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A bright digital future for all: global cooperation to make the best of the digital economy

20 June 2016
by Guest author

Digital economy ministerial Ministers, the business community, civil society, labour and the Internet technical community will gather in Cancún, Mexico on 21-23 June for an OECD Ministerial Meeting on the Digital Economy: Innovation, Growth and Social Prosperity. Today’s post is by Andrus Ansip, Vice-President of the European Commission, leading the Project Team Digital Single Market.

Slowly but surely, digitisation has transformed the world’s economy and people’s daily lives and our habits as consumers: how we work, travel, shop and are entertained.

The internet is an amazingly diverse source of innovation and creativity. Nearly three billion internet users are both creators of information as well as consumers.

Digital technologies and the internet offer remarkable development potential. With the OECD’s Ministerial Meeting on the Digital Economy about to be held in Cancún, Mexico, it is clear that digital issues are firmly on the global political agenda.

Although ICT is the fastest growing sector in the world, many millions of people are losing out on the opportunities offered by the digital age simply because they do not have access to digital technologies.

In fact, more than half the world’s people are offline. They cannot download anything, they cannot view a website, surf the internet or send an e-mail. The other half of the world which is online takes all this for granted.

Europe is not immune to this problem.

One hundred million Europeans are digitally excluded, and the percentage of people who have never used the internet is still very high.

There are huge differences in internet usage between young and old people, and similar differences between those with high and low levels of education.

This has an impact not only on individual lives – income, health, education – but also on families, communities, on political process, democracy, public services.

We are tackling these in our plan to build a Digital Single Market for Europe.

This aims to remove barriers that are today preventing people and businesses from getting the most, and best, out of the opportunities offered by the digital age.

It will allow every European to enjoy digital content and services – wherever they are in the EU- for their work, leisure and education.

It is the digital equivalent to the right to non-discrimination.

In Japan in April, G7 ministers agreed a plan for 1.5 billion more people to have internet access by 2020.

This is a good start towards getting rid of digital divides and exclusion around the world. But ultimate success will depend on at least a couple of factors: connectivity and skills.

Firstly and most obviously, we can only achieve this goal if more people have online access – preferably with a high-speed connection.

At the moment, only 15% of the world’s population can afford one.

This is often caused by a lack of competition in many markets, where expensively-priced services are only available to the few who can pay for them.

Secondly, people also need to have the skills to use digital technologies and be able to apply them in a working environment. Digital transformation is structurally changing labour markets around the world; in fact, the very nature of work as we know it today.

At the OECD meeting in Cancún, I will be chairing a panel of experts who will address these and other issues, including the need to raise digital skills and how best to go about it.

I have high hopes for Cancún in general, for it to reach good levels of understanding on a range of digital issues that call for international cooperation and discussion: internet governance, the free flow of data and its protection, net neutrality – just to name a few.

The internet should be a dynamic source of growth in the digital economy, for everyone to benefit. Everyone who is involved, or who has an interest, should have a say in how it is governed. The digital economy depends on a properly functioning, fair and open internet.

As such, all countries need to work together so that the global digital economy fulfils its potential for enhancing fairness and social inclusion – for everyone and everywhere.

I look forward to seeing many of you at the OECD meeting in Mexico.

Useful links

OECD Digital Economy Outlook 2015

OECD work on Innovation in science, technology and industry

 

Can numeracy and literacy fill the health gaps of Europe?

16 June 2016
by Guest author

health europeProfessor Helmut Brand, president of the European Health Forum Gastein (EHFG), Jean Monnet Professor of European Public Health and head of the Department of International Health at Maastricht University, The Netherlands. He serves on the European Advisory Committee on Health Research (EACHR) of WHO Europe and on the Expert Panel on “Investing in Health” (EXPH) for the European Commission.

Europe is undergoing a period of profound demographic change. Populations are ageing, fertility patterns are changing, modern living has impacted our habits, and consequently, there is an increasing prevalence of people living with one or more chronic disease. Cases of diabetes, for example, are expected to rise from 58.9 million cases in 2015 to 71.1 million by 2040. Today over 10 million people are living with dementia in Europe and it is set to double by 2050. All the while, governments struggle to manage health care spending as much of the continent recovers from the damaging global recession and faces a rising cost of treatments.

With so many potential stumbling blocks for European health systems, can we all truly access quality care?

I say we can. Demographics do not define Europe’s destiny. By proactively considering the challenges and seizing opportunities for new approaches to health care, we can influence our health outcomes for the better. A key lesson for individuals and governments alike: we stand to learn a lot from our neighbours. Working together, we can avoid reinventing the wheel, and promote a better understanding of health care at individual and community level to support health systems as a whole.

Mind the gap: measuring health system performance

Though each country starts from its own context and its health system serves a unique population, most have a similar end goal: well-equipped, efficient and sustainable health system to meet the needs of all citizens.  As such, there is value to be derived from measuring how well countries are doing against comparable health indicators.

This is already well underway. In the recent report “So What?”, prepared by the European Commission Expert Group on Health System Performance Assessment (HSPA), the OECD, the World Health Organisation Regional Office for Europe and the European Observatory on Health Systems and Policies, the authors state: “Countries often benchmark with other countries. Whilst the challenges involved in these comparisons are well known, it is also evident that information deriving from international comparisons can provide the basis of further scrutiny and a deeper comprehension of the policies required to improve the status quo.”

Platforms such as the European Union and the OECD offer an excellent means by which governments can share where they are succeeding and where there are gaps. Which prevention tactics are effective in reducing childhood obesity? How can we improve outpatient care for the elderly? Particularly pertinent as government resources are challenged in keeping up with demographic change, this exchange of best practices can facilitate sound strategies for quality health interventions.

Such cross-border collaboration is also the objective of the annual European Health Forum Gastein (EHFG), taking place on 28-30 September. This year’s conference theme, Demographics and Diversity in Europe, places the focus on what new solutions for health one country can learn from the other, to better respond to demographic trends.

Close the gap: accelerating health literacy in Europe

Health literacy, the competence to understand and apply information to make decisions for health care, disease prevention and health promotion, remains a public health challenge in Europe. In the most recent publication of Health Promotion International, I discuss together with colleagues research that demonstrates health literacy on this continent is still at its infancy.

The ability for an individual and their community to be fully informed and engaged in their own care is a necessary step in tackling the burden of chronic diseases in Europe. Take diabetes for example. The HSPA report examines the incidences of hospital admissions for diabetes patients across Europe. Such acute deterioration in the health– such as cardiovascular, renal and neurological complications – is traumatic for patients, expensive for health systems, and often, avoidable.

diabetes

An effective primary health care system should be capable of implementing a baseline of access to quality health care that prevents the emergence and progression of many major chronic diseases. But to respond to rising populations and limited health system resources, we must also strengthen what is below primary care – community level care. The more each patient, carer, and member of a community is empowered and involved in their own health care delivery and the greater the health literacy amongst the population, the better.

As highlighted by the European Patient’s Forum, empowered patients are part of the healthcare team, crucial for the performance of health care systems. This concept was explored in depth at last year’s EHFG, and is a discussion that will continue to be of pertinence to the Forum for the foreseeable future. A key recommendations of HSPA’s reports states: “In future, greater attention should be given to the assessment of patient experiences, such as patient reported experiences and patient reported outcomes. Health care in most countries is still not sufficiently patient-centred, despite the patients’ participation being increasingly emphasised in recent decades.”

Learning from our neighbours, whether they be neighbouring countries or neighbouring members of the community, will help us keep up with the health care demands of demographic change.

Useful links

Health at a Glance: Europe 2014

Slow growth in health spending but Europe lags behind (OECD Health Statistics, 2015)

Disruptive innovation in legal services – promising for consumers and challenging for regulators

14 June 2016
by Guest author
Concept illustration with mobile phone and law icons.

Click to find out more about the meeting

James Mancini, Competition Division, OECD Directorate for Financial and Enterprise Affairs

Legal professionals[i] are present during some of the most important events in our lives, such as setting up a business, buying a house, writing a will or navigating a divorce. Recent developments in legal services markets suggest that this may not be the case forever. Consumers have increasingly turned to online platforms and automated technologies to obtain services that were delivered by legal professionals in the past. In the process, traditional business models and regulatory frameworks are being called into question. What should policymakers, regulators and competition authorities know about changes in legal services markets?

The scope of current and potential innovation in legal services is substantial

Legal services that have changed little over generations are now being transformed thanks to several enabling factors. Communications technology permits lawyers to interact with clients, outsource work and share documents with colleagues seamlessly. The “democratisation of knowledge” via the internet is allowing consumers to better understand their legal needs, and the nature of the services that legal professionals provide. Further, concerns about fee levels generally, and the financial accessibility of legal services for low income individuals in particular, is putting pressure on legal professionals to justify or reduce their charges.

These factors are giving rise to the entry of new competitors into legal services markets (where permitted by regulation) and, in fewer cases, the adaptation of legal professionals to current realities.  In particular:

  • Online service delivery is allowing both legal professionals and unlicensed providers to serve clients remotely while taking advantage of the scalability of digital platforms.
  • Ranking and review information regarding legal professionals is becoming increasingly accessible, and is allowing clients to assess the quality of professionals before retaining them – a previously difficult proposition
  • The unbundling of services, partially driven by increasing client awareness and fee pressure, is transforming the distribution of tasks in legal services and ending traditional “black box” models of service delivery. As a result, standardised activities are being outsourced to low-cost providers (including unlicensed ones), and new billing models are being introduced.
  • Automation is changing the nature, and volume, of tasks that legal professionals perform. Although the extent to which the work of legal professions can be automated is subject to debate, automated systems have been introduced which offer new capabilities and even, in at least some instances, improved performance compared to legal professionals.

So innovations are not simply minor process improvements that increase legal professional efficiency. Rather, they have the potential to fundamentally redefine the practice of law, as well as the other professions associated with it, such as notaries.

The regulatory frameworks of legal professions should be assessed in light of recent innovation

Legal professions are heavily regulated across the OECD, with a range of restrictions on who can provide legal services, the fees they can charge, and other aspects of their behaviour (including restrictions on advertising, ownership restrictions and requirements to provide legal aid). These restrictions are an effort to correct market failures implicit in the traditional provision of legal services, which stem from information asymmetries and externalities. Other measures reflect broader policy objectives.

However, there are indications that some of these measures are becoming unnecessary or, worse, harmful to competition and innovation in legal services markets. Increased commoditisation of legal services and improved consumer information could eliminate the need for certain regulations altogether, by addressing the concerns that underpin these regulations. At the same time, the precise scope and enforceability of the exclusivity granted to legal professionals in their activities is under pressure. Limits on the number of legal professionals in a jurisdiction and advertising restrictions  hinder innovation and put professionals at a disadvantage compared to disruptive firms. The reliance on self-regulation in legal services may result in conflicts of interest when new disruptive entrants begin to challenge incumbents.

As a result, the regulatory status quo may be difficult to maintain, and policymakers should not attempt to do so by blocking innovation. Rather, careful consideration must be given to how the scope and specific provisions of legal professional regulations should be modified. Should a supervisory body oversee the activities of self-regulators, as is the case in the UK with the Legal Services Board? Should the reserved activities of legal professionals be narrowed and clarified? Should different levels of professional certification, and greater reliance on para-professionals, be promoted? These questions must all be tackled during the process of modernising legal services regulation. Further, new concerns regarding innovative service offerings and delivery models may arise, potentially requiring regulatory measures in areas such as data protection, privacy, consumer awareness and lawyer-client confidentiality.

Policymakers would therefore be well-advised to assess current regulatory frameworks in light of current and future innovations. The OECD Competition Assessment Toolkit can help.

Competition authorities are well-positioned to promote pro-competitive regulatory outcomes

Competition authorities are likely to have little experience in legal services markets given that enforcement issues in these markets have been rare. There is a role for them, however, in helping to respond to the challenges described above. They can promote competition assessments of existing regulations to enable a better understanding of the trade-offs implicit in current regulatory frameworks. Authorities can also help facilitate productive interactions between disruptive innovators and policymakers as well as regulators. These efforts could avoid enduring conflicts between regulators and established disruptive firms, which can engender great controversy and leave everyone worse-off.

Useful links

This post is based on a background paper for a session on disruptive innovations in legal services discussed in Working Party No. 2 of the OECD Competition Committee on June 13, 2016. More details on the session are available here.

Ministers, the business community, civil society, labour and the Internet technical community will gather in Cancún, Mexico on 21-23 June for an OECD Ministerial Meeting on the Digital Economy: Innovation, Growth and Social Prosperity.

Disruptive innovation and competition in Latin America and the Caribbean James Mancini on OECD Insights

[i] The composition of legal professions vary significantly between different countries, legal disciplines and regulatory frameworks. The core of the legal professions considered here consists of lawyers and notaries as well as other licensed, regulated professionals in some jurisdictions that provide services with respect to court proceedings and other legal processes (e.g. bailiffs, commercial court clerks and judicial commissioners in France).

The sharing economy and new models of service delivery

13 June 2016
by Guest author

Digital economy ministerialMinisters, the business community, civil society, labour and the Internet technical community will gather in Cancún, Mexico on 21-23 June for an OECD Ministerial Meeting on the Digital Economy: Innovation, Growth and Social Prosperity. Today’s post is by Antonio Maudes, Director, Maria Sobrino, Head of Market Studies Unit, and Pedro Hinojo, executive adviser in the Advocacy Department of Spain’s National Authority for Markets and Competition (CNMC)

The June 2016 OECD Ministerial Meeting on the Digital Economy in Cancun, Mexico will feature high-level discussions that will help to shape the current debate and present new ideas and perspectives for the participants regarding online platforms. Opportunities coming from online platforms not only create innovative forms of production, consumption, collaboration and sharing between individuals and organisations,  but also promote economic benefits and employment opportunities thanks to the digital economy by creating a fast-moving business environment.

But, what is the “sharing economy”? Finding a precise definition is both challenging and controversial. The CNMC, the Spanish Competition Authority, has approached this phenomenon through a public consultation (launched on November 2014, with a first and a second stage), achieving some preliminary findings, which were submitted to public consultation too. The results of the latter consultation point out that competition authorities, regulators, consumer organizations and universities tend to perceive the sharing economy as an opportunity to improve social welfare, regulation and competition while unions and freelancers had a somewhat negative view.

After more than one year of intense work, the CNMC has gained knowledge about these new models of service delivery in the digital economy. One of the defining features of the sharing economy is the use of underutilised assets and goods, be it in exchange of other resources (money or other goods or services) or for free. But this is not new: houses, cars and other durable goods have always been exchanged and shared (among relatives, friends, colleagues…). The novelty is the scale of the current wave of sharing economy, overcoming transactions costs and informational asymmetries.

This has been made possible thanks to technological and social transformations, somehow intertwined:

  • On the technology side, the “21st century sharing economy” relies on internet platforms in multi-sided markets, which slash transaction costs by matching supply and demand more efficiently. The IT revolution, chiefly smartphones and apps, allows us to find new services or providers thereof very conveniently. Competition is not one ‘click’ away, it is even closer. Competition is actually one ‘swipe’ away. It is at our own hands, every day, every time.
  • On the social sphere, people are showing how they are willing to concede anonymity in order to enjoy the sense of belonging to a community and building trust among a wider network, thus sharing goods and services within platforms. The voluntary revelation online of the “real world” identity helps to reduce information asymmetries, facilitating markets and transactions.

This is, without a shadow of a doubt, a structural, unstoppable and disruptive revolution. A fourth sector is emerging, not falling under any of the traditional three classifications (primary-agriculture, secondary-industry, tertiary-services).

In this digital economy, the consumer is more empowered, with access to a wider variety of goods and services and higher quality at lower costs and more efficient prices. The user receives more information, more comparable and reliable, as shown by reputation mechanisms. And consumers can even be producers, offering their goods and assets as services. In a nutshell, a new economic agent is born: the “prosumer”, who can participate in both sides of the market. And this empowerment of the prosumer, along with market entry for new players, is the main reason why the CNMC, as a competition authority, welcomes these new models of service delivery within the sharing economy.

This “permissionless” innovation can foster competition by challenging the status quo in some sectors traditionally shielded from competition. The absence of competitive pressure was in many cases provoked by inefficient regulations which made entry more difficult (if not virtually impossible), as well as market failures such as information asymmetry. Paradoxically, new business models overcome technological obstacles while responding to these market failures more efficiently than traditional incumbents (for instance, through online reviews and reputation mechanisms), question the rationale for distortive regulation.

Other benefits of the sharing economy can be felt beyond the scope of competition:

  • Economic development, fostered by the innovative and technological dimension of these new business models.
  • Environmental sustainability, as the circular economy emphasizes access and service provision rather than at ownership and goods production. Indeed, one of the reasons behind the thriving of the sharing economy, apart from the technological and social transformations already mentioned, is increasing environmental awareness.
  • Redistribution of resources towards low-middle income citizens, which can monetise some illiquid under-utilised assets (in order to smooth their consumption over the cycle) while accessing some goods and services at lower prices.
  • Better contribution than traditional business models to other general goals, like consumer protection or tax compliance, due to the electronic tracking of transactions and, consequently, greater transparency.

Therefore, the role of public policy is to embrace these new models in order to increase general welfare. The CNMC preliminary findings on the new business models and the sharing economy” advise governments to take advantage of this opportunity to revise the existing sectoral regulation according to the efficient regulation principles (necessity, appropriateness, proportionality). The fact of dealing with multi-sided markets implies that the platform has to balance at the same time the interest of both producers and consumers. This reduces the risk of a “race to the bottom” in terms of quality standards given that if consumers don’t perceive adequate guarantees, they can switch to another platform or not fulfil the transaction. Reforms in horizontal regulation (for instance, in the areas of tax and labour compliance) might also be warranted in order to ensure its adaptation to a new and more flexible economic reality.

The OECD, with its rich history of dialogue and analysis, is the perfect setting to shape the digital economy and the future of the new services’ economy.

Useful links

OECD Digital Economy Outlook 2015

OECD work on Innovation in science, technology and industry

Digital Transformation in Chile: A roadmap to strengthen its governance

10 June 2016
by Guest author

Digital chileBarbara Ubaldi, Senior Project Manager at the OECD leading the work on digital government and open government data (@BarbaraUbaldi) and Rodrigo Mejía Ricart, Junior Policy Analyst at the OECD (@rodrigoamrc)

The digital revolution has drastically changed societies. People work and relate on the move. We are now able to interact, access information and services by touching a screen that fits our hands. For over 15 years now, specialists have looked for the best ways to leverage the power of new technologies to make governments more efficient and effective. The evidence points towards a horizon of endless possibilities: higher productivity, more convenient services, greater transparency and accountability, improved data management for evidence-based policies, inclusive and cost-effective decision-making processes, among many other benefits. The practice, however, shows it is easier said than done.

Governments have made strenuous efforts, yet the expected benefits have not always been met. Besides, are governments really offering digital services and answers that better respond to users’ demands and needs?  Duplication of efforts, poor investment decisions, incoherent use of technologies, inadequate flows of information and lack of engagement of service users lead to overall digital fragmentation. These are common challenges among OECD and non-OECD member countries and more often than not they are the result of one single (yet not so simple) thing: inadequate governance.

Governance determines the decision-making process, how priorities are set and executed and how resources are allocated. It is the most basic and fundamental enabler of government activities in all policy areas. It is also the framework that allows governments to drive change, adapt to new realities and solve outstanding challenges. Given the evolving nature of society, good governance is a continuous process. In the field of digital government, the Government of Chile has shown the lucidity, courage and commitment to accept the constant quest for improvement.

Under the leadership of the Ministry of Finance and the Ministry General Secretariat of the Presidency (through its Modernisation and Digital Government Unit) Chile has established itself as a regional leader and has been rapidly closing the gap with other OECD countries in the field of digital government. Instead of giving way to complacency, this drive has led the government to set one only objective: do better. This is particularly challenging in Chile given the short political cycles that produce frequent changes. This lack of continuity can affect the stability of digital government policies, the achievement of goals and the return on investment.

The Government of Chile engaged with the OECD in a Digital Government Review focused on the institutional and governance framework for digital government. The Review benchmarks Chile against ten advanced countries in the field of digital government.

The OECD Review Digital Government in Chile: The Institutional and Governance Framework, shows that good co-ordination across public institutions and appropriate incentives are essential to achieve expected goals.

ICT Governance Structures in OECD Countries

Chile

Source: OECD’s calculations based on OECD Survey on Open Government Data (dataset, 2014); OECD Survey on Digital Government Performance (dataset, 2014); and “OECD Questionnaire on Governance of Digital Government” (unpublished dataset, 2016); and desk research.

To drive change and develop  a whole-of-government approach, the Review recommends, the body responsible for digital government should be able to structure ICT investments and strategies  and ensure they are in line with the overall digital government strategy and broader public sector objectives. This implies endowing the entity with the right authority level supported by a solid legal basis. The Digital Government Review of Chile advances two alternative recommendations: (a) the creation of a Sub-Secretaría de Gobierno Digital, or (b) the creation of a digital government agency. The strengths and weaknesses of both models are assessed based on the Chilean context: (a) is more agile and provides greater political visibility; (b) provides greater stability and technical focus, which would need to be balanced with adequate democratic accountability and political leverage.

Governance choices must come from Chile’s democratically elected authorities. The digital government review was a gratifying exercise. It leaves small room for doubting that, provided with the right tools and institutional framework, Chile’s authorities and civil servants stand ready to drive government to the new digital frontier.

Useful links

Read the full digital government review of Chile

OECD work on digital government

 

 

 

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