Interview with Jorgen Abild Andersen: Chair of Committee on Digital Economy Policy, OECD.
Jorgen Abild ANDERSEN: Big data is a phenomenon which is based on digitization. With the increasing digitization more and more digital data are produced and the increase is exponential. This rapidly increasing amount of data provides the raw material for the development of applications and services. Around the world and especially in the US, we have seen the app economy developing as a result of this. The app economy has great implications for growth, innovation and employment. It started--more or less --with the iPhone in 2007 and in the first 4-5 years thereafter it has developed into a USD 20 billion industry having created 4-500,000 new jobs in the US.
These are positive implications of big data; are there any downsides?
You could say that big data is a two-edged sword. Work in the OECD documents that big data, on the one hand, can become an important basis for innovation and growth as well as improving the possibilities for a better life-for what has been termed 'social prosperity'. On the other hand, one must not forget the important and legitimate privacy concerns. OECD urges its member countries to leverage the potentials of big data and at the same time take the privacy concerns into consideration. The privacy concerns can, for instance, be dealt with by developing and stimulating the use of privacy by design solutions where the anonymity of individuals is maintained.
How is OECD working with big data issues?
The work of OECD is performed under the cross sectorial project called 'New Sources of Growth. Knowledge Based Capital'. The committee that I am chairing, Committee on Digital Economy Policy, is responsible for phase 2 of this project. It contains two corner stones: 1) Data Driven Innovation (DDI) and 2) IPR/Copyright. A comprehensive OECD report on Data Driven Innovation is to be published late spring 2015. The report shows that Data Driven Innovation is already happening. It's not something that needs to be kick-started. But it is important to make governments aware of the big potentials in this development and that the digital economy is a crucial part of the solutions for improving innovation, growth and social prosperity. Empirical studies reflected in the report show that companies capable of leveraging the potential of big data can experience productivity growth rates of 5-10% per year.
Which are the implications for public sector use of big data?
There are enormous potentials in the public sector area. To take an example, with big data and Data Driven Innovation it will be possible to meet the challenges of Alzheimer disease much earlier and better. In Japan, they have been working on this for quite some time to a wide extent because of the demographic development in Japan where the proportion of inhabitants above the retirement age is increasing dramatically these years. There are great human and also economic potentials in this. By collecting data on the daily behavior of elderly persons, for instance when they turn off the light, when the get up and when they go to bed, etc., and combine this with data on shopping behaviors and other kinds of data, it is possible to observe changes in the behavioral patterns, which can be used to detect Alzheimer's symptoms at an early stage. However, as one can imagine, there are huge privacy concerns involved here. And, such well-founded concerns are some of the most important potential barriers for the use of big data.
Are there any differences in the approach of private companies and public institutions?
Yes, public institutions and private companies have different approaches. However, the interests are basically the same. In the public sector, the budgets are constrained and there is an interest in figuring out how public services can be delivered in a more efficient manner: More quality for the same amount of money. Private companies have an interest in doing better in the competition with other companies. One of the ways is to use big data and Data Driven Innovation.
Are there any differences of opinion on the balancing of economic potentials and privacy concerns among OECD countries?
There is a broad agreement regarding potentials, challenges and concerns among the OECD countries. But there are obviously differences in how much emphasis the different aspects are given. In Germany, for instance, there is in general, for historical reasons, a greater concern for privacy issues. There is an area though where the discussions in the OECD go beyond the issues of economic potentials versus privacy concerns. This has been termed 'societal challenges' and is concerned with the basic structures in society including market concentration and dominance. It is also concerned with future employment developments. The question is whether, in the long run, some of the consequences of unleashing the full potential of Data Driven Innovation may be loss of jobs, not only for the low-skilled but also for the highly educated. An example could be doctors specializing in X-ray based diagnosis. Understanding X-ray pictures is a complex skill and it is possible that diagnosing by skilled persons on the basis of X-ray pictures may become obsolete because big data based analyses can provide better answers than those provided by human beings even though they are highly specialized medical doctors. Such developments raise a whole new set of questions. It is often said that internet creates 2.6 new jobs where it removes 1 job. However, the question is whether this is right. We may be entering a situation where there will be a net loss of jobs in the coming years due to, eg., the potential successes of Data Driven Innovation. At this stage I think it is fair to say that there is no clear conclusion or answer to this question.
How about public sector information (PSI) which has been discussed for quite a few years?
PSI is only a fraction of the larger big data picture. However, we are still dealing with large economic potentials. In the EU context, it has been calculated that the potential direct and indirect value of PSI in Europe is around Euro 140 billion per year, whereas free access to PSI has a long history in the US. Only recently this has become possible in Europe enabling new applications and services to be developed, leading to increased economic growth.
Are there other aspects of big data, which have been part of the deliberations in OECD?
Internet of Things (IoT) is an important part of it. IoT has huge potential. The data from IoT are self-generated data from all kinds of sectors, and on the basis of such data it is possible to conduct analyses, which can lead to amazing results. There is another issue though that I'd like to touch upon, and that is the lack of skills to perform such data analyses. We will simply, to an increasing degree, be lacking skilled labor forces including academic candidates for performing such tasks. It is estimated that only 1/2 % of the population currently has the IT skills which are needed in this area. At the latest meeting in Davos in Switzerland it was mentioned that by 2020 we will be missing 900,000 persons with the IT-skills needed. Yet another important question is the infrastructure for taking advantage of big data. In some countries there seems to be too little investment in the necessary infrastructure. If the full potential of big data is to be realized, the infrastructures in terms of networks and server capacity must be there. This is an issue in a number of OECD countries. Also, I'd like to mention the issue of standardization. There needs to be interoperability between the different ICT platforms processing big data. Otherwise, it will not be possible to combine all the different kinds of data, which are necessary for conducting big data analytics and for establishing the appropriate competition.
There is another topic concerning the ownership of data. Who owns the personal data of individuals?
This is an important issue, but I have to say that this is not something that has been explicitly touched upon in OECD. The fact that you leave digital footprints all over is something that we encounter every day. When you buy something on the net, you will get personalized commercials. This is part of the privacy issue. However, the discussion as to who owns the data is not something having caught a great deal of attention in our discussions in OECD.
You mentioned that there are differences among the OECD countries in the balancing of economic potentials and privacy concerns. How does this affect the global developments in big data use and Data Driven Innovation?
There is no doubt that the US is far ahead when it comes to DDI partly because there is a more liberal regulation in the US regarding the use of data. You could say that the climate for the use of big data is much friendlier in the US as compared to Europe. In Europe, there is a more unsettled situation with respect to the use of personal data. There is a need for more discussion on this topic. The unsettled situation may - more or less - turn out to become a show-stopper in Europe. In June 2016 ministers from OECD member countries and a number of other countries will have the opportunity to discuss the political challenges and opportunities related to the Digital Economy. At this conference with the title "The Digital Economy: Innovation, Growth and Social Prosperity", Data Driven Innovation will be a cross-cutting theme in the discussions.
Knud Erik SKOUBY & Anders HENTEN
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|Author:||Skouby, Knud Erik; Henten, Anders|
|Publication:||Communications & Strategies|
|Date:||Jan 1, 2015|
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