Economic Trends
THE EMERGING DATA ECONOMY Data as a good to public administration in governing the economy
The volume of data generated has been increasing year after year, and advancements in transistor technology and machine learning expanded the computational possibilities to extract insights from it. Technological progress significantly increases the value of data and creates business opportunities, shaping the “data economy.” Today, its total value in the EU nears 301bn EUR (2018) and will have undergone a threefold growth by 2025 [197]. However, many challenges surround the field: data misuse, privacy, data breaches, and the general trust of the population towards the institutions that store and gather the data. Governments must work out the right approach about what citizen data to collect and use. A recent example highlighting the complexity of this issue is the approach regarding a publicly-funded mobile application to track the spread of the coronavirus. In the coming years, the main questions for PA will revolve around how to use big data to the best of the citizens by providing better public services while ensuring privacy.
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The European Commission projects the value of data at 829bn EUR by 2025, an increase of over 275% compared to 2018 (301bn EUR) [197]. The volume of data within the next five years will enlarge by 530%, to 175 zettabytes from 33 zettabytes in 2018 [197]. The number of data professionals will almost double to 10.9m in the EU by 2025 [198]. Initiatives and regulations of the European Commission, such as the “Free Flow of non-personal data” [199], the “Open Data Directive” [200], and the white-paper on artificial intelligence [153] strengthen the uprising data economy.
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The European Commission drives the data economy by providing a legislative framework and investing 4-6bn EUR in the underlying infrastructure in the coming years [127], more than the total EU expenditures of Denmark, Estonia, and Ireland of 2018 combined [201]. Cross-border data exchange is increasing in size and volume at an average annual growth of 40% [202]. Companies produce more data than ever [203], creating an economy with various opportunities for value creation and cost reduction [204]. AI enables companies and administrations to gain valuable insights from data, adding an expected sum of more than 15bn USD to global economies [203]. The increasing processing power of machines to analyze data and run algorithms contributes to the value of the data economy [205].
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Europe must find a balance between enabling innovation and ensuring data privacy through tight regulations [206]. Countries must come up with a solution to govern the handling of citizen data in a trustworthy and efficacious manner [206]. The question of data ownership must be solved on a panEuropean scale. As the value of data increases, so does the number of attacks to steal it. Therefore, data protection has to be taken more seriously yet managed cost-efficiently [206]. Institutions across the world have to find solutions to prevent the misuse and abuse of data like in the Cambridge Analytica scandal.
Impact on Public Administration: Governments are one of the largest data producers [207]. As digital information is progressively regarded as an economic good, the importance of PA as manager of this resource grows more and more vital. While physical assets in possession of PA decrease in significance, the administration develops into a vault-keeper of strategically essential goods and should show demonstrate aptitude. In an information economy, data-driven decision making on all levels of government becomes possible. Economically, this can enable efficient and effective resource allocation. International data sharing poses a chance to broaden the scope even further. Ultimately, PA could evolve into a better service provider to its citizens.
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