-related activities. Umbrella organisations, such as the CEE Digital Coalition, play a critical role in unifying the voices of businesses across different countries to represent their collective interests at both European and global levels,
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