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New Study Points to Economic, Geopolitical Gaps in EU Data Strategy

Economic preparedness and the geopolitical dimension of data are potential pitfalls of the EU data strategy, an economic expert told EURACTIV ahead of the publication of a new study next week.

“The paper underlines how Europe is lagging behind the US but also increasingly challenged by China in terms of GDP impact of the data economy, as well as in terms of occupation and skills. Looking at Europe, Southern European countries are second tier compared to the Nordics,” Stefano da Empoli, president of the Institute for Competitiveness, told EURACTIV.

The Institute for Competitiveness is an Italian think tank that forged partnerships with the Spanish Royal Institute Elcano, the Lisbon-based Institute of Public Policy and Geece’s Foundation for Economic & Industrial Research.

The network of Southern European think tanks gathered under the umbrella PromethEUs, is set to launch a new data economy index part of a study, seen by EURACTIV, that will be presented at an event in Brussels next week.

Data economy development

The index comprises six indicators, particularly the number of companies using cloud services, crunching Big Data, data professionals’ share, and the data market’s value.

The index sees Nordic countries like Denmark, Sweden and the Netherlands leading the pack regarding economic preparedness, with Central-Eastern Europe – countries such as Romania, Bulgaria and Hungary – lagging behind. Southern countries are somewhere in between, with Spain performing particularly poorly as it is fourth-to-last.

“The key challenges for Southern European countries consist in data access for SMEs, their capacity to exploit the advantages of the data economy, and the fact that not only basic skills but also specialised professionals are quite scarce,” da Empoli added.

For the expert, another problem common to countries in Europe’s South is the possibility of counting on data infrastructure, as, for instance, high-performance computing is only accessible to large companies. At the same time, SMEs seldom can access supercomputers.

Geopolitics of data

The paper also puts the data economy into the international perspective, estimating that the US data market value in 2022 was worth a whopping €289.5 billion, a little short of four times the EU total of €73 billion and seven times that of China, which is at €40 billion.

At the same time, Europe’s second place is increasingly challenged by Beijing, whose market growth in the last two years has been more than double that of the European market.

In this context, the EU should strive to “develop a data diplomacy to strike agreements with like-minded countries that could lead to a coordinated approach in terms of regulatory regimes,” da Empoli said, pointing in particular to the importance of developing a common vision on emerging technologies such as the metaverse.

Given the pulling power of the so-called ‘Brussels effect’, the paper considers that the EU data strategy has the potential of influencing the rest of the world in the way data is shared and used and suggests that the EU pushes its views in international fora like the G7 and the Digital Economy Partnership Agreement.

At the same time, the study notes the potential ‘weaponisation’ of the Data Act by certain companies from third countries, which could use the regulation to access Intellectual Property and obtain data from sensitive sectors like defence.

“Safeguards need to be in place to avoid the release of commercially sensitive data, which is not easy to distinguish. If not properly handled, this data-sharing might undermine the very European competitiveness it is meant to reinforce,” da Empoli added.

Regulatory landscape

The European data strategy encompasses a complex regulatory framework that involves the Data Governance Act, the Data Act, the Open Data Directive and nine sectorial dataspaces.

For the expert, what is left to be defined is the kind of incentives companies will have to share their data with other economic actors, including competitors. While the EU rules are meant to foster trust in Business-to-Business data sharing, they do not change the underlying business model.

“You have two choices. Either you have a positive incentive in the form of compensation, or you mandate companies to provide data. Of course, the first way would be better. If we are talking about non-personal data, that could be a solution,” da Empoli added.

The paper zooms in particular to the European Health Data Space, the first sectorial data space meant to enable citizens to access their private health information better while making non-identifiable health data available to academia, researchers and policymakers.

The expert notes that in some countries like Italy and Spain, the situation is particularly complex, as there is no national health database since healthcare is managed at the regional level. The Italian case, he added, is made worse by the lack of digital skills and particularly high age of staff in the public administration.

Source: Euractiv



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