Information and Communication Technologies (ICT) in EU

The ICT sector contributes a significant part to overall European Union GDP and employment. ICT is an omnipresent technology and estimates of investment in the ICT sector  contributes to approximately half of EU’s productivity growth in recent past.ICT sector involves high R&D spending and the spending accounts to around quarter of R&D spent in EU.  In general ICT services and goods are one of the main drivers of economic performance and productivity growth across all sectors.

ICT enables product and process innovation and funds spent on research in computing technology results in worker productivity which is several times higher when compared to other investments in other sector. ICT has a great impact on economic growth. Increase in investment of ICT increase the amount of capital available thus increasing labor productivity which also increases economic growth.

Trends: 

“The 2010 Report on R&D in ICT in the European Union” which includes data up to 2007, gives interesting figures about how ICT sector grew strong even in between two global economic crisis, the dot com crisis and the recent global meltdown .The multiannual report confirms the consistent growth of ICT sector and presents a privileged view of the major ICT R&D trends in European union,.

The core ICT industry and the ICT enabled innovation in non-ICT industries has contributed significantly to economic growth of advanced economies in European Union.  The ICT sector was one of the highlights in the EU Lisbon objectives and the ICT sector will retain its prominence in the newly proposed Europe 2020 strategy. The EU strategy focuses on achieving a target spending of 3% of GDP in the EU as proposed in Europe 2020 strategy.

FDI Figures and Growth figures:

Austria ICT industry has shown great development potential in past years. The total revenues which included domestic and export touched 27.15 billion euro. The total production value of ICT products equaled 18.39 billion euro which was 7.13% of the total GDP that year.
Germany is one of the top receivers of FDI in EU. Around 2,239 foreign companies invested in 3,086 investment project. Majority of the FDI went to ICT sector specifically in R&D due to the encouragement provided by government.

Market Size:

European Union currently has 27 member countries with 3 more countries likely to join in near future. The approximate population of European Union at the end of 2010 stands at 501 million... Since, ICT sector spans across different sectors as well, the investor are likely to benefit huge by investing in ICT sector in EU.

Key Players in ICT sector in European Union:

The ICT sector in Austria is huge with around 15,000 enterprises employing 170,000 employees. The total revenue generated by ICT sector in Austria is approximate EUR 45 billion. Austria also has the highest penetration of mobile phones with many international companies actively providing service to the consumers. Some of the reputed companies in ICT sector of Austria include Microsoft, Hewlett-Packard, Polycot and many others.

Germany has the largest ICT sector in terms of volume revenue earnings which is 20% of the EU’s ICT revenue... Germany is also the fourth largest ICT market in the world which is 5.5% of the world market. The approximate turnover of Germany’s ICT market is EUR 130 billion. Around 850,000 people work in Germany’s ICT industry which is second to only machinery and equipment industry.  R&D in ICT is also a highlight of   ICT sector in Germany and around 20% of patent in European Patent office were from German ICT sector.

The reason for high amount of activity in R&D in ICT sector is because Government is providing incentives to investors engaging in R&D sector.  The German Government through its High Tech Strategy in 2011 will provide EUR 15 billion p in projects grants. Some of the big ICT players in Germany include eBay,   Oracle, DELL and many others.

France is also one of the leading nations in ICT sector. Some of the big players in this sectors include France Telecom, Capgemini, Dassault Systèmes, ST Microelectronics, Motorola and LG Electronics,  Atmel, IBM, NXP and Freescale. All these reputed companies have invested in different type of industries in ICT.

FDI/Investment policy:

The German Government gives importance to R&D activities in ICT industry. To encourage R&D activity and investment in R&D in ICT, it offers several funding program. The Government has taken a initiative to  invest  and spend around  3% of  national GDP in R&D.

The Austrian government has released a ICT Research and Development Strategy 2020 which mainly focuses on development of ICT sector in Austria.

France Government gives preferential treatment to IT equipment  with depreciation rates as low as 40%. Besides it also gives preferential treatment to SMEs.  The French government  has completely abolished local business tax  from 1st January 2010 for productive investment.

Investment Incentives:

The different funding program provided by German Government   includes, interest reduced loans, special R&D grants. Many partnership  firms investing in this sector specifically in R&D can receive finance at regional, , state, national and European Union Level.

The incentives offered include 50% of all R&D costs  while the German Federal State grants are specifically reserved for SME’s

Austrian Government also offers R&D grants and incentives to investors in ICT sector.  Besides a good co-operation model and attractive incentives, it also offers several advantages to national and international research programs.

The French government has an attractive tax policy for investors. It has completely abolished taxes such as Annual Fixed tax and Stock exchange tax for investors.

Resources:

Every country in EU has independent agencies that promote foreign investment in country. The Germany Trade and Invest helps investors at every stage of investment. Similarly invest in France and invest in Austria performs the same role of assisting and guiding the investors to understand the legal framework, identify right opportunities for investment. Besides, these agencies also provide comprehensive information about investment climate in respective country.

 

© Copyright 2010-16 Invest in EU All rights reserved.