The development of new information and communication technologies (ICTs) such as Artificial Intelligence (AI), the Internet of Things (IoT), 5G, robotics, big data analytics, blockchain technology, machine learning, etc. are paving the way for innovation and technological advancements that are affecting individuals, companies, and the society. In this context, the ICT sector lies at the heart of this digital transformation and provides the tools (infrastructure) and services that facilitate and accelerate the digilitalization process.
The widespread use of ICTs is linked with significant societal and economic benefits, as they enhance efficiency and business performance[1], induce productivity gains[2], and act as significant contributors to national economic growth[3]. But these effects are not homogenous across countries or even across sub-national regions. In fact, the emergence of significant Digital Divides among European regions has attracted the attention of policymakers for some time. According to OECD, a digital divide is the gap between individuals, households, businesses, and geographic areas about both their opportunities to access ICTs and use them for a wide variety of activities. However, as digital technologies continue to evolve and provide solutions to certain dimensions of these divides (such as internet access), new technologies introduce new problems that relate with the unequal adoption and utilization rates. One aspect of these problems is societal and relates with the cultivation of proper digital skills and the development of ICT infrastructure so that individuals and households can have access to and use/benefit from these technologies. A second one is economic in nature and relates with the concentration of firms in regional digital hubs, that can create economic imbalances and hamper other regions. Such imbalances are well documented in the EU[4], as ICT producers (both manufacturers and service providers) tend to create geographical clusters. These clusters stimulate the specific regional economies both directly through their own activities, and indirectly, by creating channels of economic externalities to the regional firms that use their ICTs.
Focusing on this dimension, the situation for Greece is quite severe, as the divide among most of its regions and the metropolitan area of Attica – where most of the economic activity in the country takes place – is quite wide. This is evident in the ICT business demography across the country and the regional ICT business specialization index[5]. The index calculates the share of firms that engage in ICT activities relative to the aggregate number of firms in each region. The patterns of ICT specialization in Greek regions (at the NUTS3 level) for the year 2018 (latest available data) are depicted in Fig.1, where Attica (pink and orange variations) stands out as the only ICT-intensive region in the country. In fact, even Attica’s sub-regional ICT specialization scores are well above those from the other Greek regions, surpassing Thessaloniki (light purple) and Achaea (deep purple) which are the second and third largest metropolitan areas in the country, respectively. What is more interesting, is that the ICT business demography in Greece aligns with the 2019 edition of the European Regional Competitiveness Index[6], where Attica stands out as the most competitive region in the country, with competitiveness scores above the national average but still below the EU average.
Figure 1: Regional ICT specialization across Greek regions in 2018 at the NUTS 3 level (share of ICT firms to the aggregate no. of firms in each region, in %), with special focus on the Attica region. Source: Stamopoulos et al., 2022. Data retrieved from the Hellenic Statistical Authority.
The evident connection between digital divides and regional competitiveness for the Greek case calls for targeted policy action. On the one hand, the digital transformation has been placed in the epicenter of policy focus in Greece, where the Greek Bible of the Digital Transformation provides a detailed documentation of the goals and strategy of the country’s digital transformation and, the National Resilience and Recovery Plan “Greece 2.0” will provide the much needed funding mechanisms to support this transformation. On the other hand, supplementary actions with a regional character need to be considered for the country to reach the ambitious 2030 goals set by the EU’s Digital Compass initiative. These actions should focus on the development of digital skills and the fostering of high-quality, ICT-related entrepreneurship across different regions of the Greek economy, with a specific goal to address the digital divides and provide new growth trajectories for the country’s regions. Another critical element is the development of proper funding-allocation mechanisms that can secure a much-needed upgrading in terms of ICT infrastructure.
A proper policy instrument that can be utilized towards achieving these goals is the upcoming Greek Regional Smart Specialization Strategy (RIS3) agenda for the period 2021-2027. The new RIS3 framework has the potential to become a force for transformation for the regional economies by supporting research and innovation, the development of digital skills for the digital transition of regional business ecosystems, the of fostering high quality entrepreneurship, and by ensuring that the benefits of digitalization process will be reaped by citizens, firms, and local governments.
[1] Benitez, J., Chen, Y., Teo, T. S. H., & Ajamieh, A. (2018). Evolution of the impact of e-business technology on operational competence and firm profitability: A panel data investigation. Information & Management, 55, 120–130
[2] Niebel, T. (2018). ICT and economic growth – Comparing developing, emerging and developed countries. World Development, 104, 197–211. https://doi.org/10.1016/j.worlddev.2017.11.024
[3] Tsakanikas, A., Dimas, P., & Stamopoulos, D. (2021). The Greek ICT Sector and Its Contribution to Innovation and Economic Growth. In V. Vlachos, A. Bitzenis, & B. S. Sergi (Eds.), Modeling Economic Growth in Contemporary Greece (pp. 281–300). Emerald Publishing Limited. https://doi.org/10.1108/978-1-80071-122-820211020
[4] Vicente, M. R., & López, A. J. (2011). Assessing the regional digital divide across the European Union-27. Telecommunications Policy, 35(3), 220-237.
[5] Stamopoulos, D., Dimas, P., Siokas, E., & Tsakanikas, A. (2022). A preliminary analysis on the digital specialization of Greek regions. Submitted to the Journal of Innovation Economics & Management.
[6] Annoni, P., & Dijkstra, L. (2019). The EU Regional Competitiveness Index 2019. European Commission, 1–42. https://ec.europa.eu/regional_policy/sources/docgener/work/2019_03_rci2019.pdf