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"Facing the Challenge" (the Kok Report, November 2004)

A High Level Group headed by Mr Wim Kok, former Prime Minister of the Netherlands, was asked to carry out an independent review to contribute to the mid-term review of the EU’s Lisbon Strategy.

“Europe faces two enormous challenges – increasing global competition and a rapidly ageing population … to safeguard and strengthen [Europe’s] distinctive economic and social model, it must adapt.”
– press release

The group’s final report – “Facing the Challenge: The Lisbon strategy for growth and employment” (November 2004) - identified five areas for urgent action, one of which was to: “increase Europe’s attractiveness for researchers and scientists, make R&D a top priority and promote the use of information and communication technologies (ICTs).”

More generally, the report pointed out that progress during the first few years following the launch of the original Lisbon Strategy in 2000 had been disappointing due to lack of determined political action, but that the Lisbon ambition was “needed more than ever”, and that the Lisbon agenda must be prioritised around boosting economic growth and increasing employment.

The Challenge Europe Faces

It finds Europe “between a rock and a hard place”:

“although Chinese wages are a fraction of those in Europe … the difference in quality … is already small or non-existent,” while “India’s challenge is no less real”
“Europe has to develop its own area of specialisms, excellence and comparative advantage … but here is confronted by the dominance of the US. The US threatens to consolidate its leadership. The US accounts for 74 % of top 300 IT companies and 46 % of top 300 firms ranked by R&D spending. The EU’s world share of exports of high-tech products is lower than that of the US [as are its share] of high-tech manufacturing in total value added and numbers employed in high-tech manufacturing.”

“In a global economy”, the report concludes, “Europe has no option but radically to improve its knowledge economy and underlying economic performance if it is to respond to the challenges of Asia and the US.”

Moreover, “declining birth rates and rising life expectancies are interacting to produce a dramatic change in the size and age structure of Europe’s population … Ageing will raise the demand for pensions and healthcare assistance at the same time as it reduces the number of people of working age, to produce the necessary wealth.”

The Role of ICTs

“the knowledge society covers every aspect of the contemporary economy “

The report finds that the realisation of a knowledge society is one of five broad priority areas. Noting the overwhelming evidence that higher R&D spending promotes higher subsequent productivity growth, the report points out that ICTs are crucial to all areas of the economy:

“the knowledge society is a larger concept … covering every aspect of the contemporary economy … from high-tech manufacturing through knowledge intensive services to the overtly creative industries such as the media and architecture. … ICTs permit every step in value generation to become smarter … Successful companies are becoming more networked, customer focused and agile… Knowledge and the potential of ICTs penetrate every link in the economic chain”.

However, the report points out, “neither Europe’s knowledge society in general nor its ICT sector in particular are as strong as they need to be”, which means accelerating progress in:

information society: defining a regulatory framework for electronic communications; encouraging the spread of ICTs; creating conditions for e-commerce; supporting European leadership in mobile communications technologies;
research: setting up of an area of research and innovation; boosting spending on R&D to 3% of GDP; making Europe more attractive for its best brains; promoting new technologies;
education and human capital: halving the number of early school leavers; adapting education and training systems for the knowledge society; fostering lifelong learning for all; promoting and facilitating mobility.

Since the Report

"Europe needs a comprehensive and holistic strategy to spur on the growth of the ICT sector and the diffusion of ICTs in all parts of the economy”

The report concludes that “Europe needs a comprehensive and holistic strategy to spur on the growth of the ICT sector and the diffusion of ICTs in all parts of the economy”. The top priorities identified are to implement the eEurope 2005 action plan and fully implement (and enforce) the regulatory framework for electronic communications.

These findings were a key input to the i2010 Initiative, launched in mid 2005. Among the i2010 priorities are:

updating the regulatory framework: see eCommunications > Tomorrow's Framework;
increasing research spending: see Information Society Research;
promoting an Information Society that is inclusive, provides high quality public services and promotes quality of life.