8/11/2012: OECD Internet economy outlook 2012: Part 5 Conclusions

By now, I have posted 4 different posts on the OECD Internet Economy Report 2012 and the implications arising from the OECD data for Ireland. The core points of these posts are:

1. Overall ICT-linked employment in Ireland is declining, not rising, as the share of total employment in 1995-2009, despite the fact that we have experienced a virtual collapse in the traditional sectors activity over the same period of time (Part 1 post);
2. Growth in ICT sector revenues has been below OECD average in Ireland during 2000-2011 period, in contrast to the claimed successes in attracting ICT sector FDI into the country and contradicting the Government claims that Ireland-based ICT suppliers are consistently enhancing the value-added activity here (Part 1 post);
3. In addition, growth rate in the sector revenues in Ireland at roughly half the OECD average rate of growth is coincident with unprecedented growth in expatriated profits by the MNCs and massive in scale tax optimization ongoing within the MNCs component of the ICT economy here. This suggests that actual real activity might be declining, not growing, in Ireland (Part 1 post);
4. ICT investment by asset-type and overall in 2010 in Ireland was exceptionally poor, ranking the country as the 5th from the bottom despite the Government claims that Ireland was the leading destination for attracting FDI in Europe (with FDI into Ireland dominated by ICT services)  (Part 1 post);
5. Business R&D investment in ICT-related areas in Ireland ranked the country in 10th place in the OECD in 2010, once again contrasting the claims by the Government that Ireland is an ICT investment hub  (Part 1 post);
6. Business use of the internet in 2011 sees Ireland ranked 5th from the bottom (Part 4 post) despite having access to a broadband connection above OECD average (Part 4 post);
7. We score rather poorly in terms of our broadband infrastructure quality, penetration (Part 2 post) and poorly (well below average) for broadband access in the most economically developed region of the country (Part 4 post);
8. More significantly, we score poorly in terms of the quality of our human capital when it coms to ICT-enabled economy: less than OECD average is the share of Irish residents who used internet for communicating in 2010; we have the third lowest percentage of internet users who created a web page in 2011; we score at the average in terms of individuals engaging in ordering or purchasing goods or services online in 2011; below OECD average in terms of use of banking services online and close to average use of internet for learning in 2010 (Part 2 post);
9. For the 'smart workforce' claimed, irish share of employed persons at work using an internet-connected computer ranks below EU15 average and Ireland sports average rates of growth in this metric for 2005-2011 period (Part 4 post);
10. Despite having above average proportion of schools with internet connection in 2009, we had well below average usage of these connections, suggesting that our education system is incapable of using modern tools of learning (Part 3 post);
11. Consequently to (9), we have below average percentage of individuals using the internet to obtain information from the public authorities websites in 2011 - the outcome that can be expected in a country where education system is incapable of using web-based platforms (Part 3 post);
12. Ireland scores fifth from the bottom in terms of internet users using P2P file sharing to exchange content in 2011 (Part 3 post);
13. Ireland scores average in internet use by the highest educated segment of its population, below average in internet use by medium-educated households and average in internet use by the low-education households (Part 3 post);
14. Irish businesses have close to average (OECD) percentage of businesses with a website (Part 4 post);
15. Less than EU15, EU27 and OECD average proportion of Irish companies share information electronically externally, and the same holds for companies using automatic data exchange to receive or send e-invoices in 2010-2011 (Part 4 post);
16. We rank 9th in the OECD in the total turnover of companies from e-commerce in 2011 (as % of total turnover) despite the fact that we are clearing huge volumes of transactions for ICT services MNC giants like google, linkedin, etc (Part 4 post);
17. We rank 10th in the OECD in terms of companies selling over the internet in 2011 (Part 4 post)

In brief, Ireland is not an ICT services and culture hub, but at best an average performer in the group of advanced economies.

Furthermore, per OECD data:

So Ireland scores 6th from the bottom in terms of share of ICT specialist users in the total economy back in 2010, with that share growing by lowest percentage of all countries save Greece and Portugal. The outcome is made more egregious to the Government claims of Ireland being a global ICT hub by the fact that between 1995 and 2010 Irish economy has been attracting massive inflows of FDI in the sector.

The OECD report is extremely disturbing in terms of the picture it paints of Irish internet-based economy and flies in the face of a number of traditional assertions about Ireland as the global ICT hub made by the Government, IDA and Enterprise Ireland, as well as our business lobby and quangoes.

5/11/2012: OECD Internet economy outlook 2012: part 4

This is the fourth note on the OECD Internet economy report 2012 (part 1, part 2 and part 3 are linked here).

We hear much about the vast gap between Dublin and the rest of the country in digital economy. Usually this refers to the disparity of access. Yet, as the following illustrates, even the 'advantaged' Dublin scores poorly compared to its peers (other capital regionas) in the OECD:

For example, Dublin and Southern and Eastern region are worse than Scotland - the lowest scoring region in the UK. Too bad the folks at the WebSummit and other prime events in digital economy world converging onto Dublin have no clue just how poor we really are in terms of enabling and deploying ICT services-based economy. May be some of them will read these posts or the OECD document before they start extolling the virtues of Irish 'digital' economy.

But enough about the households. What about pioneering, innovative, R&D intensive, knowledge economy business environment here? After all, as I said earlier, ireland is home to so many MNCs in the sector and so one should expect business use of the web to be high...

Oops.. I thought we have hugely innovative start ups and MNCs popping up on every corner... After all, IDA and EI brochures are full of their smiling faces and sunny stories.

And usage is, as with schools, vastly lower than access:

Now, unimpressive record on the share of employees connected to the web and using it...

Equally interesting fact revealed by the above chart is that there is no impressive growth in this metric in 2005-2011 period, despite the fact that overall share should have risen dramatically due to obliteration of jobs in less computer- and web-enabled sectors such as basic consumer services and construction. In other words, the above chart shows conclusively that Irish economy is not becoming more knowledge-intensive even after jobs destruction wave sweeping traditional sectors.

The same ic confirmed by a different metric:

Remember the malarky about MNCs operations in Ireland being of great benefit to 'clustering' and 'spill-over of skills and know-how' to the broader economy? Why, it seems to be pretty much a lie too:

Per chart above, Ireland scores relatively well on internally shared systems and rather poorly on externally shared ones. In other words, if MNCs are creating knowledge and transfers here, they are more likely to keep them to themselves than to allow them to 'spill-over' to outside their own offices.

Ireland-based businesses are not even any good at invoicing via the web:

Of course, the headline figures on earnings generated via e-commerce are high, but these are grossly skewed by MNCs (e.g. google et al):

How I know that? Because the actual usage of e-based sales is poor in Ireland:

So revenue generation ranking above is skewed heavily by few businesses carrying out huge transactions volumes, not by broad reach of e-commerce.

And the same applies to ICT business spending on R&D:

Once again, more on the topic in the next post.

5/11/2012: OECD Internet economy outlook 2012: part 3

In part 1 and part 2 earlier I took a look at some stats coming from the OECD report published today and positioning Irish internet economy overall at the very best at-or-below the OECD average across e-business, connectivity and social use.

Let's continue wading through the massive report (linked in the first post above).

An interesting chart below:

This shows that Ireland overall scores relatively well in terms of schools access to the web - at least we are above the OECD average. But usage of this access is... well - well below the OECD average ranks Ireland closer to 7th from the bottom. So having access (public spending) is not equivalent to quality of use. In fact, ireland has the 5th largest gap in usage relative to access in the OECD.

Irish Government is equally poor at providing useful and user-friendly access to information on the web, on par with our sub-average performance in other ICT-enabled services:

Which is in line with general lack of transparency and engagement with services users on behalf of our State, where fixing potholes still requires a phone call to a local TDs, rather than a more modern and less corrupting approach of simply requesting a service from responsible authorities.

Back to utilization of basic ICT services:

No comment necessary.

And usability by our remarkably highly educated workforce? Why, average, again:

Remember, it's the workforce marvel that attracts MNCs into Ireland - the workforce where even highly educated don't really use the web, and where education system doesn't encourage use of the web in schools, and where stats for P2P file sharing, use in continued education, basic webpage publishing etc are all abysmally poor.

Never mind... just read an IDA brochure and believe!..

5/11/2012: OECD Internet economy outlook 2012: part 2

Here comes the second post on OECD Internet Economy Outlook 2012 report (first in the series was here), focusing on Ireland and the mythology of our 'global ICT services hub'.

So wading deeper into the OECD report, take a look at this chart:

Ireland hardly can boast of an advanced fibre infrastructure that would be consistent with real ICT economy, especially ICT services economy. Per OECD: "Fibre-based broadband connections offer the fastest data transfers..." Now, in many countries, deployment of fibre broadband is lower due to home ownership rates being lower (people tend to invest less in a fixed connection quality when they rent, other things held constant). In Ireland, abysmally low fibre coverage is coincident with very high home ownership rates.

Next up, given lack of fibre coverage, you'd think we should lead the world in overall penetration of the substitutes (e.g. wireless), although, of course, fixed fibre and wireless can be complementary to each other (e.g. fixed line at home, mobile on the go). Alas, not really:

And subsequently, the gap between broadband connections and overall internet connections in Ireland is high by comparative standards:

In fact, we are below both EU27 and OECD average on broadband coverage per above chart.

Next up: the world of data is becoming portable. And in particular it is becoming portably mobile - in other words, more and more access to data is now taking place via mobile devices, rather than portable computers... And in Ireland?

Despite all the talk about the new generation of mobile users, etc, Irish 'younger and more educated workforce' seems to be not using mobile devices.

Having netted into Ireland all flagships of ICT web communications services providers and having established ourselves as social networking capital of Europe, we show neither a dramatic rate of coverage for internet communications, nor a dramatic rate of growth from 2007 through 2011 in this category:

In fact, per OECD data, we have fewer internet users engaging in social networking than Greece, Portugal, Poland, Slovakia and Hungary (overall, we rank 12th in the group of 24 countries in terms of this parameter).

And we are not exactly content-creative either:

E-commerce is absolutely average in its reach in Ireland too and is growing relatively slowly:

As is internet-based learning:

Do note that e-learning is associated strongly with continued or life-long education, so the above suggests we tend not to upskill much via continued education once we get our degrees. Not exactly a badge of honour.

More on this in the third post.

5/11/2012: OECD Internet economy outlook 2012: part 1

Quite an interesting chart from OECD on Ireland and its peers in terms of the spread / reach of the ICT economy. Now, keeping in mind that Ireland is, allegedly, a 'knowledge-based economy' with prime talent in ICT services, attracting huge share of global ICT services firms, etc... why is, then

Or put in words, why is Ireland is one of only 3 countries with shrinking, not growing proportion of workforce engaged in ICT sector?

Per OECD report (link here), Ireland had 3 firms represented in top 250 ICT firms globally, same as, for example South Africa (which is not calling itself a 'global ICT hub' last time I checked). Nonetheless, Ireland's count is large for our relative size. Alas, in 2000 total revenue of ICT firms in Ireland was estimated at USD29.04bn and that rose to USD42.8bn in 2011 - a rise of 47.4% or a growth rate of 3.6% annually. Not spectacular, considering worldwide sector revenue grew 108% over the same period of time expanding at an average annual rate of 6.9% per annum. In other words, Ireland's ICT 'global hub' managed to grow at slightly above 1/2 the global rate of growth.

Just when you thought things couldn't get much worse. Net revenues of the ICT sector in Ireland amounted to USD3.871 billion in 2000. You would expect this to rise dramatically by 2011, especially since globally net revenues grew 127% over 2000-2011 period. But no: Irish ICT sector net revenues have actually fallen USD3.444 billion in 2011.

Now, wait: gross revenues of ICT sector in Ireland underperformed global growth rates by a factor of almost two, while net revenues have shrunk. This hardly constitutes some huge success in attracting ICT FDI and creating a global ICT services hub.

Now, chart below shows just how much of a 'leading' light our FDI magnet in ICT sector really is:

Good news is that "On average, 20% of total BERD investment is focused on the ICT sector. But the data show very large differences across countries. In 2010, ICT BERD accounted for more than a half of total business R&D expenditure in Chinese Taipei, Greece, Finland and Korea. It accounted for more than 30% in Estonia (30%), Ireland (32%), Singapore (36%) and the United States (33%)." The problem, however, is that Ireland has one of the lowest BERD investment overall in the OECD economies, so 32% of a small number can be less than 16% of a larger one...

So here's the outcome:

I will continue blogging on the OECD report tonight, so stay tuned.