Prospects of the ICT sector in Greece

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Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications The Greek economy is rapidly and steadily growing. Thus, a favourable macroeconomic environment is developed for the domestic ICT sector. Private consumption and investments remain at high levels, while the progressive fiscal reinstatement allows an increase in public investments. These trends can benefit the growth of ICT sector. The dynamic elements of the economy, the improved business climate, and the government inclination towards reformatory initiatives and structural changes imply that the economic conditions do not hinder the growth of the domestic sector. However, the favourable macroeconomic environment does not constitute a necessary and mandatory condition for the sector’s growth. Furthermore, the long established structural problems of the Greek economy and the delays in the implementation of the planned reform actions create a competitiveness deficit and difficulties, which have an impact on all firms. Therefore, to the extent that solutions to these long established problems of the Greek economy are progressing, the effectiveness of the IS policies could also be improves and maximized. Evidence for the reinforcement of demand is strengthened Although the problematic characteristics of demand require additional time to smooth out, there are clues for its reinforcement. The diffusion of ICTs in developing sectors of the economy (such as Tourism, Manufacturing) is considered as a decisive factor of demand that can create broader dynamics for the growth of ICT sector. Entrepreneurs’ understanding that they can improve their productivity and competitiveness through ICTs is increasing. There are strong indications that the medium-sized and the larger firms of the country have moved from the stage of connectivity to the stage of adoption of some e-business practises. Although these firms constitute only a minority of the entrepreneurial activity, they relate to a big portion of employment. Simultaneously, a large number of smaller firms operate closely to them and within the borders of their productive chain (suppliers/ customers). The smaller firms are already forced to keep pace with their large customers and they are expected to be more positive towards the investments on ICTs. This is probably not attributed to their beliefs about ICTs benefits, but to their need to preserve their position in the market. Besides it is predicted that the ICT expenditures will increase in the next 2-3 years, mainly in the direction of IT services and less in the hardware 24 . Additionally, as the e-business watch survey indicates, a 40% of the firms from 10 important sectors of the economy will increase their investments on ICTs during the next year, whereas only 4% will reduce them. 24 Round Table Discussion (6/7/2006), Observatory for IS October 2006 Observatory for the Greek IS 34
Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications In consumers’ market, younger clients have strong dynamics and are expected to stimulate the use of ICTs in the socio-economic activity in the country, as they participate more to the economic activity, but also as sources of knowledge for their close environment. Besides, monthly expenditures of the households for ICT products/ services have increased in comparison to 1999 (5% opposite to 4%), although they mainly refer to telecommunication services. They are estimated to exceed the amount of 4.3 billion € 25 . Telecommunications dominate the market, but create also some positive spillovers to the IT market. Consequently, the new products/ services that stem from the increasing technological convergence of IT and Telcos will have a positive impact on the sector of ICTs as a whole. At the same time, the role of State seems to be empowered, not only at the level of motives and subsidies provider for the use of ICT, but also the level of e- services that facilitate the business operations. These services lead to tangible reductions of transaction costs and improve the citizens daily life. However, more advanced and efficient services have as a precondition the development of broadband infrastructures that will allow for more services and will support the training actions that form a priority of government policies 26 . The degree of success of these actions is, thus, one of the factors that will determine the intensity of the support of the secondary demand, which is the most significant for the sector. Furthermore, most of the projects that are implemented in the country are going to yield results in the forthcoming period. This is expected to stimulate the diffusion of ICTs and the penetration of the IS in the country. Concerning foreign demand, international studies expect a rapid increase of the ICT expenditures in the Balkans, East Countries, former members of USSR, and Northern Africa 27 . These countries constitute potential opportunities (especially Bulgaria and Rumania due to their imminent participation in EU). Greek firms from various sectors have already expanded to these countries, while large firms of the domestic ICT sector have also invested on these networks. This is a fact that can support, the efforts of smaller firms, as they usually operate in their close environment. Particularly, the IT sector can be aided by the expansion of manufacturing firms and Banks in the Balkans and be benefited by their practises. Besides, examples of intensely extrovert firms are evident, while some of them have already entered into the most developed and demanding markets. There are therefore export intensive cores in the IT Services subsector that have entered into foreign markets (as 25 National Statistical Service of Greece (ESYE), Households Expenditures studies 26 Digital Strategy 2006-2013, OP Digital Convergence, Broadband strategic plan 27 IT outlook 2006, OECD October 2006 Observatory for the Greek IS 35
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Prospects of the ICT sector in Greece

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