Big data set to boost EU economy by an additional 1.9 per cent by 2020

Big data has the potential to contribute €206 billion to the European economy by 2020, a sum equivalent to a 1.9 per cent increase in the gross domestic product of the 28 member states, according to a new study published this week by the Warsaw Institute for Economic Studies (WISE) 

To give a sense of the contribution this could make to revitalising national economies, a 1.9 per cent increase in GDP is equivalent to one full year of growth in the EU. 

The report, written in collaboration with the independent research institute, demosEuropa - Centre for European Strategy, and Microsoft, also attempts to unpick the impact of big data on the EU economy at a regional level. This highlights a divide in big data benefits, with Northern Europe forecast to see 2.2 per cent economic growth by 2020, while for Southern Europe and in the newer Member States the impact of big data growth will be lower. Despite the disparity, big data offers opportunities for growth across the EU. 

Maciej Bukowski, the President of WISE and co-author of the report, said that besides the direct effects on economic growth, big and open data will have many positive indirect effects. “With the help of big data, public services such as healthcare and education can be significantly improved,” he said at the launch of the study in the European Parliament. 

Amongst the potential benefits are productivity increases in manufacturing and services resulting from increased business process efficiency; increased competitiveness resulting from lower barriers to entry for business as a consequence of the opening of public sector data; and improved allocation of production factors resulting from better decision making - thanks to a shift from instinct – to data-driven management processes.

Expectations are high, and the authors paint an optimistic picture, but the impact will depend critically on how big data is applied. It is not clear, as yet, if companies and governments are capable of gaining useful insights from big data, nor if they have the ability to translate these insights into better products, better decision-making and better governance.  

The Internet, the spread of ICT across all areas of the economy, and the increasing use of sensors, is generating torrents of data – creating the potential to generate new products and services, and improve management and decision making in sectors from healthcare to retail. 

But, an ever-increasing amount of data means that there is an ever-increasing need for data scientists to marshal this resource. Beyond the need to develop relevant skills, Europe also needs to strengthen the digital market, in particular by creating pan-European technical standards and regulations.

“Big and open data has the potential to unlock new growth, new jobs and new opportunities for all Europeans,” said Jan Muehlfeit, Chairman of Microsoft Europe, speaking at the launch of the report. But he said, releasing this potential requires appropriate skills. “Big data can help in the reform of the European education by improving learning processes, and it can help in creating more efficient healthcare services by creating a link between patient lifestyle and the appropriate care,” Muehlfeit said. 

The report concludes that Europeans faces a triple challenge with respect to big and open data. “Firstly, they must recognise the different initial readiness of individual Member States to the challenges and opportunities of a data-driven economy. Secondly, they should address them with policy choices tailored to [local needs], but at the same time strengthening the scale of the common market. Thirdly, they must look at the big and open data challenge not as an isolated regulatory challenge but rather as part of broader reform agenda for Europe that should reinvent our thinking about the post-crisis economic reality, and provide new engines for economic growth for the future.”