In this paper, we will discuss how Europe makes digital policy and how its digital economic performance can be improved. The focus is on the D9+ initiative. Launched in 2016 on the initiative of former Swedish trade minister, Ann Linde, nine countries with a particular interest in matters of the digital economy met to learn from each other and seek common ground on policy issues. On occasions, the D9+ Group has issued joint statements relating to regulatory initiatives in the EU. Since its founding, the group has expanded, and now also includes “guest countries”, but it remains fundamentally an initiative of small and mid-sized open-oriented economies with a strong interest to exploit the economic power of digitalisation and new emerging technologies.
The D9+ initiative is important and this paper argues that its work should expand and focus on expanding the scale and scope of digital technological change in the European economy while addressing risks that an over-powering regulatory approach to digital policies in Europe reduces the benefits of the digital transformation. Importantly, the D9+ Group has a special interest to promote digital openness and avoid the agenda for technology sovereignty and strategic autonomy sliding into digital protectionism. Finding the right direction of policy is of fundamental importance for Europe’s long-run economic growth, and the D9+ Group should take a leadership role.
There are five key arguments advanced in this paper:
First, all countries in the EU stand to benefit from digital openness – an approach that deepens the single market while keeping borders open for deep digital integration with other countries. Recent decades have already proven that the European economy thrives on close technological integration in its single market, leading to higher rates of productivity, better global competitiveness, and more prosperity. Furthermore, with markets being open to other partners in the world, the EU can benefit on the basis of many more customers and better access to frontier technology.
Second, a restrictive regulatory environment will depress activity in the digital economy and reduce the positive effect of digitalisation on productivity and prosperity. Good regulations help to expand economic activity and support entrepreneurship, the growth of young firms and fast rates of digital adoption – the use of digital technologies and services by businesses and households. On these scores, the EU can substantially improve its performance.
Third, D9+ countries have a lot in common – digital and general economic characteristics that should prompt them to be far more ambitious in promoting Europe’s digital competitiveness. The group is based on small and mid-sized open-oriented economies that all think it is crucial for Europe to run an open digital economy with large space for entrepreneurial experimentation and intensive integration with leading digital regions in the world.
Fourth, D9+ countries should take on greater leadership for the development of digital regulations and the broader policy for an open digital economy in Europe. In the last decade, the voice of small and mid-sized open-oriented economies in Brussels have been challenged by a changing global landscape and new policies have increasingly reflected the economic interests of larger European economies. Hence, D9+ countries have a key task in front of them: to be more proactive in developing new ideas for how European policy should evolve, advance the economic reforms that are necessary for deep digital integration, and ensure that the voice of digitally open economies is heard around the negotiation tables when policy is decided in Brussels.
Fifth, the D9+ countries have a clear role in establishing better frameworks in the EU for sharing experiences and learning from each other. EU countries have made different experiences in technological specialisation and they all have important knowledge to share – and lessons to learn. Some of the D9+ countries are consistently ranked very high in global league tables over technology, innovation and digital competitiveness and have economic and political experiences that are relevant for the general EU policy direction. Therefore, these countries have a special responsibility to carve out a new function in EU digital policy-making that provide for positive examples to be imitated.
D9+ countries should take a greater responsibility for the long-term development of digital regulations. It is important now to accommodate the ‘portfolio’ effect of digital regulation: the entry of new and burdensome digital regulations should be balanced by policy reforms that ease the conditions for digital business, just as high-risk investments in a financial portfolio should be balanced by purchasing low-risk assets. Each digital regulation adds to the total cost of developing and doing business in Europe, and with the current wave of burdensome regulation, it is urgent to balance Europe’s regulatory portfolio. Therefore, policy leadership from the D9+ group of countries should consider the future path of digital regulations. There is a dearth of policy leadership on emergent technologies and what is needed.
ECIPE’s work on Europe’s digital economy receives funding from several firms with an interest in digital regulations, including Amazon, Bertelsmann, Ericsson, Google, Meta, Microsoft, Rakuten, SAP, and Siemens.