Riga 3rd June 2009 Is there a case for a Latvian version of the Obama broadband package? Alf Vanags

Riga 3rd June 2009 The facts (1) Latvia is in deep recession Infrastructure spending is classical approach to boost demand and achieve useful improvements In Latvia we have programme improve heat insulation

Riga 3rd June 2009 The facts (2) Obama is spending 37 billion USD on digital related infrastructure UK: Digital Britain initiative France: France Numerique 2012 What is the case for a Latvian programme?

Riga 3rd June 2009 The facts (3) Latvia has low productivity in many sectors Micro-level policy should be aimed at increasing productivity Arguably, LV policy of prioritising sectors is wrong Broadband development offers horizontal policy

Riga 3rd June 2009 Productivity in manufacturing relative to EU-27

Riga 3rd June 2009 Productivity in services relative to EU-27

Riga 3rd June 2009 Productivity in real estate, renting and business activities in 2007, % of EU-27 average

Riga 3rd June 2009 Productivity in financial intermediation sector in 2007, % of EU-27 average

Riga 3rd June 2009 Studies on productivity impact of broadband Brookings in US Fornefeld, M, Delaunay G, and Elixmann D (2008) The impact of broadband on growth and productivity A study for the EU Composite indicators: –Infrastructure (13 indicators) –Readiness (7 indicators) –Use (14 indicators)

Riga 3rd June 2009 Broadband readiness IT skills, innovation, home equipment Use of on-line services E-government, e-commerce, other Economic impact GDP, productivity, employment Broadband infrastructure Penetration, coverage, bandwidth Theorising the economic impact of broadband development

Riga 3rd June 2009 Relative role of infrastructure and readiness 66% of change in use explained by change in infrastructure 34% explained by readiness

Riga 3rd June 2009 Development of broadband by country DFE use cluster analysis to define 4 country groups Advanced knowledge societies Austria, Belgium, Denmark, Finland, Luxembourg, the Netherlands, and Sweden. Large industrial countries: France, Germany, Italy, Spain and the UK. Quickly developing: Ireland, Czech Republic, Estonia, Hungary, Malta, Lithuania, Portugal and Slovenia.. Less developed broadband: Bulgaria, Greece, Cyprus, Latvia, Poland, Romania, and Slovakia.

Riga 3rd June 2009 Broadband penetration rate: number of broadband access lines per 100 inhabitants EU-27::::: Denmark Estonia:: Latvia:: Lithuania:: Slovakia:: Finland Sweden United Kingdom

Riga 3rd June 2009 % of households with broadband connection EU-27: Denmark Estonia: Latvia: Lithuania Finland Sweden:: United Kingdom Iceland: United States20::55:

Riga 3rd June 2009 % of enterprises with broadband connection EU-27: Denmark Estonia: Latvia: Lithuania: Luxembourg Poland: Romania:7: Finland Sweden62: United Kingdom Iceland20::95:99

Riga 3rd June 2009 % of enterprises having received orders on-line in previous 12 months EU-27: Denmark Estonia: Latvia::1226 Lithuania: Portugal Romania:::233 Finland : Sweden United Kingdom Iceland12::22:21 Norway

Riga 3rd June 2009 % of households with access to internet by regions of Latvia LATVIA Riga region Pieriga region Vidzeme region Kurzeme region Zemgale region Latgale region

Riga 3rd June 2009 Possible programme Use the opportunity of the recession to create a 21st century digital infrastructure Increase broadband infrastructure, readiness, use to EU average levels or better eParvalde at RAPLM could be organising institution Finance – structural funds +public private parnership

Riga 3rd June 2009 Economic impact No Latvian research Cornwall programme: increase in SME broadband penetration fromless than 1% to 47% resulted in more than 10% increase in productivity in business services.