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by Institute for Prospective Technological Studies (I) PREFACEThe acceding and candidate countries, in particular those in Central and Eastern Europe, have during the last decade undergone a set of three radical transformations: the shift to a market economy, integration into the European Union – the so-called Enlargement Process – and finally, a move towards the Information Society, today enshrined in the different initiatives of the eEurope Action Plans. These three transformations aim, at various levels, at the emergence of an enlarged European knowledge society as referred to in the March 2000 declaration of the Lisbon Council. In doing so, they challenge the economy, institutional and political structures, constitutional and legal frameworks, and working conditions in the countries in question. The question of what the Information Society means for countries entering the European Union from next year onwards is a fascinating and complex one. Fascinating, because it opens up a real window of opportunity for these countries to leapfrog technical, economic and social divides, thereby enabling them to meet the Lisbon objectives by 2010. Complex, because building the Information Society is only one of many priorities these countries have today and because there is no single recipe for achieving it. The research carried out into these issues at IPTS and reported herein has attempted to break down this complex picture into the following straightforward questions: Have we learnt anything from the experience of the EU-15 Member States that is transferable to the CC-13? Does industrial development of the ICT sector constitute a major opportunity for the acceding and candidate countries? à Have we learnt anything from the experience of the EU-15 Member States that is transferable to the CC-13? Does industrial development of the ICT sector constitute a major opportunity for the acceding and candidate countries? à How best can use be made of the benchmarking efforts of the eEurope+ Action Plan? To what extent do these tools fit methodologically into the context and the issues to be analysed in acceding and candidate countries? How can an Enlarged Europe benefit from “bench-learning” tools? à Are there specific technological prospects in the CC-13 which can be seen as offering leap-frogging opportunities? For example, is the growth rate of GSM penetration rates a favourable signal for rapid development into next generation mobile services? à If aiming clearly at economic growth, what could be the targets of future Information Society strategies? Is the ICT sector the principal engine of growth? Do services deliver growth, as expected from a knowledge-based society? Have economists developed the relevant tools to answer such questions? à If taking an ICT-intensive service such as banking, how does it perform – when considering its e-services – in acceding and candidate countries? Do such e-service oriented developments meet challenges and obstacles that are specific to these countries? This special issue of the IPTS report offers partial answers to these questions and I hope it will contribute to a better understanding of the issues at stake in the acceding and candidate countries. By doing so it may help European, national and regional decision-makers, from both public and private organizations involved in the Information Society field, to better coordinate their activities. ICTs, the Lisbon Strategy and EU Enlargementby Bernard Clements, Jean-Claude Burgelman and Marc Bogdanowicz, IPTS Research and policy-making in ICTs has from the early ‘80s suffered from a problem of context and emphasis – whether to regard it as a vertical sector to be developed for reasons of industrial policy and competitiveness in its own right, or as Dr. Cenys’ asks in his preface, whether it should be seen as the principal engine of growth, and thus given a wider role in economic policy. It is doubtful that this poses a real dilemma; a vibrant and healthy ICT sector is in any event a prerequisite for its successful application to other fields. But if emphasis on developing the sector was a feature of early research and market policies, that emphasis has now clearly given way to a perception of ICTs as an area capable of transforming a wide range of economic and social activity. This is borne out by the role given to it in the Lisbon strategy, and expressed in practical terms in the eEurope action plans. The Lisbon process launched a decade-long strategy of economic, social and environmental renewal, with the aim of transforming Europe into a competitive and dynamic knowledge-based economy by 2010. The process is a formal one, in which progress towards the Lisbon goals is measured through a wide range of structural indicators for the Member States, assessed by periodic reviews held at each year’s Spring Council meeting. The latest review revealed short-comings in several areas, including employment, productivity and sustainable development, and listed the important challenges for enlargement.1 Although most candidate countries had experienced rapid growth over the last five years, their economies were clearly at different stages of development, with agriculture still a major source of employment. Moreover, the disparities between candidate countries in a number of key areas of the economy were exacerbated by the continuing differences between these countries and EU-15 Member States. Taking the wider view of the transformational role of ICTs in the economy, the key question addressed in this special issue is what Information Society strategy the acceding and candidate countries can follow, given their overall social, political and economic situation. The general picture emerging is that the candidate countries are able: à to maintain high economic growth rates, so long as the industries and services developed are in growth intensive areas and exploit the synergies and network effects of global markets. Contrary to the example of some EU-15 success stories, it would not appear to be in the interests of candidate countries to rely on ICT manufacturing to support growth, rather they should seek to develop other sectors; à to catch up in technological terms, but not necessarily by taking advantage of technological leapfrogging opportunities – such as with say third generation mobile networks – this is not so straightforward; à to match or even challenge western standards in the area of technological education, bearing in mind that the transition to market economies has temporarily weakened the economics of the educational system (with a consequent need for strengthening it during the coming decade), and that the continuing high demand for ICTs might reveal skills shortages in certain sectors such as public administration, SMEs, etc. à to develop numerous content-related initiatives in media, e-business and e-government, but recognizing the particular context and challenges that will make this a more difficult exercise than in the case of the EU-15 countries; à to attract existing global companies, in particular those in the ICT sector, but with attendant risk of their plants relocating to other trade blocks, ironically in the face of increasing economic growth in candidate countries. As a result, a simple scenario for the way forward, a single and common Information Society strategy for the candidate countries, appears an unlikely outcome. The recipe which made an economic success of certain regions and countries in EU-15 seems almost impossible to repeat in the candidate countries. First and probably most important, candidate countries already confront difficult choices, expressed in one paper as that between “bread or broadband”. Only even-handed trajectories that will offer a compromise between these two poles, and feed simultaneously into overall welfare issues and economic growth will be politically sustainable. Technology is perceived as unaffordable, unless it can be demonstrated to be a clear tool for the country’s well-being. The strong disparities that accompany the enlargement process at the European level, and the potential complex digital divide that may derive from these disparities are illustrations of this dilemma. Moreover, many countries may need institutional and managerial strengthening rather than plain infrastructure or technological upgrading. The question is therefore how best to put the Information Society policy strategies at the service of a country’s democratic and social development, while optimizing its resources and economic output. Second, while the example of west European countries could be seen as showing the way forward, the simple emulation of those “best practices” is seen as decreasingly relevant for candidate countries. In particular, Information Society developments should not be seen exclusively as targeted industrial developments around the ICT sector itself. While this has been a possible trajectory for so-called “Tiger” countries of the EU-15 during the last decade, today’s economic conditions – the burst of the speculative bubble around the new economy, and the overall downturn of the global economy – do not seem to favour such scenarios any longer. In the realm of a strongly competitive and global industry, it is obvious that not everybody can play a major role. Moreover, current market developments are bringing uncertainties to the future of the ICT industry, even in EU-15 countries or regions. “Benchlearning” from EU-15 successes and failures is making the best possible use, not only of the accumulated European knowledge base, but also of Asian, US and developing countries’ experiences. Third, ICTs are tools for the modernization of the economy, and for the building of an equitable, democratic and sustainable society. Just as in most advanced economies, growth in the enlargement countries is expected to come from productivity gains in ICT user-intensive sectors – at present these being expected to be mainly in retail and wholesale, banking and insurance, etc. – rather than from the ICT industry itself. Expenditure on a technological roll-out per se, in particular when supported by public subsidies or incentives, should be carefully monitored for its pay-off. The development of an ICT sector can nevertheless be supported by industrial and technology policies, if these are adapted to domestic needs and assets, aimed at the improvement of overall productivity and service quality, and take into account the global competitive context. Under such conditions, these developments may become with time exportable items. Possible trajectories therefore include developing value-added services and targeted high-tech goods (rather than being a low-cost player in ICT “commodities”), and turning the goals of the Acquis into a leveraging tool for domestic R&D, production and procurement. In such a perspective, FDI, R&D and public expenditures, and any other public support for the presence of an ICT industry in each candidate country, could help feed a longer-term perspective, rooted in effective needs and markets rather than favouring a domestic, but highly autonomous ICT manufacturing sector. Fourth, the enlargement process carries with it the possible financial and political burden of its implementation. Compliance with the Acquis Communautaire offers the virtues of effective harmonization, levelling the playing field for the market economy to prosper. For ICTs, it offers the additional advantage of regulatory certainty and technological neutrality. Nevertheless, it also raises important economic challenges, such as those related to the effective implementation of Universal Service Obligations, that might distract from other priorities and could undermine future decisions. Maximizing the chances of converting the Acquis compliance into opportunities might be the most fertile approach. Fifth, in line with the need to consider ICTs as tools rather than objectives in Information Society strategies in enlargement countries, complementary approaches need to be taken to move from the development and deployment of ICT infrastructures into the broader development of enabling contexts for users. These should be targeted at having citizens make full use of ICTs as tools for a better quality of life and access to more competitive products and services. Socio-economic aspects need to be addressed, such as trust in the institutions and trust in the technology, better managerial capacities, a legal framework for consumer protection, security and privacy concerns. Sixth, Information Society strategies are expected to be geared to societal and developmental needs. A vision statement, as well as its translation into goals and means, needs to be rooted in a context-related analysis of the conditions (strengths and weaknesses) of a country or a region. These conditions and needs will be differentiated among candidate countries and from the EU-15, even when framed by the rules of the Single Market, the Acquis Communautaire or present EU policies. An Industrial policy on ICT – even if focused on Services rather than strictly on Manufacturing – is necessary, but as a proportional means for complementing a broader strategy encompassing targets such as the general modernization of the existing economy, or that of Education, Social Welfare or Governance. Under this perspective, it seems necessary to co-ordinate and ensure consistency between ICT policy strategies and education, employment, or administration policy strategies, at different national and regional levels, and to co-ordinate those with national development plans. This rather holistic view is also strongly supported in the recent EC Communication on Industrial Policy. Such strategies need to be driven or at least monitored by the users of ICTs, be they corporate or civil. The necessary innovative institutional settings allowing for such processes to develop are a core lesson of EU-15 experience: there is a role to play in each specific context for a variety of actors from national politicians to industrialists, unions or NGOs. Bottom-up strategies are needed and should be put in place whenever possible. Finally, following the terms of the Lisbon objectives, there is an essential issue about integrating Information Society Strategies in the broader development of a Knowledge-based society, seen as the broad orientation of Europe’s contemporary development trajectory. In such frame, ICTs are seen much more as enablers for economic, political, social and intellectual development, rather than self-sufficient goals. The studies illustrated in this special issue are therefore part of a larger picture taking in strands of economic development resulting from technological change. Along with the Information Society issues described herein, the IPTS Enlargement Project addresses the agricultural transition to be made by the acceding and candidate countries and the question of how sustainability in the areas of energy, waste management and transport can be achieved when economies are growing. The Project assesses how technological change in these areas affects overall productivity and competitiveness under different policy scenarios. The Enlargement Project is being carried out jointly with scientists and experts from the countries concerned, and is guided by a Steering Committee made up of high-level representatives from all ten acceding countries. The results are to be discussed in a forthcoming conference in Florence in November 2003, co-organized by the JRC-IPTS and the European University Institute, and part of the official programme of the Italian Presidency. The conference will bring together European academic researchers and policy-makers to debate the issues involved and their implications for future policy. Information Society Strategies for the Candidate Countries: Lessons from the EU-15by Marc Bogdanowicz and Jean-Claude Burgelman, IPTSIssue: There is an ongoing debate on the appropriate strategies for the development of Information Society in candidate countries. Obstacles to the Information Society may be general or specific to a particular Candidate Country context.Relevance: Policy-makers today are confronted with hard choices about Information Society strategies at regional, national and European levels for Candidate Countries. Large investments have to be made, regulations have to be implemented and applied, social cohesion has to be preserved. There may be lessons to be learned from earlier EU-15 MS Information Society experiences, in particular in industry. IS developments in Candidate Countries: the current state of affairs Over the last decade the Candidate Countries (CCs), and in particular the Central and Eastern European Countries (CEECs) have undergone radical changes in their economies, their institutional and political settings, their constitutional and legal frameworks and their social and labour regulations. These changes show their adaptability and capacity to meet the challenges of building a knowledge society. Over the last decade the Candidate Countries (CCs) have undergone changes in their institutional and political settings, their constitutional and legal frameworks and their social and labour regulations The CCs have indeed been able, with the help of considerable foreign investment and proactive policies, to attract and integrate many of the top global companies in the ICT industry. They have also reinforced or created new competitive niches for their domestic industries, mainly in software and content services. Nevertheless, bearing in mind the global and cyclical nature of these industries, these achievements should be assessed with caution and relevant strategies to support sound economic development should be further articulated. Simultaneously, CCs have shown themselves very capable of developing a wealth of ICT-based services in such diverse areas as business services or public administration. Though these initiatives demonstrate an obviously entrepreneurial mindset, they are still too dispersed and unconsolidated, and lag behind in terms of critical mass and economies of scale. The CCs have been able, with the help of considerable foreign investment and proactive policies, to attract and integrate most of the top global companies in the ICT industry On the demand side, in some areas such as mobile telephony, spectacular growth rates have allowed the CCs to catch up in technological terms and to achieve above EU-15 average penetration rates. In some countries (the Czech Republic, Estonia, Hungary, Slovakia, Slovenia and Turkey) fixed line penetration has overtaken that of the EU-15. However, as progress in ICT penetration is correlated to a large extent with the level of economic development, the investment capacity and the purchasing power of the population, countries with low per capita GDP are not capable of sustaining such a high rate of penetration growth. On average, the CCs continue to lag behind EU Member States in most, if not all, measures of ICT access and usage. Furthermore, the overall economic situation in the CCs – and the resulting uneven revenue distribution – is widening the gap between the people and organizations that can access advanced technologies and services and those for whom they are a luxury. Close observation of the educational system also shows that CCs at least match Western European standards in technological education. This is an asset clearly inherited from the past institutional settings in the educational area, and current changes – privatization, shifts in the vocational and on-the-job training system, brain drain, public funding crises, etc. – may offer opportunities as well as weakening the inherited system. Such achievements, some of which are very recent, should also be assessed in the light of the disparities on many levels that can be observed within the CCs and in a broader Enlarged Europe. With enlargement it is estimated that the income dispersion between regions in EU-28 will double relative to that existing in the current EU-15. The impact and complexity of the digital divide resulting from this fact, added to disparities between countries in terms of the distribution between their rural and urban populations, regional situations and demographic trends, is expected to be such that it could endanger market growth, social cohesion and democratic participation. In such circumstances, there is a very high risk of developing a complex digital divide between and within groups of European countries, among sectors and businesses, generations and cultures, etc. Such a pronounced divide would weaken the economy, social cohesion and the building of democracy in the CCs, and would run counter to the European objective of an inclusive society. The disparities within the CCs and in the broader Enlarged Europe risk endangering market growth, social cohesion and democratic participation Finally, most of the CCs today are new democracies with comparatively weak economies and are still dealing with the overall challenges of the transition to market economies, and the implementation of the political and economic framework required by the European Union. Striking a balance between two sets of policy objectives – acute societal day-to-day needs and longer term IS-related development needs – is probably their most difficult policy challenge. From this point of view, it is clear that the strategic political choices made today could have important implications for the CCs’ economies and societies: à If present development imbalances are not properly addressed and provisional achievements not consolidated, the CCs will certainly succeed in creating ICT islands but large disparities between countries, regions, businesses and populations will remain, both in the ICT domain and others. CCs run the risk of not reaping the political, social and economic benefits of their societies’ transformation. Economically speaking, these countries may even become isolated in the role of low wage/low quality countries constrained to lower added-value production and consumption patterns. The strategic political choices made today could have important implications for the CCs’ economies and societies à If the CCs wish to achieve a more balanced development of the Information Society and strengthen their position, a strong policy commitment (policy push) is needed which clearly focuses on meeting the Lisbon competitiveness, social cohesion and sustainability targets and has sufficient financial support. In times of limited public resources, striking the balance between competitive objectives and targeting the major relevant factors for cohesion and sustainable development could become the outline of a “Marshall plan” for the Information Society in the CCs. Only a multi-layered policy push of this kind will ensure that the CCs build up their own socially inclusive and competitive Information Society. What lessons can be learned from past experiences in EU-15? How can this knowledge be applied to the particular circumstances of the CCs when setting up an appropriate policy agenda? The last decade of ICT-related development in EU-15 Member States provides examples of national successes and failures Lessons from ICT-related EU-15 experiences The last decade of ICT-related development in EU-15 Member States provides examples of national successes and failures, set against the particular economic, industrial, historical, social and geographical context of the country or region concerned. It is thus worth looking at how particular initiatives in given EU-15 national/regional contexts have created favourable conditions for achieving ICT-related regional and national development and what this has meant in each case. The analysis of various cases across Europe identified the following seven factors which, taken together, help us understand the dynamics that have led to more or less successful ICT-related development in EU-15 MS since the mid 90s. Box 1. Seven factors leading to successful ICT-related developments in EU15Committed and adaptive public policyCo-opetition frameworksFrom ICT Manufacturing industry to the adaptive use of the industrial profileDiversity/Uncertainty: the role of adapted financing toolsEducation, info-culture, awareness: the intangible facetCreative use of specific contexts: alliances by position, language, identityEU-policies A strong recurrent element in the case studies that illustrate the development of IS trajectories in the EU-15 is that they generally did not develop spontaneously or in a socially inclusive way. They were all strongly supported by an adaptable, committed and pro-active public policy. This policy was also often cross-departmental, and aimed at the overall development of the country rather than being focused strictly on ICTs. In the case studies, IS policies were absorbed into the broader category of development policies covering a variety of domains such as economic development, industry policy, science and technology, employment, regional policy, innovation policy, social policy, education, media, etc. A strong recurrent element in the case studies on the creation of ICT-related development in the EU-15 is that they did not develop spontaneously or in a socially inclusive way A specific role for the public authorities concerns the co-ordination of a diversity of actors at various levels – the creative design and management of co-opetition schemes – and the arbitration of ethical/political considerations about public interest and democratic representation. Co-opetition refers to the search for the right and creative mix of co-operation and competition, through, for example, bringing together diverse – possibly competing – actors in a coordinated way in a goal-focused and time-determined taskforce. This mix aims at creating mutually beneficial situations providing diversity, and at generating synergies that may help to create common goals and trajectories for all. The concept calls for innovative institutional arrangements in public-policy management, which include the delegation of decision making and implementation capacity, and a citizen/entrepreneur-oriented mindset. It promotes the idea that reciprocal responsibilities pay better than a “winner takes all” approach. Coordinating co-opetition involves meeting the challenge of difficult ‘policy learning’, in particular because the environment for policy-makers and partner-actors becomes highly complex and constraining. In most cases EU policies have supported national initiatives as much with mandatory regulation frameworks as with awareness raising, direct subsidies or benchmarking initiatives EU policies can play a powerful role in framing these political conditions. In most cases they have supported national initiatives as much with mandatory regulation frameworks as with awareness raising, direct subsidies or benchmarking initiatives. However, EU policies can have the opposite effect. The focus on EMU and the stability pact, and on the overall enlargement process and its conditions, may have distracted some governments from other priorities or legitimized less open cooperative schemes. As well as the right political conditions, IS initiatives need financial support that offers a variety of tools adapted to the diversity of initiatives necessary to explore and develop traditional and new opportunities – with very different degrees of risk – for business and civic life. Foreign Direct Investment (FDI) is a major tool, particularly for funding and developing an ICT (manufacturing) sector, but also for any development plan. Other essential tools for the promotion of domestic ICT-related development are venture capital, seed capital, public subsidies and the protection of revenues through adequate regulation (for example, intellectual property rights). The EU-15 case studies also show that the presence of foreign and indigenous ICT manufacturing multinationals and/or a dynamic SME-sector that successfully develops international ICT-related niche-markets (such as software development, maintenance, services, etc.) have been essential ingredients in some major IS developments. During the second half of the 1990s several national economies benefited from the contribution of ICT industries to added value, GDP and employment. But it is also evident – if not more important – that national/regional economic structure matters, as much for development opportunities as for growth. Countries and regions, which have a tradition in industrial manufacturing, may succeed in modernizing that industry through ICT use. The adaptive use of ICTs is at the core of these IS strategies. But other nationally or regionally specific assets – particularly in services – can help to transform relevant sectors into ICT-intensive ones. Exploring, creating and exploiting these ‘sweet spots’, which may be either historical or new, is a complementary strategy which may be more reliable in the long term than a basic industrial policy that concentrates on ICT manufacturing clusters. During the second half of the 1990s several national economies benefited from the contribution of ICT industries to added value, GDP and employmentMore surprisingly, geographical position or size may allow for a specific role in geopolitics or international trade. Traditional migration flows may reveal unexplored networking capacities as well as access to foreign resources. Language specificity may translate into market access or identity seeking. The historical background may support sudden attractiveness. Such features can be embedded in international alliances, in marketing behaviours and mobilizing visions or in the distribution of managerial responsibilities. Strategic creativity matters more than the hurdles. Addressing those specific features that are seemingly hurdles to ICT-related development at national or regional level has often revealed opportunities for creating competitive advantages. Not addressing them has turned them into real weaknesses. Finally, education – often little acknowledged in excessively short-term assessments – is always an essential ingredient in successful ICT-related development. However, it has to be viewed in the longer-term. The generational upgrading of the population’s educational level is a central ingredient of development. In the broad realm of education, general literacy levels and the explicit support to creativity, self-teaching and retraining should be examined. However, other intangible national assets also play a role in fostering ICT potential. Infoculture, a neologism that indicates the social habits of a given population and its private and leisure behaviour, seems also to partly determine the possible scope of successful development. On the supply side, R&D capacities, fundamental research and curiosity-oriented research, technology transfer mechanisms, patent regulation, innovation policies, managerial capacity towards innovation and entrepreneurship, and simple awareness of change, are all observable intangible assets that should be explored and valued. The managerial capacity of the decision-makers and their sensitivity to the issues raised by the IS, are themselves ultimately an essential facet of a country’s intangible assets. The managerial capacity of the decision-makers and their sensitivity to the issues raised by the IS, are themselves ultimately an essential facet of a country’s intangible assets It is worth trying to assess how transferable these factors, seen as important ingredients of EU-15 IS experiences over the last decade, might be to the CCs today. While an early diagnosis shows that CCs benefit from a multiplicity of diverse IS initiatives and players of various scales, they may still lack some of the other necessary ingredients. For example, a committed and supportive policy focus may be undermined by other essential targets and budgetary constraints. Co-opetition, i.e. the institutional creativity that allows the necessary consensus (about targets) and decision building (about actions to be taken) across a broad range of partners may also be weakened by the too recent emergence of institutions which lack the resources – human, legal, budgetary – and the legitimacy to act as coordinating bodies for creative settings. Additionally, the credible presence of a wide range of solid financing tools able to support a diversity of initiatives and players may well be prejudiced by the still recent take-over of management of capital and subsidies by the private and public sector. As a result, conditions may not be ripe in most CCs for implementing EU-15 “best practices” successfully, especially if they need to be followed too closely.Potentials for a CCS ICT industry-led IS development The EU-15 “Tigers”: a model for IS development?As “European Tigers”, Ireland, Finland and Sweden have features in common and their position contrasts with that of the rest of Europe, and in some ways with that of the rest of the world. These three countries’ very strong ICT manufacturing profiles makes them stand out. The financial results of their ICT sectors have in turn impacted positively on their overall national economies. On the other hand, the long-term sustainability of their winning positions should be assessed from various points of view: à They have the advantage of being the “first come” countries in an important, – even if momentarily stagnating – sector of the economy. Would-be “followers” have to assess the difficulty of challenging these positions à These ‘Tigers’ have developed an industrial capacity in a difficult sector and are faced with fierce global competition, and technologically-related cyclical patterns à They have developed a possibly vibrant innovation capacity not only in ICTs, but they would hope also in other branches, reinvesting their benefits in a new cycle of value creation which makes them less vulnerable to the potential downturns of the ICT Manufacturing industry. The so-called “European Tigers” Ireland, Finland and Sweden have developed strong ICT manufacturing profiles which have boosted their overall national economies It is thus quite possible that times have changed for national Information Society projects relying strongly on the building block of growth in ICT manufacturing industries. This issue affects the transferability of the observed factors determining success and failure, into the context of the CCs and more precisely to the support given to their ICT Manufacturing industries. Potential CCS “Tigers”: repeatable trajectories towards the IS? The above observations question to what degree “Tigers” scenarios are possible for some or all of the CCs? Do their ICT industries show signs of being able to reproduce a “Tiger” renaissance or not? The “European Tigers” are models that CCs with strong ICT manufacturing sectors might wish to emulate, although there appear to be some specific weaknesses which may have a negative effect on their ability to do so in the medium term A closer look at the ICT manufacturing industry in those CCs which are seen as ICT manufacturing champions today – namely Hungary, Poland, the Czech Republic, Estonia, Turkey – indicates some specific weaknesses which may have a negative effect on their development in the medium term: à The development of their ICT manufacturing capacity is highly dependent on external factors. For example, fluctuating FDI flows and their relation to incentive policies have a considerable influence. Foreign firms, whose strategies are designed to deal with an ultra-competitive environment may also decide that relocation of activity is the easiest option. Competition from other European and non-European countries, access to market-based competition for plant and R&D centres, and strong dependency on overall economic health as export-oriented industries also have an effect. à There is an observable shift in production specialization towards lower-value ICT manufacturing such as Consumer Electronics (which represent today less than 10% of total world production value) or even Components. This shift accompanies a general shift towards assembling activities with low added value and little accompanying knowledge intensive activity (R&D, for example). This has happened partly as a result of a focus on competition strategies that are cost-based rather than knowledge-based. à Those CCs that are seen as ICT manufacturing champions – with the exception of Hungary – have negative overall trade balances in ICT goods. Even though they have stronger ICT manufacturing industries than the other CCs, their economies have to absorb the effects of a much larger demand. à Last but not least, it may well be that these strategies, and the industries themselves, will be sensitive to the potential impacts of accession. While the single market rules will further boost export capabilities as the logistics of doing business are made easier, it may well be that some aspects of today’s policies will come under scrutiny in order to make them meet fair competition rules. Excessively generous incentive policies, for example, may be cut back. With the exception of Hungary, even the CCs that are seen as ICT manufacturing champions have negative overall trade balances in ICT goods Bearing these factors and the most recent company decisions (to relocate to Asia, for example) in mind, it is fair to conclude that developing “classical” Tiger strategies by encouraging foreign or domestic companies to foster and grow in the domain of ICT manufacturing may be, today, a mistake. Though these strategies were rewarding in the 90s, today the position of western European “Tigers” – Ireland, Finland, Sweden – has been weakened not only by the downturn of the market and the difficulties in the telecoms sector, but even more by the pervasive trend of globalization and one of its obvious consequences: the rise of the Asian countries as both major economic partners and challengers. The timing now after two decades of progressive globalization may thus play against new entrances in terms of industrial scenarios. Conclusions: from benchmarking to benchlearning Two major conclusions emerge from observation of IS-related initiatives in the EU-15 during the last decade. Firstly, the integration of global ICT companies in the domestic economy with strong investment incentives may be risky in the medium term because it relies on the dynamics of a cyclical and global industry rather than on the domestic economy’s intrinsic strengths. While this has been successful for the so-called “Tiger” countries of the EU15 during the 90s, today’s economic conditions no longer seem to favour such scenarios. Two decades of globalization (particularly noticeable in the ICT industry), the emergence of Asian economic challengers, the bursting of the speculative bubble around the new economy, and the overall downturn of the global economy, hinder repetition of the West European success stories. One of the lessons to emerge from IS-related initiatives in the EU-15 is that the integration of global ICT companies in the domestic economy with strong investment incentives may be risky in the medium term because it relies on the dynamics of a cyclical and global industry rather than on the domestic economy’s intrinsic strengths Second, a unique recipe or scenario for the road forward as regards IS strategy for any one CC, let alone the CCs as a group, does not exist. The simple emulation of EU-15 “best practices” is seen as less and less relevant for CCs. CCs should be “benchlearning”, rather than benchmarking, from EU-15 successes and failures, and also from other countries and regions around the world. They would benefit from making the best possible use of the accumulated European, Asian, US and developing countries’ experiences to develop their own trajectory and articulate the IS strategies as one important tool – although not a panacea – for the development of their national economies, societies and democracies. More about IPTS Reports at:http://www.jrc.es/home/report/report_main.html