The digital economy accounts for less than 3% of the EAEU’s aggregate GDP, according to a research by the EDB
The Eurasian Development Bank publishes the results of its assessment of the EAEU member countries’ digital potential
Moscow, 1 July 2019. In the Eurasian Economic Union (EAEU), comprising all the Eurasian Development Bank’s (EDB) countries except Tajikistan, the digital economy accounts for less than 3% of its aggregate GDP. This finding is presented in the special report titled Digital Potential of the EAEU Member Countries distributed by the Centre for Integration Studies at the EDB’s Directorate for Research.
This gap with the developed countries has a number of reasons behind: the economic models of the EAEU countries, with agriculture making up a significant share; the relatively slow introduction of digital technology; and the need to close the gaps in research and technology with post-industrial countries.
The report analyses and assesses the EAEU countries’ digital potential using quantitative and qualitative indicators developed by leading international organisations in order to present in a more objective way the opportunities and challenges associated with digitalisation.
It should be said that, since 2000, all the EDB member states have demonstrated only positive developments in advancing the base infrastructure for the digital economy. According to the Digital Adoption Index (DAI)[1], Russia, Kazakhstan and Armenia are the leaders in the region. That said, in 2014–2016, all the member countries improved their DAIs.
In terms of the DAI indicators, the main driver of digital transformation in Kazakhstan and Russia is the government sector (with indexes of 0.82 and 0.84, respectively). These are also the countries that demonstrate the highest index of e-government development. In Armenia, Belarus, Kyrgyzstan, and Tajikistan, the key driver of digitalisation is business, which is interested in maximising profits and optimising business processes in order to effectively distribute its resources.
An analysis of the digital potential of the EDB member countries has shown that these have significant resources to create a digital economy, but their respective potential is different, and this can widen digital gaps among them. Overall, the region needs to develop its digital culture, as at present business remains the key driver of digitalisation in all the EDB member states.
The first step to develop the digital economy would be to establish an up-to-date information and communications infrastructure, and upgrade the existing base. Information infrastructure needs to be developed, including information centres, subsystems, data and knowledge banks, communication systems, control centres, hardware and software, as well as data collection, storage, processing and transmission technology.
In addition, the current economic model can determine the key initial stages to unlock the digital potential. In particular, the countries with a high share of employment in agriculture need to develop digital agriculture in order to improve the sector’s productivity. Of no less important is a favourable environment for innovations, which should be created with governmental support in the first place.
Given digitalisation’s positive effects on integration, regional unions and multilateral development institutions will be interested in projects and initiatives aimed at improving cooperation between their member countries in the context of integration. Therefore, the institutional ambition to develop the digital economy, coupled with the financing capacity of multilateral development banks and the private sector’s appetite for innovations, creates a synergy needed to develop the digital economy.
The full version of the report is available for free on the EDB’s website: https://eabr.org/en/analytics/special-reports/the-digital-potential-of-the-edb-member-countries/
Additional Information:
The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB's charter capital totals US $7 billion. The member states of the Bank are Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia and Tajikistan.
The EDB Media Centre:
Alexander Savelyev +7 (985) 765 23 59 (Moscow)
Azima Sapargaliyeva +7 (777) 750 00 08 (Almaty)
Sergey Gorbachev +7 (916) 727 22 00 (Moscow)