Technology Adoption and Innovation in Public Services(TAIPS)A project funded by Eiburs –European Investment Bank, University Research Sponsorship Programme

Department of Economics and Quantitative Methods (DEQM), Università di URBINOp Q ( Q ),

Dec 9 2010

EU Cohesion Policy 2007‐13 and public e‐services development

Luigi Reggi* and Sergio Scicchitano*

*University "La Sapienza", Department of Public Economics and Ministry for Economic Development, Department for theDevelopment and the Economic Cohesion.

1

The views expressed in this article are those of the authors and, in particular, do not necessarily reflect those of the Ministry of EconomicDevelopment.

OutlineOutline

• Regional policy and e‐services: institutionalliterature

• The resources for e‐services and information societysociety

• Empirical analysis: preliminary results– at national level– at regional level (cluster and factor analysis)at regional level (cluster and factor analysis)

2

Cohesion Policy and ICT (1)Cohesion Policy and ICT (1)COUNCIL DECISION of 6 October 2006 on Comm nit strategicCOUNCIL DECISION of 6 October 2006 on Community strategic 

guidelines on cohesion:

...“Guideline: Improving knowledge and innovation for growthThe guidelines for action are as follow:The guidelines for action are as follow:— Ensuring uptake of ICTs by firms and households and promoting 

development through balanced support for the supply and demand of ICT products and both public and private services as well as throughICT products and both public and private services, as well as through increased investment in human capital…

— Ensuring availability of ICT infrastructure and related services where the market fails to provide it at an affordable cost and to anthe market fails to provide it at an affordable cost and to an adequate level to support the required services, especially in remote and rural areas and in new Member States”.

3

Cohesion Policy and ICT (2)Cohesion Policy and ICT (2)“Th f d ll th i i ith• “Thus, resources are focused on all the regions coping with structural adjustment and on investment with a particular emphasis on the cluster of activities around research, innovation, and the information society”, p XV EC (2007), Fourth report on economic and social cohesion

• “Digital agenda: Member states should consider how to better use the European Regional Development fund (ERDF ) to accelerate achievement of the EU 2020 objectives for broadband access including total coverage, making use of the different technologies (fibre, adsl, wireless, satellite) available to suit the diverse geographical needs and challenges of different regions across the EU”EC (2010) Regional Policy contributing to smart growth in EuropeEC (2010), Regional Policy contributing to smart growth in Europe 2020, SEC(553)Final 

4

Lisbon Strategy and Cohesion Policy“…Europe must renew the basis of its competitiveness, increase its growth potential and its productivityand strengthen social cohesion, placing the main emphasis on knowledge, innovation and the optimization of human capital To achieve these objectives, the Union must mobilize all appropriate optimization of human capital To achieve these objectives, the Union must mobilize all appropriate national and Community resources – including the cohesion policy”.(European Spring Council 2005). 

“…In line with the re‐launch of the Lisbon strategy for Growth and Jobs, cohesion policy should focus on knowledge, research and innovation and human capital. Accordingly, the global financial effort in support of these fields of action should be significantly increased”.(E.C. 2005 Cohesion policy in support of growth and jobs. Community strategic guidelines, 2007‐2013 )

“In the 2007‐2013 planning period the share of Structural Funds of the European Union allocated to Research and Innovation (the “Lisbon Agenda”) received theUnion allocated to Research and Innovation (the  Lisbon Agenda ) received the largest increase, in absolute and relative terms. It is no exaggeration to claim that, for many countries, the entire Lisbon Agenda rests on Structural Funds.”(Bonaccorsi A 2010 Towards better use of conditionality in policies for research and innovation under(Bonaccorsi A., 2010, Towards better use of conditionality in policies for research and innovation under Structural Funds: The intelligent policy challenge, working paper underlying Barca Report “An agenda for the reformed Cohesion Policy.)  5

Categories of expenditureCategories of expenditure

• How to calculate the contribution of structural Funds to each priority/sector?

• COUNCIL REGULATION (EC) No 1083/2006 general: 86 categories of expenditure86 categories of expenditure– Of which 6 are dedicated to the information Society

• Of which 1 is dedicated to public E‐servicesOf which 1 is dedicated to public E services

6

6 categories of expenditure forInformation Society (IS)

10. Broadband networks11. Information and communication technologies: access,g ,

security, interoperability, risk‐prevention, research,innovation, e‐content, etc.

12 Information and communication technologies (TEN ICT)12. Information and communication technologies (TEN‐ICT)13. Services and applications for the citizen (e‐health, e‐

government, e‐learning, e‐inclusion, etc.)government, e learning, e inclusion, etc.)14. Services and applications for SMEs: e‐commerce, education

and training, networking, etc.15. Other measures for improving access to and efficient use of

ICT by SMEs

7

What do structural funds co‐finance? European Regional Development fund (ERDF)European Regional Development fund (ERDF)

Structural funds for e‐services are much more relevant in the CONVERGENCE (CONV) Regions

REGULATION (EC) No 1080/2006 (ERDF)CONV

“…information society, including development of electronic communications infrastructure, local content,services and applications, improvement of secure access to and development of on‐line public services; aidand services to SMEs to adopt and effectively use information and communication technologies (ICTs) or toexploit new ideas;”exploit new ideas;

COMPETITIVE (COMP)“ promoting access to take up and efficient use of ICTs by SMEs by supporting access to networks the“… promoting access to, take up, and efficient use of ICTs by SMEs by supporting access to networks, theestablishment of public Internet access points, equipment, and the development of services andapplications, including, in particular, the development of action plans for very small and craft enterprises.”

8

What do structural funds co‐finance? EUROPEAN SOCIAL FUND (ESF)EUROPEAN SOCIAL FUND (ESF)

ERDF ibi i l dERDF exibits a more important role compared tothe ESF in financing e‐services

/REGULATION (EC) No 1081/2006 (ESF)

“…the dissemination of information and communicationtechnologies, e‐learning, eco‐friendly technologies and managementskills, and the promotion of entrepreneurship and innovation and, p f p pbusiness start‐ups”;

9

EU Cohesion policy: 2007 13EU Cohesion policy: 2007‐13

• 27Member states• Almost 344 billion Euros:

– 281 CONV, 56  COMP, 7 COOP– 278 ERDF 76 ESF– 278 ERDF, 76 ESF– Almost 28 to ITALY

• 21 CONV 6 2 COMP 0 8 COOP• 21 CONV,  6.2 COMP,  0.8 COOP• 21 FESR, 7 SFE

M th 15 billi E t I f ti S i t• More than 15 billion Euros to Information Society• More than 5 billion Euros to e‐Services

10

EU Cohesion policy 2007‐13:p yCategories of expenditure dedicated to Information 

societysociety 

10 Telephone infrastructures (including broadband networks) 2,257,722,464 15%11 + 12 Information and communication technologies (including TEN) 4,121,115,554 27%Information and communication technologies (including T N) 4, , 5,554 7%13 Services and applications for citizens (e‐health, e‐

government, e‐learning, e‐inclusion, etc.)5,225,072,351 34%

14 Services and applications for SMEs (e‐commerce, education  2,144,358,160 14%pp (and training, networking, etc.)

15 Other measures for improving access to and efficient use of ICT by SMEs 

1,537,162,147 10%

15,285,430,676 100%

11

Member States:Member States:the national level

12

Resources allocated by Member State: absolute values (MEuro)

1,600

1,8003,714

1,621

1,200

1,400

1,600

800

1,000

,

400

600

0

200

Cat 13 (a v) Tot IS (a v )

Note. Authors’ calculations on EC – DG Regio data

Cat.13 (a.v) Tot IS (a.v.)

13

Resources allocated by Member State: % values

10.00 %

8.00 %

4.00 %

6.00 %

2.00 %

0.00 %

SK GR

MA FI KR ES CK EE

COOP LT PO FR

EU (M

ean) SL IT PT HU RM ND SE UK DE BG LV BE DK IR LU AT

% cat 13 over tot SF % IS over tot. SFNote. Authors’ calculations on EC – DG Regio data

14

Correlation between Inf soc and E‐services: abs values

4,000,000,000

Correlation between Inf. soc. and E‐services: abs. values

PO

3,000,000,000

3,500,000,000

R² = 0.800

2,000,000,000

2,500,000,000

t. Inf. soc.

GRIT

1,000,000,000

1,500,000,000

Tot

ES

GR

SKFR

0

500,000,000

CKHUDE

RM

0 200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000

Cat. 13 E‐services 

Total Structural Funds

15

Note. Authors’ calculations on EC – DG Regio data

RESOURCES ALLOCATED BY FUND (ERDF and ESF) AND OBJECTIVE (CONV, COMP, COOP)

15 158

1.91 %

1 50 %

2.00 %

6,000

7,000

Resources allocated by Fund (Meuro)

12,4191 56 %

1.80 %1 60 %

2.00 %12,000

Resources allocated by Objective (Meuro)

15,158

5 135

1.00 %

1.50 %

3,000

4,000

5,000 1.56 %

1.26 %

0 80 %

1.20 %

1.60 %

6,000

8,000

10,000

128

5,135

90

0.12 %

0.00 %

0.50 %

0

1,000

2,000

2,312 554

4,388696 141

0 00 %

0.40 %

0.80 %

0

2,000

4,000

ERDF ESFI.S.  CAT 13 CAT 13 / S.F.

0.00 %0

CONV COMP COOPI.S.  CAT 13 CAT 13 / S.F.

Note. Authors’ calculations on EC – DG Regio dataNote. Authors’ calculations on EC – DG Regio data gg

16

Structural Funds regionalallocation across EU27

Cluster analysisCluster analysis

17

Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5ITF3 Italia GR11

GreciaCZ02 CZ01 Rep. Cec AT11 DEF0 Germania MT00 Malta

PL12Polonia

GR30 CZ03 DEG0 Germania AT12 DK01 NL11

CLUSTER ANALYSIS ON ALL EUROPEAN REGIONS: TOTAL INFORMATION SOCIETY (CAT. 10‐15) 

Rep. Cec Austria

Polonia

Danimarca

Olanda

PL22 ITF4Italia

CZ04 EE00 Estonia AT21 DK02 NL12SK02

Rep. SlovacITG1 CZ05 ES12

Spagna

AT22 DK03 NL13SK03 LT00 Lituania CZ06 ES30 AT31 DK04 NL21SK04 LV00 Lettonia CZ07 ES41 AT33 DK05 NL22

PL11 CZ08 ES42 AT34 ES13

Spagna

NL23PL21 ES11

Spagna

ES43 BE10 ES21 NL31PL31 ES52 ES62 BE21 ES22 NL32PL32 ES61 ES63 BE22 ES23 NL33

Polonia

Spagna

Belgio

PL32 ES61 ES63 BE22 ES23 NL33PL33 ES70 ES64 BE23 ES24 NL34PL34 GR14

Grecia

FI13Finlandia

BE24 ES51 NL41PL41 GR21 FI19 BE25 ES53 NL42PL51 GR22 FR30

Francia

BE31 FI18Finlandia

PT15

PortogalloPL61 GR23 FR61 BE32 FI1A PT17PL62 GR25 FR71 BE33 FI20 PT20PT11

PortogalloGR41 FR91 BE34 FR10 PT30

PT16 GR43 GR12 BE35 FR21 SE12PT16 GR43 GR12Grecia

BE35 FR21 SE12

SveziaHU21

Ungheria

GR13 BG31

Bulgaria

FR22 SE21HU22 HU10 Ungheria BG32 FR23 SE22HU23 ITF5 Italia BG33 FR24 SE32

FR25HU31 RO11

Romania

BG34 SE33HU32 RO12 BG41 FR26 UKC1HU33 RO21 BG42 FR41 UKC2ITF6 Italia RO22 CY00 Cipro FR42 UKD1ITG2 RO31 DE21 FR43 UKD2

Francia

ITG2 RO31 DE21 FR43 UKD2PL42

Polonia

RO32 DE22 FR51 UKD3PL43 RO41 DE23 FR52 UKD4PL52 RO42 DE24 FR53 UKD5PL63 SE31 Svezia DE25 FR62 UKE1PT18 Portogallo SI01

SloveniaDE26 FR63 UKE2

SI02 DE27 FR72 UKE3SK01 Rep.Slov. DE30 FR81 UKE4UKK3 DE41 FR82 UKF1

Gran Bret.

Germania

UKK3Gran Bret.

DE41 FR82 UKF1UKL1 DE42 FR83 UKF2

DE50 FR92 UKF3DE60 FR93 UKG1DE71 FR94 UKG2DE72 GR24

GreciaUKG3

DE73 GR42 UKH1DE80 IE01

IrlandaUKH2

DE91 IE02 UKH3GermaniaDE91 IE02 UKH3DE92 ITC1

Italia

UKI1DE93 ITC2 UKI2DE94 ITC3 UKJ1DEA1 ITC4 UKJ2DEA2 ITD1 UKJ3DEA3 ITD2 UKJ4DEA4 ITD3 UKK1DEA5 ITD4 UKK2DEB1 ITD5 UKK4DEB2 ITE1 UKL2DEB3 ITE2 UKM2DEC0 ITE3 UKM3DED1 ITE4 UKM5DED2 ITF1 UKM6DED3 ITF2 UKN0DEE0 LU00 Lussemb.

18

CLUSTER ANALYSIS ON ALL EUROPEAN REGIONS: TOTAL INFORMATION SOCIETY (CAT. 10‐15) 

19

Information society (cat. 10‐15): first evidencefrom cluster analysis

• Campania shows the largest amount of Investments in Information Society (almost 535Investments in Information Society (almost 535 milions of euros)

• In the cluster 1: Západné Slovensko StrednéIn the cluster 1: Západné Slovensko, StrednéSlovensko e Východné Slovensko (SlovackRepublick – 367 milions of  euros each), pMazowieckie (341) e Slaskie (337) in Poland. 

• Cluster 2: Puglia (305), Sicily (258), Attiki and Anatoliki Makedonia (Greece), Latvia, Lithuania, Centro and Norte (Portugal), 10 Regions in PolandPoland. 

20

Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 ES61 S ES12 CY00 Ci CZ01 BE33 B l i FR41 PT30 P t ll

CLUSTER ANALYSIS ON ALL EUROPEAN REGIONS: CAT. 13 “E‐SERVICES” 

ES61 Spagna ES12Spagna

CY00 Cipro CZ01

Rep. Ceca

BE33 Belgio FR41 PT30 PortogalloGR30 Grecia ES43 DE93

GermaniaCZ02 BG31

Bulgaria

FR42 SE21

SveziaITF3 Italia ES62 DEG0 CZ03 BG32 FR43 SE22SK02

Rep. Slov.FR30 Francia ES24

Spagna

CZ04 BG33 FR51 SE31SK03 GR12 ES30 CZ05 BG34 FR52 SE32SK04 GR13 ES41 CZ06 BG41 FR53 UKC1

GR22 ES42 CZ07 BG42 FR62 UKC2

FranciaGreciaGR23 ES63 CZ08 DE21 FR63 UKD1

GR25 ES64 EE00 Estonia DE22 FR71 UKD2GR41 FR61 Francia ES11

SpagnaDE23 FR72 UKD3

GR43 GR24 Grecia ES52 DE24 FR81 UKD4HU31 Ungheria HU10 ES70 DE25 FR82 UKD5ITG2 Italia HU21 GR11 DE26 FR91 UKE1

Germania

UngheriaGreciaPL11

Polonia

HU22 GR14 DE27 FR92 UKE2PL31 HU23 GR21 DE41 FR93 UKE3PL33 HU32 LT00 Lituania DE42 FR94 UKE4PL34 HU33 PL12

Polonia

DE50 GR42 Grecia UKF1PL42 ITF4

ItaliaPL21 DE60 ITC1 UKF2

PL43 ITF6 PL22 DE91 ITC2 UKF3

Gran Bret.

Polonia

Italia

PL52 ITG1 PL32 DE92 ITC3 UKG1PL61 MT00 Malta PL41 DE94 ITD2 UKG2PL62 RO11

R i

PL51 DEC0 ITE4 UKG3PL63 RO12 PT11

PortogalloDEE0 ITF1 UKH1

RO21 PT16 DEF0 ITF2 UKH2RO22 PT18 ES13 ITF5 UKH3

Romania

Spagna

RO31 ES21 LV00 Lettonia UKI1RO32 ES22 NL11 UKI2RO41 ES23 NL12 UKJ1RO42 ES51 NL13 UKJ2SI01

SloveniaES53 NL21 UKJ3

SI02 FI13 NL22 UKJ4

OlandaFinlandia

UKL1 Gran Bret. FI18 NL23 UKK1FI19 NL31 UKK2FI1A NL32 UKK3FI20 NL33 UKK4FR10 NL34 UKL2FR21 NL41 UKM2

FranciaFR22 NL42 UKM3FR23 PT15

PortogalloUKM5

FR24 PT17 UKM6FR25 PT20 UKN0FR26

21

CLUSTER ANALYSIS ON ALL EUROPEAN REGIONS: CAT. 13 “E‐SERVICES” 

22

E services: first evidence from cluster analysisE‐services: first evidence from cluster analysis

ll h i i Sl k bli• All the regions in Slovack Republic except Bratislavsky have planned high investments in e‐

i ( th 189 ili f )services (more than 189 milion of euros)• Campania (147,5 milion of euros), Andalucia (Spain) and Attiki (Greece) also belong to the first cluster

• In the 2nd cluster: Sardinia in Italy, 3 Spanish, 7 Greek and 10 Polack Regions,  Pas‐de‐Calais (France), Észak‐Magyarország (Hungary)

• A number of COMP regions decided not to use structural funds to co‐finance e‐services development

23

Resources for e‐services and information isociety

an exploratory factor analysisp y y

• What is the “allocation strategy” of EU Regions?  

• What is the relationship between the resources for e‐services and the rest of theresources for e services and the rest of the money allocated to “Information Society”?

• Is there any difference between CONV and• Is there any difference between CONV and COMP Regions?

24

Principal component analysis: all regionsVariable cat. n. average min maxp_broadband (%) 10 263 14.134 0.000 100.000p_ICT (%) 11+12 263 27.831 0.000 100.000

Descriptivestatistics

p_e-services (%) 13 263 23.763 0.000 100.000p_SME1 (%) 14 263 19.218 0.000 100.000p_SME2 (%) 15 263 15.055 0.000 100.000

Correlation matrixCorrelation matrix

Variable p_broadband p_ICT p_e-gov p_SME1 p_SME2

p_broadband 1.00p_ICT -0.37 1.00p e ser ices 0 16 0 30 1 00

Correlation matrix

p_e-services -0.16 -0.30 1.00p_SME1 -0.17 -0.32 -0.30 1.00p_SME2 -0.22 -0.33 -0.28 0.02 1.00

N. Eigenvalues % Cum %g1 1.5061 30.12 30.122 1.3866 27.73 57.853 1.1330 22.66 80.514 0.9744 19.49 100.005 0 0000 0 00 100 00

Eigenvalues table

5 0.0000 0.00 100.00

Var n distance from origin dim1 dim2 Coordinates of

ObjectiveC3= CONVERGENCE 99 0.28386 0.28 0.41C3= COMPETITIVENESS 164 0.10344 -0.17 -0.25

illustrative variables:CONV & COMP

25

ALL REGIONS (CONV AND COMP)

e‐services

26

ALL REGIONS (CONV AND COMP)

Convergence obj.

Competitiveness objCompetitiveness obj.

e‐services

CONVRegions

COMPRegions

27

Principal component analysis: CONV regions

Variable cat. n. average min max

i ip_broadband (%) 10 263 15.049 0.000 100.000p_ICT (%) 11+12 263 25.452 0.000 100.000p_e-services (%) 13 263 33.058 0.000 100.000p_SME1 (%) 14 263 16.466 0.000 100.000

Descriptivestatistics

p_SME2 (%) 15 263 9.975 0.000 100.000

Correlation matrix

Variable p_broadband p_ICT p_e-gov p_SME1 p_SME2

p_broadband 1.00p_ICT -0.43 1.00p_e-services -0.23 -0.44 1.00

Correlation matrix

p_SME1 -0.03 -0.41 -0.32 1.00p_SME2 -0.02 -0.44 -0.02 0.29 1.00

N. Eigenvalues % Cum %1 1.8448 36.90 36.902 1.3606 27.21 64.113 1 1293 22 59 86 70

Eigenvalues table3 1.1293 22.59 86.704 0.6652 13.30 100.005 0.0000 0.00 100.00

28

Facteur 2ONLY CONV. REGIONS 

3.0

p e go i

1.5

p_e-gove‐services

0 p_SME2

p_broadband

p ICT

-1.5

p_SME1

p_ICT

Example:Sicily has programmed a single action for both e‐business and 

-3.0 -1.5 0 1.5Facteur 1

broadband 

29

Factor analysis: preliminary evidenceFactor analysis: preliminary evidence

• Low correlation between e‐services and the other categories of expenditure => Regions investing in e‐services made a “clear choice”

• CONV Regions tend to choose the “e‐servicesCONV Regions tend to choose the  e services strategy” more frequently than COMP regionsI CONV R i h t t l f d th• In CONV Regions – where structural funds are the main source of funding for information society –h i d i b ithe measures aimed at promoting e‐business are often accompanied by the development of broadband networks (see Sicily strategy)

30

Conclusion (1)Conclusion (1)

li d f h i li1. Stylized fatcs: European Cohesion Policy 2007‐13 is a really ( in many cases, probably the most) important source for financing e‐servicesin the CONV Regions. 

2. Cluster analysis: As to the allocated resourcesof Structural funds for e‐services:a) Significant heterogeneity across Member Statesb) Significant heterogeneity within Member Statesb) Significant heterogeneity within Member States

and across European Regions

31

Conclusion (2)Conclusion (2)

3. Factor analysis: a) Allocated resources for e‐services stands alone: )

an “e‐services strategy” could be identified.b) CONV Regions are more likely to adopt such a “e‐b) CONV Regions are more likely to adopt such a  e

services strategy”.

32

Further researchFurther research

• What does determine the allocation ofresources? 

• Which regional characteristics influencefunding allocation?funding allocation? 

• Is there a significant difference betweennational and regional level among MemberStateState

33