Denmark as a digital frontrunner
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- Bartholomew Gerard Adams
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1 Denmark as a digital frontrunner Recommendations for the government from the Digital Growth Panel May 2017 Digital Growth Panel
2 Summary Vision: Denmark as a digital frontrunner Denmark and the rest of the world is on the verge of a new industrial revolution. New digital solutions will increasingly become part of our lives - both at home, at work and in the public sphere. Developments are moving faster than ever. Within the next 10 to 15 years, technologies such as advanced robots, artificial intelligence, 3D printing, driverless vehicles and the intelligent house will gain even more ground throughout society. Just as with any other significant and fundamental change, digitisation can seem extreme and hard to deal with. However, digitisation holds a wealth of opportunities for our society if we can seize them and use them to the benefit of all. Fewer arduous jobs. Less congestion. Improved healthcare. Better public services. Increased resource-efficiency and reduced environmental impacts. Entirely new businesses. Last but not least, stronger exports, innovation and productivity for Danish companies. The question is not whether we want to join the process of accelerating digitisation in the future. The question is rather whether we want to reap the benefits of the opportunities and deal with the challenges that follow. If we take matters into our own hands, as a society we can have unlocked DKK 90 bn. by 2025 within the five selected sectors with the most potential in connection with the digital transition. Denmark is already in a strong position. We have been among the most digitised countries in the world for many years. We are all online, we all use social media and internet banking, and we all communicate with the public authorities via NemID. We are an open and internationally oriented country that historically has been able to adjust to new technology and new global opportunities. We are a small and innovative country and we can adjust quickly to new situations. However, Denmark and the EU have begun to lose ground to other countries. Within a few years, Denmark and other European front runners may be overtaken by Asian countries which have already implemented ambitious initiatives to convert education programmes, the business community and the public sector to a more a digital future. Denmark needs to shift into high gear and create the best possible environment to remain at the forefront. This will require developing our competences for the digital age through retraining and education. This will require ensuring good conditions and a good environment for digital and creative innovation so that we can develop the solutions of tomorrow and attract new investment. This will require regulatory and legislative frameworks that are ready for the digital transition so that companies do not encounter unnecessary barriers to developing new business models. This will require access to digital and innovation-friendly markets in the EU and the rest of the world. At the same time, it will require that we as a society strengthen our digital mindset, so we are better able to understand the opportunities of digitisation and are able to convert these into solutions that create value throughout society. In order for everyone to be a part of and contribute to this development, a clear vision is needed of the direction we as a society want to go and ambitious initiatives to steer us on the right course. The vision is that Denmark is to be a digital frontrunner. We must be the fastest and best at creating and exploiting the benefits of digitisation to the advantage of the individual business, the individual person and society as a whole.
3 Good general framework conditions as the basis for digital transition The Digital Growth Panel has been focusing on digital transition and concrete recommendations for digital initiatives. However, this does not mean that general frameworks are not important. On the contrary, good general framework conditions are imperative if the digital transition in society and the business community is to be at all possible. Favourable tax conditions, access to venture capital, the property market, free-trade agreements, the single European market and many more elements are therefore vital for Danish companies to succeed in creating growth and innovation, even during a digital transition. In other the words, such general frameworks are the foundation on which to build specific digitisation initiatives. Three objectives for Denmark's digital transition The Digital Growth Panel has identified three general objectives to realise the vision of Denmark as a digital frontrunner. All citizens have a share in the benefits of digitisation: Digitisation can improve the welfare of each individual through less arduous jobs, improved healthcare and increased wealth. However, this will not happen automatically. New jobs must be created, we need to manage the digital transition and we have to help everyone through the changes. One vital prerequisite is strong focus on increasing digital skills through education and retraining in order to ensure that each individual can reap the full benefits of digitisation. Businesses unlock the growth and SMEs needs at digital upgrade: Growth in the business community will ensure that we as individuals have more welfare and a wealthier society in the future. It will benefit us all if the Danish business community can succeed with the digital transition. It is especially important that we raise the digital bar for small and medium-sized enterprises. It is harder for SMEs to get started on digitisation than it is for larger enterprises. Good digital framework conditions will promote the digital transition: Digital and technological development is fast-paced and challenges existing assumptions and rules. In order to take advantage of new opportunities and to manage new risks, legislation must quickly and responsibly be adjusted so that we can support the development of new digital technologies as well as new and innovative business models. Here too, Denmark will be an international frontrunner and work towards ensuring that the digital single European market promotes innovation and new business models across different policy areas and is not overregulated and protectionist. An ambitious digital initiative In order to provide Danish society with the best possible framework to exploit the opportunities in the new digital reality, the Digital Growth Panel recommends ambitious initiatives within four areas: 1. Digital competences for everyone: Danes will need stronger digital competences to take advantage of new opportunities and create new good jobs. 2. Attractive digital growth environment: Denmark will need an attractive digital growth environment that provides good conditions for new and value-adding solutions and attract new investment and talent. 3. Proactive framework for digitisation: Denmark will need a proactive framework for digitisation that supports the development of new business models. 4. Digital responsibility and engagement: Digital responsibility, engagement and ambition must be established in society as a whole to exploit the opportunities of digitisation. The Digital Growth Panel has drawn up 33 recommendations within these four focus areas. Some of these recommendations will require financing if they are to be implemented, while it will be possible to implement other recommendations within the existing financial framework or by changing priorities.
4 The Digital Growth Panel has not assigned specific sources of financing to its recommendations, but the potential returns on investments in the digital transition are so large that they will benefit society and the public purse within just a few years. The following two pages illustrate the Panel's vision, objectives and four focus areas in a single figure and provide a table detailing the 33 recommendations.
5 Society Sustainable growth and value creation Individuals Improved quality of life and new jobs BENEFITS Businesses Increased productivity and innovation VISION Denmark as a digital frontrunner Denmark is the fastest and the best at creating and exploiting the advantages of digitisation to the benefit of all OBJECTIVES All citizens have a share in the benefits of digitisation Businesses unlock the growth and SMEs needs at digital upgrade Good digital framework conditions will promote the digital transition INITIATIVES Digital competences for everyone Attractive digital growth environment Proactive framework for digitisation Digital responsibility and engagement Begin building digital competences at primary and lower secondary schools Digitisation of youth education programmes and higher education Upgrade the digital skills of the workforce Leading international digital hub as well as knowledge and test environments Attractive country for international digital talent Favourable climate for digital investments and access to capital and financing Agile and innovationpromoting regulation A future-proof infrastructure in a digital world Good framework for data utilisation, IT security and e- commerce Political focus and progress in Denmark's digital development Increased awareness of digital opportunities Proactive approach to the societal challenges in digitisation
6 Recommendations Denmark shall have a technology pact Begin building digital competences at primary schools Digitisation of youth education programmes and higher education Upgrade the digital skills of the workforce Leading international digital hub as well as knowledge and test environments Attractive country for international digital talent Favorable climate for digital investments and access to capital and financing Agile and innovation-promoting regulation A future-proof infrastructure in a digital world Good framework for data utilisation, IT security and e- commerce Political focus and progress in Denmark's digital development Increased awareness of digital opportunities Proactive approach to the societal challenges in digitisation Digital competences for everyone 1. The government to spearhead a technology pact focusing on digital and technical competences 2. Informatics as a compulsory subject at primary and lower secondary schools 3. Increased utilisation of digital learning tools across different subjects 4. Closer cooperation between schools and businesses 5. Informatics as a compulsory subject in 3-year upper secondary programmes 6. More funding to develop digital competences on all relevant education programmes 7. More admissions to digital and technical education programmes ("STEM programmes") 8. More flexible adult and further education programmes focused on the needs of businesses 9. Improved guidance and clarity regarding digital adult and further education programmes 10. Greater financial incentives to upgrade digital skills Attractive digital growth environment 11. Establish a leading international hub for the Internet of Things, artificial intelligence and Big Data 12. Improved strategic, technical and digital research 13. Improved access to test and demonstration facilities, particularly for SMEs 14. New SME platform and increased focus on digitisation of the system for innovation and trade promotion 15. Good framework for highly qualified foreign professionals within technology and digital business development 16. Easier for SMEs to recruit highly qualified foreign professionals 17. Targeted marketing efforts to attract digital talent to Denmark 18. Promote investment by SMEs in digital transition 19. Review of tax depreciation rules for digital investments and deductible development Proactive framework for digitisation 20. Flexible regulatory concept for new digital technologies, products and business models 21. Technology-neutral and digitisation-ready regulation 22. Danish efforts in connection with an ambitious and innovation-friendly single European digital market 23. Strategic Danish efforts to update and develop international standards 24. Ambitious 2025 goals for digital infrastructure, including roll-out of 5G 25. Automation of reporting and notifications from businesses to the public authorities 26. Action plan on testing and promoting driverless vehicles 27. Make more public-sector data with commercial value accessible 28. Strengthen SME data utilisation through guidance and simpler rules 29. Danish businesses to be among the leading in Europe within IT security 30. Strengthened framework for competitive e-commerce Digital responsibility and engagement 31. Annual digitisation summit and roadmap for Denmark's digital development 32. Digitisation Week and a broad information campaign on the benefits of digitisation 33. The Danish Council of Ethics should have specific focus on ethical questions related to digitisation
7 Great benefits from digitisation The government aims at increasing BNP by DKK 80 bn. in 2025 via policy initiatives that raise productivity and employment. Digitisation and new technology can be a vital contribution to this aim. In order to explore this potential, the World Economic Forum and Accenture have carried out an analysis on behalf of the Digital Growth Panel with regard to the digital benefits for Denmark from five selected sectors. The World Economic Forum and Accenture assessed benefits based on a broader definition of economic growth beyond GDP because benefits in the form of increased leisure time, reduced carbon emissions and longer life expectancy are also included. The analysis shows that Denmark can unlock almost DKK 87 bn. of value in 2025 by exploiting to a greater extent some of the newest technologies already available today. Other analyses estimate that the value added by digitisation might be even higher than forecast by the analysis drawn up by the World Economic Forum and Accenture. 1 The analysis also shows that the value added to business will be substantial but that it will be even greater for individuals and society as a whole. About DKK 54 bn. out of the DKK 87 bn. will benefit individuals and society, while a possible DKK 33 bn. will be unlocked for the business community. The five sectors that can expect to unlock high amounts of value and which are the focal point of the analysis are: 1. Manufacturing, where the most value will go to businesses because new digital technologies can significantly reduce and open up new markets which could unlock DKK 17 bn. in Digital development will also result in lower consumer prices (DKK 2 bn.) due to increased competition. 2. E-commerce (B2C and B2B), where increasing e-commerce and new digital opportunities are altering how we shop, and where individuals can achieve value impacts through lower prices for goods and services as well as more leisure time. The value to individuals alone is estimated at about DKK 16 bn. 3. Connected mobility services, where reduced transport etc. mean that individuals have more leisure time corresponding to a value impact of DKK 17 bn. 4. Healthcare, where new digital healthcare solutions will result in fewer sick days, lower healthcare and longer life expectancy. 5. Electricity smart grid, where implementation of new consumer-focused digital technologies can profit consumers since future electricity consumption will be matched to energy production from renewable resources. 2 The digital transition will transform the labour market: some job functions will disappear and new jobs will arise. The opportunity to create new highly productive and well-paid jobs in Denmark in line with some jobs disappearing depends on the initiatives implemented and how quickly we as a society adapt. New jobs will not come automatically. The full results of the analysis by the World Economic Forum and Accenture are summarised in the table on the following page and are presented in more detail in their report. 3 The report does not include estimates on the investments needed to achieve the value impacts. However, the assumptions behind the estimated developments up to 2025 are relatively conservative. It is assessed that implementation of the recommendations by the Digital Growth Panel will be a significant step towards realising the value impacts. Read the full report (in Danish) here: em.dk/digipanel 1 See for example Boston Consulting Group (2016): Digitizing Denmark. 2 The Digital Growth Panel does not provide recommendations regarding healthcare and energy. Instead, refer to the Growth Team for Life Science and the Danish Energy Commission. 3 World Economic Forum and Accenture 2017 for the Digital Growth Panel
8 Value of digitisation for selected Danish sectors and technologies in 2025 Value to individuals Value to business Value to Society Total value in 2025 Manufacturing Digital R&D, production technology and supply chain management Selected sectors: Consumer goods, industrial equipment and life science Lower consumer prices Reduced Job functions will change Creation of new jobs will depend on the political initiatives implemented = DKK 2 bn. = DKK 16 bn. = not estimated* DKK 18 bn. E-Commerce B2C e-commerce B2B e-commerce Time savings Lower consumer prices Lower transaction Export opportunities Job functions will change Creation of new jobs will depend on the political initiatives implemented = DKK 16 bn. = DKK 12 bn. = not estimated* DKK 28 bn. Connected Mobility Services Assisted driving Car & ride sharing services On-demand chauffeur service Reduced ownership Sales of new transport/mobility services Reduced transport and infrastructure = DKK 17 bn. = DKK 3 bn. = DKK 3 bn. DKK 23 bn. Healthcare Virtual care Analysis and data-based diagnoses Intelligent devices Time savings Fewer sick days Sale of new goods and services Lower healthcare Longer life expectancy = DKK 7 bn. = DKK 1 bn. = DKK 5 bn. DKK 13 bn. Electricity: smart grid Smart meters Matched supply and demand Smart Grid for consumers Reduced energy consumption Lower prices Optimised peak load management Less traded energy Reduced CO2 emissions = DKK 4 bn. = not estimated* = not estimated* DKK 4 bn. Total value for selected areas DKK 46 bn. DKK 33 bn. DKK 8 bn. DKK 87 bn. Greatest benefits of digitisation Source: World Economic Forum and Accenture 2017 *The value has not been estimated Time savings Lower prices Reduced ownership Increased productivity Sales and new markets Lower Less pollution Improved health New jobs
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