Salvatore Capasso, Giovanni Canitano (a cura di)
Mediterranean Economies 2023
DOI: 10.1401/9788815411167/c6
Within the acknowledged importance of processes of digitalization and digital transformation, the European Commission and EU Member States are showing increasing attention to technological and digital developments of the economy and society in the EU. The publication «Shaping Europe’s Digital Future», published in February 2020, stresses the need for citizens, employees and business people to reap the benefits of digital technologies and the urgency of empowering EU society with digital solutions strongly rooted in Member States’ common values. Consistent with the above, three key objectives are set to be achieved by 2025 to enable digital transformation and sustain European technological sovereignty:
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a) development, deployment and uptake of technology to improve people’s lives. In this respect, key actions include: the building and deployment of digital capacities in key technologies (such as AI and blockchain); investments to strengthen Europe’s connectivity; a European cybersecurity strategy; an action plan to boost digital literacy and upgrade digital skills; a reinforced EU government’s interoperability strategy;
b) a fair and competitive economy based on a digital single market. In this direction, key action plans include the elaboration of a data strategy able to make data available, accessible and simple to use; a new EU Industrial Strategy to help companies and especially SMEs to benefit from digital solutions; enabling consumers to make informed choices and trust digital products and services;
c) an open, democratic and sustainable society, within a trustworthy environment in which citizens are empowered in how they act and interact. Achieving this goal requires, amongst other things, the revision of rules about the Internal Market for Digital Services, with particular attention to the responsibilities of online platforms; the enhancement of democratic systems; new initiatives to sustain climate-neutral products and processes and circular economy business models; the promotion of electronic health records.
It is clear that to evaluate the achievement of established goals, measuring the digital transformation of economic and social activities through specific indicators becomes a crucial issue within the EU digital agenda [Bánhidi, Dobos and Nemeslaki 2020]. Indeed, measuring the various aspects of digital economy and society may help evaluate the progress made by EU Member States in digital performance and re-orient decision-making and strategic actions to improve the digital competitiveness of Europe as well as that of individual regions and countries, contributing to elaborate information-based national digital strategies and fostering digital convergence across EU states [Laitsou et al. 2020]. Digital convergence, in particular, has become increasingly important within the Digital Single Market Strategy which – since 2015 – has aimed to create an integrated digital market in Europe, unhampered by local and national regulations [Borowiecki et al. 2021]. {p. 181}

1.2. Measuring the digital economy and society: DESI

In order to measure digital transformation and its impact on both the digital economy and society, starting from 2014 the European Union introduced the so-called Digital Economy and Society Index (DESI), a comprehensive measure of data related to individual EU members (27) and reflecting different aspects of digitalization [EU 2022]. Until 2020 the index was calculated as a weighted average of five main dimensions, i.e.: connectivity (25 per cent), human capital (25 per cent), Internet use (15 per cent), integration of digital technologies (20 per cent) and digital public services (15 per cent). DESI has a 3-layer structure since each main dimension consists of more than one sub-dimension which, in turn, is broken down into several individual indicators.
Importantly, several changes were introduced in 2021 to take account of key policy initiatives in the field of digital transformation. In particular, the previous five-dimension structure was replaced by a four-dimension structure that closely reflects the four key policy areas of the 2030 Digital Decade Compass Agenda. These dimensions are: 1) human capital; 2) connectivity; 3) integration of digital technology; and 4) digital public services. These dimensions are not independent, and the development of the digital economy and society requires that improvement is pursued equally in all these areas at the same time. For this reason, the new weights attributed to the DESI dimensions were also changed starting from 2021 so as to reflect the equal value given to the four targets in the Digital Decade Compass. In light of such changes, the DESI of previous years was re-calculated for all countries. Table 1 reports the three-level structure of DESI:
As shown in table 1, the four main dimensions include 10 sub-dimensions which, in turn, account for 33 indicators. The last column shows that data are available from 2016 for most indicators. Interestingly, some new indicators have been added starting from 2021, notably: «ICT for environmental sustainability», which measures the level of support that adopted ICT technologies provide companies in taking more environmentally-friendly measures; «digital intensity», which measures the percentage of SMEs with at least a basic level of digital intensity that requires usage of at least four of 12 selected technologies; «AI», that refers to the percentage of enterprises using at least {p. 182}two AI technologies; almost all indicators of digital public services focus on e-government (the only exception is the indicator «e-government users»). The DESI report of a given year is mainly based on the previous year’s data. This means that DESI 2021 scores and rankings apply to the digital performance of the economy and society related to the first year of the COVID-19 pandemic. As for data sources, most data used to elaborate the DESI are directly supplied to the European Commission (Directorate-General for Communication Networks, Content and Technology and Eurostat) by the relevant national authorities, including statistical offices, regulatory bodies and relevant ministries, which collect and/or verify data provided by third parties for the European Commission (e.g., Capgemini).
Tab. 1. The three-level structure of DESI
Dimension (weight)
Description and alignment with the digital Decade Compass
Subdimension (weight)
Indicator
Time coverage
Human
capital (25%)
Assesses both internet user skills of citizens and advanced skills of specialists. At least basic skills, ICT specialists and female ICT
specialists measure targets of the Digital Decade Compass.
Internet user skills (50%)
At least basic digital skills
2016-2022
Above basic digital skills
2016-2022
At least basic software skills
2016-2022
ICT specialists
2016-2022
Advanced skills and development (50%)
Female ICT specialists
2016-2022
Enterprises providing ICT training
2016-2022
ICT graduates
2016-2022
Connectivity (25%)
Under Connectivity, both fixed and mobile broadband are analysed with indicators measuring the supply and the demand side as well as retail prices. Fixed VHCN and 5G coverage measure targets of the Digital Decade Compass.
Fixed broadband take-up (25%)
Overall fixed broadband take-up
2016-2022
At least 100 Mbps fixed broadband take-up
2016-2022
At least 1 Gbps take-up
2020-2022
Fast broadband (NGA) coverage
2016-2022
Fixed broadband coverage (25%)
Fixed Very High-Capacity Network (VHCN) coverage
2016-2022
4G coverage
2016-2022
Mobile broadband coverage (40%)
5G readiness
2019-2022
5G coverage
2022
Mobile broadband take-up
2016-2022
Broadband prices (10%)
Broadband price index
2020-2022
Integration of digital technology (25%)
The integration of digital technology dimension is made up of 3 sub-dimensions: digital intensity, take-up of selected technologies by enterprises and e-commerce. SMEs with at least a basic level of digital intensity, take-up of big data, cloud and AI are targets of the Digital Decade Compass.
Digital intensity (15%)
SMEs with at least a basic level of digital intensity
2022
Electronic information sharing
2016-2022
Social media
2016-2022
Digital technologies for businesses (70%)
Big data
2017-2022
Cloud
2016-2021
AI
2022
ICT for environmental sustainability
2022
e-Invoices
2019-2022
SMEs selling online
2016-2022
e-Commerce (15%)
e-Commerce turnover
2016-2022
Selling online cross-border
2016-2022
Digital
public
services (25%)
The digital public services dimension describes the demand and supply of e-government as well as open data policies. Indicators of digital public services for citizens and businesses assess targets of the Digital Decade Compass.
e-Government (100%)
e-Government users
2016-2022
Pre-filled forms
2022
Digital public services for citizens
2022
Digital public services for businesses
2022
Open data
2022
 
 
Source: authors’ elaborations based on European Commission, 2022.
In general, the DESI reports published annually can be used by individual Member States for the following purposes: to monitor their digital performance in a specific year and over time by analysing the overall index score (a score between 0 and 100 is assigned to each country) and the scores of the composing dimensions; identify specific areas of key intervention through a more in-depth analysis of specific sub-dimensions and indicators; track each country’s progress in digital performance over time. Moreover, as previously underlined, the index is a valuable tool for comparing countries, clustering them according to their index scores and informing digital policy decisions to address performance gaps and sustain digital convergence at EU level.
DESI was developed following the methodological guidelines and recommendations provided by the OECD for the construction of composite indicators [EU 2022]. Although the analysis is limited to EU Member States, it is among the most important benchmarks available worldwide to measure various aspects of digitalization in the economy and society. Moreover, a number of dimensions (sub-dimensions or specific indicators) overlap with those also measured by intergovernmental and international organisations to draw up indexes of ICT use and digital transformation at macro level.
As for global benchmarks, for example, the World Economic Forum elaborated the Network Readiness Index (NRI) and Global Competitiveness Indexes 4.0 (GCI 4.0). NRI, a composite index constructed with three levels, provides a framework to assess the multi-faceted impact of ICT on society and the com
{p. 185}petitive development of over 120 economies worldwide (https://networkreadinessindex.org/). Introduced in 2018, the GCI 4.0 analyses the factors that drive productivity, growth and human development of 141 economies, covering over 100 individual indicators organized into 12 pillars, some of which are strictly related to digitalization, notably ICT adoption and skills (https://www.weforum.org/reports/the-global-competitiveness-report-2020/). An important multi-stakeholder initiative aimed at producing high-quality and internationally comparable statistics about ICT was launched in 2004 by the International Telecommunications Union (ITU) that defined a core list of ICT indicators (e.g., ICT infrastructure and access, access to and use of ICT by households, individuals and businesses; e-government) and methodologies to collect them. From 2009 the ITU has also elaborated the state of digital development across its 196 member countries in the annual report «Measuring digital development: Facts and figures» which offers a snapshot of the most important ICT indicators, estimating key digital connectivity indicators and multiple aspects of the digital divide (https://www.itu.int/en/ITU-D/Statistics/Pages/facts/default.aspx). In the EU context, it is worth mentioning the project launched by the European Commission in 2018, when it established the International DESI (I-DESI) to measure the digital performance of 28 EU Member States and 15 other non-EU Member States (https://digital-strategy.ec.europa.eu/en/library/i-desi-2020-how-digital-europe-compared-other-major-world-economies). Although I-DESI has the same structure as DESI, significant differences exist in individual indicators used mainly due to data availability constraints. Such differences have to be taken into account to interpret results since the two indexes are not strictly comparable.