How should we govern the digital economy?

Posted by Matthew Davies
June 7, 2016 04:14 pm

At Readie’s recent Digital Economy Research Summit, Nesta’s CEO Geoff Mulgan noted that “we’re witnessing an extraordinary series of digital revolutions in our economy”. They’re certainly extraordinary: never before has digital technology attracted such levels of investment or media attention, or been so tightly integrated into the lives of ordinary people. We live in a world populated by more smartphones than humans, in which even the most traditional industries are being continually disrupted through digital innovation. We still talk about the ‘tech sector’ and the ‘internet economy’ – in fact, Nesta’s research has shown that the UK’s digital businesses are performing than they ever have been – but there’s a growing recognition that the digital transformation we’re seeing is much broader. It’s no longer an exaggeration to say that in the 21st century, the digital economy is the economy.

You’d be hard-pressed to find a policymaker anywhere in Europe who doesn’t think digitalisation is important or relevant. According to a survey conducted by Readie last year, nine out of ten European policymakers think that digitalisation is ‘important’ or ‘very important’ to their work. The problem, as ever, is getting the right information. Less than half of policymakers said that the current evidence-base on the impact of digitalisation was robust or user-friendly. Denmark’s Business Minister, Troels Lund Poulsen, underscored this point when he told us that “solid knowledge of the consequences of digitalisation must be in place” for governments to help businesses succeed. Many governments – including Denmark – are embarking on fact-finding missions to gather this information, but it’s increasingly difficult for governments to take stock of a digital economy which is much bigger than any one country or sector.

Governments are choosing to engage with the complexities of the digital economy in a variety of different ways. In late 2014, the UK government opted to bring together all of its digital policymakers into a body called the Digital Economy Unit, which straddles two government departments. Bringing expertise together from across government allows for a more intelligent approach to digital policy, incorporating experts on skills and infrastructure as well as entrepreneurship and business growth, as well as coordinating digital strategy across government. France has opted to do something similar, creating a digital agency – l’agence du numérique – and a dedicated Minister for Digital Affairs. Poland, too, has a digital minister, and it’s these clearly demarcated responsibilities which have made greater collaboration between member states possible, such as a recent open letter to the European Commission on the regulation of digital platforms.

The idea of a ‘digital economy unit’ isn’t hegemonic, however. Many leading digital countries continue to distribute responsibilities for setting digital policy across departments. Germany, for instance, splits digital functions between three ministries, but has still managed to lead the pack with initiatives such as its path-breaking Industrie 4.0 strategy. Estonia, a world leader in entrepreneurship and e-government, treats digital economy issues as part of the remit of their economy ministry, but an across-the-board commitment to minimising red tape and embracing e-government has made the country a haven for entrepreneurs. It’s this ‘horizontal view’ that was advocated by Estonian MEP Kaja Kallas in our interview with her last month. “The question shouldn’t be about centralised digital units” Ms. Kallas told us, as “digitalisation takes place in all spheres of the society as well as all policy areas”.

It may be that we’re yet to discover the most effective way to understand, govern, and support the digital economy. Most of these units and approaches are new and fairly untested, and we believe that there’s a need for greater communication and sharing of best practice between governments across the continent. We also strongly believe that policymaking on the digital economy needs to become less siloed and more joined-up. Business leaders and campaigners in civil society have for a long time recognised that ‘turning digital’ isn’t a matter of adopting specific technologies, but of wholesale organisational and cultural change – and it’s encouraging to see governments getting in on the act. This change will only come about if digital policy units from different countries engage with each other in good faith, and in the spirit of experimentation.

It’s for this reason that we‘re bringing Europe’s digital economy teams together for the first time at the Readie Policy Summit 2016 in Berlin to share, explore and interrogate existing policies. In the meantime, we’ll be using this blog to foster the growing conversation about how we should govern the digital economy – a conversation you’re invited to join. Follow us on @ReadieEU and use the hashtag #Readie4Digital to share your thoughts on how governments can make the most of digitalisation.