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Page updated:
25 January 2000
Telework and Teletrade:
Opportunities or Threats for Europe?
Telework and Teletrade:
Opportunities or Threats for Europe?
A period of sustained economic growth
We are at the beginning of a significant period of growth in world trade, driven and enabled by technology price-performance improvements and (particularly) telecoms liberalisation and trade liberalisation (if the politicians keep their nerve) [Note 1]. Some of that growth will be conventional material growth (eg supplying China's emerging middle classes with motor cars, refrigerators, etc [Note 2]) but a lot of it will be in new forms of products and services delivered electronically across the networks.
The networked economy
The networks will be a primary medium for marketing, selling and buying all kinds of products (including the material ones). In periods of economic growth most people benefit in some way but the benefits are unevenly distributed. In this case those countries, regions and people that are the most effective innovators in their use of the new trade mechanisms will gain the most. That includes both the developing economies, where they will have new ways to access work and trade opportunities from anywhere in the world, and the developed economies, which have the best opportunities to innovate and to supply the new products and services to people everywhere.
The threat
The threat? This is equally real. Right now (end of 1996) Europe (for example) is following a strong USA lead, so that Europe is mainly a customer not a supplier of the new technologies and the new mechanisms. More than one in 5 USA citizens has access to the networks (mainly Internet), compared with less than one in 50 Europeans. This means USA decision makers in industry, government, local communities have a very high tendency to know and understand the new environment, while European decision makers are just reading about it in reports and in some cases making serious misjudgements. It also means that European legislators may make important regulatory decisions that citizens don't understand and are not interested in [Note 3].
What should I do about it?
Whether you are in a developed or a developing economy the best thing to do is to encourage everyone to "get connected" and to start learning about and participating in the new environment. Telework is just one aspect. Equally important are teletrade (doing business across the networks), telecooperation (personal, team and community networking), telelearning (distance education and training). Its specially important for leaders and decision makers to get connected rather than learning about the new environment second hand.
Who will benefit?
Communities and nations that take best advantage of these methods will have greater leverage in the emerging "networked economy" [Note 4]. To gain the advantages citizens have to be connected. Where only one or two per cent of citizens are connected local market players (including Governments) will not be motivated to provide competitive services so the services will come from elsewhere and the best jobs will be created elsewhere. This is happening now to Europe, we are buying many of the services and products from the USA and the USA economy is creating far more than its share of the new work opportunities. Also, because investors there understand what is going on, USA money is available to acquire any European enterprises that achieve visible success, while European money is more cautious, presented with opportunities it cannot comprehend [Note 5].
Europe's position
The potential problem is specially acute for Europe, because we have high labour costs and risk losing the low level work to low wage cost economies, but we are also risk-averse so we are being slow to innovate the new higher level kinds of products and services and losing the new high level jobs to more innovative economies. We need to accelerate awareness, understanding and use of the new methods across Europe as a matter of urgency.
Europe's opportunities
If we can increase this wider understanding quickly enough, Europe also has special opportunities. A high proportion of future growth will be in fields where Europe's history and traditions provide great strengths - education, health care and medicine, cultural activities, entertainment, the arts, the sciences, the democratic process. Just as a high proportion of the world's citizens would like to visit Europe and even to live here, so a high proportion in the networked economy will want to connect with Europe - but we have to provide the connections and fully understand how people respond to them.
The European Telework Development Initiative (ETD)
ETD is an initiative to accelerate awareness, understanding and take up of the technologies and methods of telework, teletrade and telecooperation.The Initiative is supported by more than 40 companies and covers each country of the European Union as well as representation in the wider Europe and in other countries. It is supported by the European Commission (DGXIII) as part of the ACTS Programme (Advanced Communications Technologies and Services). Information about the Initiative can be found at the European Telework Online website, http://www.eto.org.uk.
Notes:
Note 1. Evidence from history strongly suggests that the diffusion of significant new technologies is associated with significant economic growth. Over the past hundred years there have been numerous forecasts that "this time will be different" since the most visible impact of new technology is to undermine traditional industries and jobs. But the outcome has always been a new wave of innovation, so that today there are more people "in work" than at any time in history. This is often masked on a short term basis by the relatively high visibility of job losses (from large, established, highly visible enterprises and sectors) and the low visibility of new job creation (in small firms and microenterprises and in sectors that from an economic reporting standpoint may not yet exist).Note 2. Over the next decade or two, unless there is some unforeseen disruption, China will have a "middle class" that is as large as that of North America and Europe combined. The middle classes are the main buyers of both material and immaterial products and services. Even if China were to maintain effective trade barriers, the Asia-Pacific region will contribute to a doubling or possibly trebling of the world's middle class consumers over the next twenty years. The need to supply material goods to these new consumers in ways that are environmentally more sustainable will itself increase growth in production and trade.
Note 3. This is written at a time when European opinion formers are seriously debating new legislation and regulation for an environment that is not at all understood in Europe. For example the extension of employment law to embrace teleworkers, and the introduction of a "bit tax".
Note 4. Liberalisation of telecommunications accompanied by liberalisation of international trade mean that connected citizens can purchase goods and services from any supplier world wide. The tendency is to buy from the supplier who offers the best combination of price, service, product quality and marketing excellence. Increasingly each of these factors will be optimised by well judged innovation. Well judged innovation is much more likely in those economies that have the highest proportion of connected citizens, since companies there will be staffed by connected people, managed by connected people, and operate in environments legislated and regulated by connected people. Marketing into a connected economy from an unconnected one will become increasingly difficult. Marketing from a well connected economy to connected citizens in a less-connected economy will become increasingly easy.
Note 5. An example of USA acquisition is the purchase of Pipex, one of Europe's strongest indigenouse Internet providers, by the USA based UUnet. The proposed (as at November 1996) acquisition of MCI by BT is an encouraging example of this process being reversed. However, as telecom liberalisation spreads in Europe we should expect to see more USA acquisitions of EU-based innovators than vice versa. USA enterprises start with the advantage of a home market that is more than five times as developed as the overall European market.
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