i THE EAEU 2025 DIGITAL AGENDA: Prospects and Recommendations Overview Report WORLD BANK GROUP THE EAEU 2025 DIGITAL AGENDA: Prospects and Recommendations Overview Report v CONTENTS vii Foreword ix Acknowledgements 1 Executive Summary 5  The EAEU 2025 Digital Agenda: Prospects and Recommendations 5 Prerequisites and rationale for the creation of the EAEU Digital Agenda 11 Challenges to the digital transformation of the EAEU and the possibility of achieving digital dividends 19 Priority initiatives for implementation of the EAEU Digital Agenda 23 The main directions and methods for implementation of the EAEU Digital Agenda 28 Conclusion 29 References vii Foreword Nowadays, the level of development of digital technologies plays a critical role in the competi- tiveness of countries and economic unions. The Eurasian Economic Union (EAEU) considers the transition to a digital economy to be the key driver of economic growth. In recent years, EAEU member states have made significant progress in many areas of digital development. The prospects and relevance of digital development of the economies of the EAEU member states were reflected in the Main Directions of the Digital Agenda of the EAEU by 2025, where digital transformation is emphasized as a key factor of development. Harmonization of efforts in the joint implementation of initiatives and projects of the Digital Agenda of the EAEU will allow the expansion of the capabilities of member states, citizens and business entities not only within the EAEU, but also in foreign markets. The effec- tiveness of joint actions of member states within the Digital Agenda depends on the successful development of their own economies. The implementation of the Digital Agenda will require the creation of digital platforms, network infrastructures, enabling initiatives and projects, building partnerships with those who have chosen the path of digital transformation. In 2016-2017, the Eurasian Economic Commission (EEC) and the World Bank conducted a joint study to research the international experience, and develop recommendations to maxi- mize the economic impact of the development of the digital space and the implementation of the Digital Agenda of the EAEU. This study represented the continuation of the work initiated by a decree No. 6 from March 17, 2016 of the EEC Board on the creation of the EAEU digital space, as well as by the Statement on the Digital Agenda of the EAEU, signed on December 26, 2016 by the heads of the member states. In the course of the study, international experience was analyzed, the existing national digital initiatives of the EAEU member states were reviewed and the economic impact of the development of the digital space of the EAEU and the implementation of the Digital Agenda was assessed. The study concluded that it was important to develop a common coordinated approach to the framework of digital development at the national and union levels for obtaining maximum effects (digital dividends) for all participants. The creation of the digital space of the EAEU will make it possible to achieve synergies from the implementation of a regional digital agenda. Indeed, the implementation of the joint Digital Agenda is expected to lead to overall economic growth, increased employment in the ICT industry and in the EAEU as a whole and enhanced productivity in priority fields. We hope that this overview report will provide helpful guidance in the implementation of the EAEU Digital Agenda and serve as the basis for continuing the fruitful cooperation between the leadership of the EAEU and the World Bank in future stages of implementation of the Digital Agenda. Cyril Muller Tigran Sargsyan Вступительное Vice President слово Chairman of the Board Europe and Central Asia Region Eurasian Economic Commission В современном мире уровень развития цифровых технологий играет определяющую роль в World Bank Group конкурентоспособности стран и экономических союзов. Переход к цифровой экономике рассматривается Евразийским экономическим союзом (ЕАЭС) в качестве ключевой движущей силы экономического роста. За последние годы в государствах -членах ЕАЭС зафиксирован ощутимый прогресс по многим направлениям цифрового развития. Перспективность и актуальность цифрового развития экономик государств – членов ЕАЭС нашли отражение в основных направлениях реализации Цифровой повестки ЕАЭС до 2025 года, где цифровая трансформация выступает в качестве ключевого фактора развития. Гармонизация усилий при совместной реализации инициатив и проектов Цифровой повестки Союза позволит расширить возможности государств-членов, граждан и хозяйствующих субъектов не только внутри Союза, но и на внешних рынках. Эффективность совместных действий государств-членов в рамках Цифровой повестки зависит от успешного развития национальных экономик. При реализации Цифровой повестки потребуется создание экспертных площадок, сети центров компетенций, формирование пула инициатив и проектов, выстраивание партнерских связей с теми, кто выбрал путь цифровой трансформации. В 2016 и 2017 годах Евразийская экономическая комиссия (ЕЭК) и Группа Всемирного банка провели совместное исследование в целях изучения международного опыта и выработки рекомендаций для максимизации экономического эффекта от развития цифрового ix This Report is an English translation of the original Russian language overview report which was produced on the basis of two detailed background reports. It is the product of a team of the International Bank for Reconstruction and Development / World Bank. The results, inter- pretations and conclusions contained in this document do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Acknowledgments This Report is an overview of the joint Study conducted by the World Bank’s team of experts led by Juan Navas-Sabater, Lead ICT Policy Specialist and Oleg Petrov, Senior Program Officer, in close collaboration with a group of experts of the Eurasian Economic Commission. The main experts – authors of the Study were Declan Deasy, Zamira Dzhusupova, Aynura Dzhoroeva, Arman Doskaliyev, Artyom Anikyev, and Darshan Yadunath. Asya Rudkovskaya acted as the Editor-in-Chief of this Overview Report. The team thanks the Eurasian Economic Commission and Minister Karine Minasyan, Alexander Mukovozchik, Alexander Petrov, and Khazhak Karayan for their active participa- tion in this collaborative study. The team also thanks colleagues from the World Bank and external experts who have made a valuable contribution to this study, in particular, Jane Treadwell, Randeep Sudan, Carlo Maria Rossotto, Aleksander Korolyov, Timothy Kelly, Maria Amelina, Hernan Winkler, William Lehr, Andrew Stott, Christopher Miller, Siddhartha Raja, Casey Torgusson, Mikhail Bunchuk, Rosanna Chan, and Luda Bujoreanu. The team expresses its appreciation and gratitude to Reyn Christine Anderson, Elena Lipilina, Stela Leuca, Tatiana Ershova, Cristina Elena Martinez Pinto, Samagan Aytymbetov, Olga Grishina, Yulia Danilina, Olga Ryzhuk, Yaroslav Eferin, and Laura Manley for their assistance in research, editing and drafting of this Report. 1 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS EXECUTIVE SUMMARY Digital technologies present unprecedented opportunities for the EAEU to transform its economy. The emergence of new ways of interaction between people, communities, and governments, In 2016, the EAEU started developing proposals on the of accessing information, and of doing business and interacting formation of a digital space. The following priorities were set: with public authorities, as well as the gradual disappearance of • Development of the EAEU legal and regulatory geographical and physical barriers open new prospects for the framework and harmonization of the legislation of economic, social and cultural development of the Union, as well the EAEU member states as for the growth of regional and global competitiveness. • Creation of a common digital space to increase mutual trade volumes using e-commerce tools Because of the impact digital technologies have on all spheres of public life, EAEU heads of state have recognized • Expanding the practice of using information and the need to foster and manage the processes of technological communication technology (ICT) to improve the efficiency of cross-border interaction between public transformation for the benefit of all members of society as new authorities, business entities, and individuals opportunities for regional cooperation and economic growth in the Union arise, based on digital networks, common digital • Development and implementation of joint projects platforms and new digital solutions that reduce distances, and programs aimed at the digital transformation of the economies of the EAEU member states eliminate borders, create new jobs, and develop previously nonexistent areas of business activity. Thus, in November 2016, the Eurasian Economic Commission, together with experts from the World Bank, began working to study the current situation and make recommendations for reaping the economic benefits of digital Association of Southeast Asian Nations (ASEAN), and the development. They studied the potential of creating a common Gulf Cooperation Council (GCC). The experience of these digital space and implementing the Digital Agenda of the associations was used in developing a common vision and EAEU by 2025, aimed at creating a single digital economy in the main directions of the Digital Agenda of the EAEU, as the region and achieving associated digital dividends. well as in understanding the possible results and achieve- ments that should be sought when implementing the Agenda. The vision of the EAEU common digital space is based on For example, according to the estimates of the European the creation of a common, secure, scalable digital infrastruc- Commission, the creation of the Digital Single Market of ture and platforms for the development of the Union’s digital economy, which would include broadband internet access in the EU can bring up to 415 billion euros a year to the EU all countries of the Union and would create opportunities for economy, create new jobs, and lay the foundations for a the emergence of innovative industries, new types of services, knowledge-based society. new jobs, growth and increased efficiency of interactions In addition, the study analyzed existing national digital between countries. initiatives of the EAEU member states and concluded that it is The study analyzed the experience of other regional extremely important to develop a common coordinated approach associations, in particular, the European Union (EU), the in order to ensure the expected benefits at the level of the Union. OVERVIEW REPORT 2 The result of comparing two digitalization scenarios1, that of GDP), of increasing international bandwidth (plus 0.66% is, the implementation of the digital agenda only at the national of GDP) and of spreading the use of electronic commerce level by the EAEU member states on the one hand, and devel- (plus 0.88% of GDP), among others. oping a comprehensive regional digital agenda on the other Regarding employment, based on a 30 percent average hand, showed that efficiencies and additional dividends from fixed broadband penetration rate in the EAEU, 2 to 4 million regional transformation will be significantly greater. new jobs may be created by 2025, 1 million of which would For example, considering the impact of regional digital be in the ICT sector. At the same time, it is possible to achieve initiatives on the growth of the region’s GDP by 2025 an increase in labor productivity of up to 1.73% by 2025. (Figure 1), one can notice the importance of expanding the Optimization and robotization of production, as well as penetration of fixed broadband internet access (plus 1.7% increasing labor efficiency, will certainly make some workers redundant, but the net effect of the development of the digital The differences between both scenarios were calculated for a broad 1 economy on jobs will be positive (Figure 2). range of indicators based on estimates of the regional spillover effects and externalities achieved through several mechanisms, such Considering the potential transformation of the services as strengthened competition, increased size of markets through and sector in 2018-2025, efforts to remove existing regulatory reduced inefficiencies, through harmonized legal and regulatory frameworks, elimination of barriers, and overall freedom of movement barriers in relations between the EAEU member states can of goods, services, capital, people and data. increase the Union’s GDP by $42.3 billion. The potential effect of Figure 1  Impact of digitalization initiatives on GDP growth for both scenarios for the period 2018–2025 GDP growth of the EAEU region due to digitalization initiatives,% Individual country scenario EAEU Digital Agenda scenario Growth of international Growth of xed broadband penetration Expanded use of Internet bandwidth e-commerce >0.11% >0.9% >0.44% 0.55% 0.8% 0.44% 0.66% 1.7% 0.88% Figure 2  Minimum estimated impact of the digital economy on employment growth for both scenarios (%) up to 2025 3.0 Minimum estimated employment growth for both scenarios (%) up to 2025 2.5 2.0 1.5 1.0 0.5 0.0 Armenia Belarus Kazakhstan Kyrgyz Republic Russia Individual country scenario EAEU Digital Agenda scenario 3 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS digitalization of government procurement at the regional level Figure 3  Transformation of the services sector is estimated at $1.6 billion. The provision of “open government” Examples of potential digital dividends (in bln. USD) services can save $1.3 billion, and the introduction of cross- from the introduction of the EAEU Digital Agenda border electronic services - another $0.5 billion (Figure 3). (2018-2025) The joint study emphasized that a major priority should be Elimination of 42.3 given to strengthening the ‘analog foundations’ for the EAEU legal barriers digital economy. In this context, it is important to achieve political consensus and provide high-level leadership of the Digitalization of 1.6 digital transformation process, as well as reinforcing the rele- public procurement vant governance institutions. State open 1.3 In order to facilitate regional integration and the digital trans- government services formation of the economy and the public sector, it is essential to create a harmonized legislation and regulatory framework. Cross-border e-government services 0.5 This requires the involvement of a range of institutions and stakeholders, including government bodies, the private sector, research and educational institutions, the media, as Successful implementation of digital technologies is possible well as the public. only if, inter alia, compatibility, interoperability, and scalability It is also important to have experienced managerial and of digital infrastructures, platforms and solutions are ensured so technical personnel who constantly improve their skills, and as to deliver an effective, inclusive, and secure digital economy. to pursue policies to develop the skills of the general public, as In cooperation with experts from the World Bank, a target well as to raise public awareness about the expected economic model for the creation of the digital space of the EAEU was and social dividends of digitalization. developed (Figure 4), and it was reflected in the proposals Figure 4  Target model for the creation of the EAEU digital space Increase of competitiveness Creation of conditions for sustainable Comprehensive cooperation of Ensuring the free movement of of economies due to development of the EAEU member states’ businesses on the basis of goods, services, capital and labor digital transformation in economies during transition to new end-to-end digital processes and in the digital space all spheres of society technological and economical bases the development of digital assets Goals Inclusion of EAEU member states in global and regional processes of Formation of a single Emergence of a stable Increased engagement Achievement of tangible digital digital transformation taking into digital market digital ecosystem for of citizens and businesses e ects for citizens and businesses consideration new opportunities in the EAEU economic entities in the digital economy from working in the digital space and risks in the digital space Share of digital goods and services exported, Share of the digital economy Share of employed in the Targets (2025) in EAEU member states’ GDP high-tech sector of the economy as well as traditional goods and services exported through digital channels, as part of total Increased productivity Expansion of opportunities and Improved quality of government Simpli ed access to global and accelerated Creation of innovation reduction of risks for citizens, and inter-governmental services Potential E ects economic growth of jobs and digital assets organizations and markets and increased provided to citizens of competitiveness for businesses EAEU member states government entities the EAEU member states Risk of loss of digital Risk of suppression and absorption Potential Risks of sovereignty of citizens, Risk associated with the Risk of delayed Risk of loss of of EAEU member states’ economies increased in uence and penetration competitiveness of goods, Risk of destructive Ignoring the Digital households, government control of the digital space of digital services, businesses and as a result of the transition cyber threats entities and EAEU of economic processes in Transformation member states by global players technology EAEU member states the other digital spaces Digital transformation of economic sectors, Digital transformation of markets for Digital transformation of Development of the EAEU’s Directions cross-sector transformation in the EAEU, as well goods and services, nancial markets, EAEU integration process digital infrastructure as formation and development of digital assets and labor market Development of the Creation of public-private Stimulation and support Support dialogue between regulatory framework for Promotion of best practices in Mechanisms digital economy of the partnerships in the digital of digital initiatives all interested organizations and the digital economy sphere economy sphere and projects citizens of EAEU member states EAEU member states OVERVIEW REPORT 4 for the creation of the EAEU digital space. This model is an First, there is a need to create the institutional and legal effective tool for determining, approving, measuring, and basis for the Digital Agenda. Here, it is important to provide overseeing the actions aimed at achieving the objectives of the for the division of roles, responsibilities, and authority EAEU Digital Agenda. between national and regional organizations. The principal actions for creating the EAEU Digital Space Second, it is necessary to allocate sufficient financial include: strengthening the processes of economic integration resources, taking into account the long-term and complex and international cooperation; creating an enabling environ- nature of the transformations. ment for the implementation of regional digital initiatives; Third, programs should be launched to increase the overall creation of a common digital infrastructure and digital plat- level of the digital skills and digital literacy among broad forms; digitalization of leading economic sectors and digitali- sectors of society, which are necessary to launch and sustain zation of regional markets. the dynamics of the new digital economy. This model also presents mechanisms for supporting And finally, new telecommunications services should be these activities, including the development of an overall deployed, including widespread broadband internet access, to favorable regulatory framework, the creation of public-private support the development and deployment of secure and reli- partnerships for the implementation of priority initiatives, able cross-border intersectoral digital platforms and digital the development of a dialogue among all interested players solutions. in digital ecosystems, and the promotion of better digital The implementation of these recommendations (Figure 5) solutions and practices. should be accomplished in stages, taking into account their It is important to note the risks associated with ignoring complexity, priority, interdependence, integration of the the EAEU 2025 Digital Agenda. These include brain drain EAEU and national systems, and the availability of resources. from the region, increasing influence of global players in the This task requires the participation, knowledge, and expe- digital space of the Union, loss of competitiveness of goods rience of many stakeholders (private and public), and, most and services, and a threat to the digital sovereignty of the importantly, inspiring, active, consistent political and profes- region. sional leadership at the EAEU level. In cooperation with the World Bank experts, key The EAEU is on the verge of a historic evolution in which recomendations were also developed for the implementation digital technologies will have a fundamental impact on all of the Digital Agenda of the EAEU by 2025, the implemen- sectors of the economy and society in general. The stakes tation of which will lead to accelerated economic growth, are high, and time is of the essence. Success is defined as an creation of new jobs, improved public services, and increased internally integrated and digitized EAEU boasting high rates competitiveness of the Union. Among the most important of economic growth, increased global competitiveness and a ones are the following: high level of social development. Figure 5  Digital dividends and the fundamentals of the strategy for the implementation of the Digital Agenda of the EAEU Digital dividends EAEU Digital Space Fundamentals of the strategy Development of vision, strategies and policies for the EAEU Contribution to Digital Agenda economic growth Strengthening the analog foundations/ enabling environment (institutions, legal framework, skills) Creation of new jobs Building digital infrastructure and digital platforms Transformation of the services Implementation of digital solutions sector for cross-sectoral, inter-industry transformation 5 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS THE EAEU 2025 DIGITAL AGENDA: PROSPECTS AND RECOMMENDATIONS PREREQUISITES AND RATIONALE FOR THE CREATION OF THE EAEU DIGITAL AGENDA Prerequisites for the creation of the EAEU As international experience shows, the digital economy Digital Agenda is a force for accelerating global economic development, enhancing industry productivity, creating new markets and Both global and EU experience with the development of the industries, and offering new avenues for inclusive, sustainable digital economy indicate how significant the economic impact growth5. However, the acceleration of economic development of the implementation of the EAEU Digital Agenda may be. is achieved by those countries and economic associations that systematically build the foundations and mechanisms of lead- ership in the digital economy. TIGRAN SARGSYAN, CHAIRMAN OF THE EEC BOARD “Change in the status quo is always a cause for certain ‘stress’ for As indicated in a recent study published by the World countries and unions, but at the same time, it creates additional Bank, ‘Reaping Digital Dividends: Leveraging the Internet for opportunities. The acceleration of global processes can transform Development in Europe and Central Asia’, not everyone takes international economic relations and cause new worldwide advantage of the benefits of the internet. In fact, there can be an redistribution of labor and competencies. Countries and unions increase in inequality between countries and population groups that are most adaptable to change have much more potential to within countries. Much of this depends on the appropriate im- become leaders in this new system. Regional integration becomes plementation of digital transformation in the context of creating a natural response to external economic challenges.” the conditions necessary for significant societal transformations6. As the authors of the study indicate, the digitalization of the At the global level, cross-border data flows (enabled by region in which the EAEU is located is determined by two sig- technology use) grew by 45 times between 2005 and 2014. nificant factors: (1) strong government interventions and (2) a They generated US$2.8 trillion2 in economic value in 2014—a risk-prone private sector. In some countries of the EAEU, inter- greater impact on world gross domestic product (GDP) than net providers were until recently monopolized by the state, so the global trade in goods3. the cost of internet access remained high and the quality of the services provided was quite low. As a consequence, the reluc- The economic dynamism created by the digital economy tance of the private sector to take risks lead to a very primitive is not just about new technological companies and businesses. use of internet technologies for business needs. Over 75 percent of the value added created by the internet is in traditional industries, due to higher productivity gains4. Moreover, geopolitical issues and weak diplomatic relations in some parts of the South Caucasus and Central Asia are ob- stacles to (1) ensuring both universal and low-cost access to the internet, (2) receiving economic dividends from international 2 http://www.mckinsey.com/business-functions/digital-mckinsey/ our-insights/digital-globalization-the-new-era-of-global-flows 3 Fact Sheet: Key Barriers to Digital Trade, https://ustr.gov/ 5 G20 Digital Economy Development and Cooperation Initia- about-us/policy-offices/press-office/fact-sheets/2016/march/ tive, http://www.g20chn.com/xwzxEnglish/sum_ann/201609/ fact-sheet-key-barriers-digital-trade P020160912341422794014.pdf 4 Digital transformation, European Commission, https://ec.europa.eu/ 6 http://www.worldbank.org/en/region/eca/publication/ growth/sectors/digital-economy/importance_en digital-dividends-in-eca OVERVIEW REPORT 6 transit traffic, and (3) other economic and social dividends. Second, to achieve the development of human capital and However, as the international experience of digital transforma- ensure that EAEU member states are part of the process of tions indicates, the benefits of this process can be very significant. new global industries’ and markets’ creation; and Understanding the above processes and potential divi- Third, achieving a multiplier effect of digitalization at the dends of developing a digital space for the Union enabled the regional level and ensuring that the digital space becomes EAEU to decide to develop the Digital Agenda and establish attractive to both consumers and businesses. a high-level working group to develop the main directions Within the context of these strategic directions, several for the implementation of the Digital Agenda of the EAEU priority areas were identified. until 2025. First, the development of the EAEU legal and regulatory Several factors were emphasized to underline the urgency framework and harmonization of the legislation of the EAEU for digital transformation: member states; First, brain drain, which is a loss of both entrepreneurial talent in the field of ICT and workers and consumers in this field, accompanied by depletion of competencies and devalua- OBJECTIVES OF THE EAEU DIGITAL AGENDA 2025 tion of traditional assets that have not been digitized; • Increase in the share of the digital economy in the EAEU Second, continuous decline in the competitiveness of tra- to annual GDP growth ditional institutions and economic entities against the back- • Growth of the number of employees in the high-tech sector drop of the practice of digitalization of business processes and • Increase in productivity of the main sectors of the economy the emergence of the data economy; and • Increase in exports of digital goods and services, as well as in Third, the domination of global digital platforms and play- digitally-mediated exports of traditional goods and services ers that dictate policies and create additional gaps between ‘connected’ and ‘unconnected’ countries and entities. Second, the creation of a common digital space to increase Global and regional trade and economic integration mutual trade volumes using e-commerce tools; are key factors in increasing the effectiveness of national economies. Digital technologies are an integral part of such Third, the expanding of the practice of using ICT to integration today, being the engine of both national growth improve the efficiency of cross-border interaction between and global competitiveness. It is digitization that can give a public authorities, business entities, and individuals; and powerful boost to the competitiveness of the EAEU. Finally, the development and implementation of joint In line with the vision of the EEC, the development of the projects and programs aimed at the digital transformation of EAEU digital space and the Digital Agenda is to support the the EAEU member states9. EAEU mission to enable free movement of goods, services, In addition to results that can be achieved in each country capital, labor and data toward achieving the vision for raising individually, this study evaluates the additional digital divi- the competitiveness of the region and of Member States, and dends that can be achieved at the level of the EAEU, the multi- improving living standards of the citizens of the Union7. plier effect (Figure 6). The strategic directions for the development of the digital For example, according to World Bank estimates, in line with space of the EAEU by 20258 were defined at the EEC in collab- the country-specific scenarios for digitalization, an increase in oration with experts: the international internet bandwidth is estimated to have a 0.55 First, to increase EAEU’s global competitiveness and percent growth impact on the cumulative national GDP of the achieve sustainable economic development for the region EAEU member states. In comparison, with the EAEU Digital through the establishment of a digital economy, comprehen- Agenda implemented, the regional GDP growth is estimated at sive modernization, and regional cooperation; a minimum of 0.66 percent. Hence, the variance between the two scenarios amounts to 0.11 percent of the current GDP. Similarly, the difference between the two scenarios in 7 http://www.eaeunion.org/?lang=en#about terms of the impact of fixed broadband access on the growth 8 “Draft of the Strategic Directions for the Formation and Development of the Digital Space of the Eurasian Economic Union in the Perspective until 2025” http://www.eurasiancommission.org/ru/ act/dmi/workgroup/materials/Documents/Стратегические%20 направления%20формирования%20цифрового%20 http://www.eurasiancommission.org/ru/nae/news/Pages/26-11- 9 пространства%20ЕАЭС%20(проект).pdf 2015-2.aspx 7 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS of the GDP of the EAEU for the period 2018–2025 is esti- mated at 0.9 percent of the current GDP. STRATEGIC GUIDELINES FOR THE DEVELOPMENT OF THE EAEU DIGITAL SPACE BY 2025 • Systemic digital transformations of economies of the Recognizing the especially important role of digital innovations EAEU countries in the areas of integration and transformations in modern conditions of economic devel- • Ensuring the seamlessness of economic processes and opment, on December 26, 2016, Presidents of the EAEU member the service environment as a result of their digitalization states signed a joint statement calling for cooperation on the creation and implementation of the Union’s Digital Agenda • Creation and launch of joint digital tools for expansion into global markets (digital assets) • Qualitative growth in the number of jobs in the digital For e-commerce and trade, the difference is estimated at economy and increase in the digital inclusion of the population least at 0.44 percent in favor of the regional scenario at the EAEU level. In the case of the expansion of mobile communi- • Reducing the complexity of economic risks cations, the difference in the impact between the two scenari- os reaches 0.25 percent of the current GDP. It is important to note that the digital economy concept Providing citizens, entrepreneurs, and companies with continues to evolve because of its multifaceted and dynamic opportunities to prosper in the digital economy will depend nature, derived from the transformational potential of digital on the success of the EAEU in creating a reliable common technologies. The digital economy involves more than simply digital infrastructure of world class level, effective integration e-commerce and includes doing business, conducting commu- mechanisms, adopting a regulatory and legal framework that nications, and providing services across all sectors including supports the digitalization of economic activity, encouraging transport, financial services, manufacturing, education, health innovation, and attracting sustainable investment. care, agriculture, retail, and media and entertainment industry. The task of the EEC is to take full responsibility for this pro- The World Economic Forum (WEF) indicates that “the cess at the Union level and secure reliable support from all the digital economy permeates all aspects of society, including the member states of the EAEU. Major priority should be given to way people interact, the economic landscape, the skills needed the development of the ‘analog foundations’ for the EAEU digital to get a good job, and even political decision making.”10 At a economy, that is, a regulatory and legal framework and gover- seminar held in June 2017 in Moscow, the World Bank team nance institutions that are aimed at and ensure the security of proposed the following definition: “Digital economy is a new digital activities and enhancing the digital skills of the population. paradigm of accelerated economic development based on real- time data exchange.”11 Digital dividends as an economic basis for consistent policy in the digital economy 10 The 10 countries best prepared for the new digital economy, WEF, 2016, https://www.weforum.org/agenda/2016/07/ To develop the EAEU Digital Agenda, common approaches countries-best-prepared-for-the-new-digital-economy 11 Developing the Digital Economy in Russia, World Bank, are key to the implementation of the Digital Agenda at regional 2016, http://www.worldbank.org/en/events/2016/12/20/ level that will result in the multiplier effect outlined above. developing-the-digital-economy-in-russia-international-seminar-1 Figure 6  Impact of digitalization initiatives on GDP growth for both scenarios for the period 2018–2025 GDP growth of the EAEU region due to digitalization initiatives,% Individual country scenario EAEU Digital Agenda scenario Growth of international Growth of xed broadband penetration Expanded use of Internet bandwidth e-commerce >0.11% >0.9% >0.44% 0.55% 0.8% 0.44% 0.66% 1.7% 0.88% OVERVIEW REPORT 8 The EU considers the digital economy as “the single most digital public services as building blocks for a Connected important driver of innovation, competitiveness, and growth in Continent and its Digital Single Market16. the world.”12 According to the calculations for this study, the cross-border ASEAN promotes a secure, sustainable, and transforma- services of utmost priority in the EAEU are registration of resi- tive digitally-enabled economy that enables an innovative, dence, obtaining identity documents, application for legal aid, filing inclusive, and integrated ASEAN community. tax return forms, registration of new legal entities, and obtaining advice on registering a business and on e-government services. The Economic Commission for Latin America and the Caribbean also facilitates the development of the regional Summarizing the potential effects of providing these six digital market13. It is anticipated that its creation will boost the cross-border priority services electronically, the potential equality-based and environmental sustainability-based devel- savings for the EAEU can reach more than US$200 per user opment in the region and drive the growth of the connectivity accessing the services, and the total number of cross-border for citizens and business and simplify the online exchange of users may reach 2.8 million people. goods and services. Digital technologies increase the efficiency of trade trans- Based on its understanding of this dynamic, the EEC actions, transparency and accountability, eliminate delays and adopted the definition of the Union’s digital space as a space reduce corruption risks. Digital technologies are lowering that integrates digital processes, means of digital interaction, transaction costs for the movement of non-digital goods and informational resources and digital infrastructures on the basis services (for example, through regional customs reforms), of regulatory norms and mechanisms of organization, manage- which will have significant economic impact that will also ment and utilization.14 indirectly support growth in digital trade. The digital transformation of the economy is understood In line with the World Bank’s methodology for presenting as the manifestation of qualitative, revolutionary changes that the dividends of digital transformation, this study analysed the involve not only individual digital transformations, but also benefits for the EAEU from the implementation of its Digital a fundamental change in the structure of the economy where Agenda in terms of growth, jobs and services (Figure 7). the centers of value creation shift toward the development of digital resources and end-to-end digital processes15. Contribution to Economic Growth As a result of the digital transformation of the economy, a The global digital economy is at a stage of active growth, rapid transition to a new technological structure is taking place, and development of innovation, and widespread use of digital new industries are emerging. technologies in all sectors. The EEC recognises the digital transformation of the As highlighted in the World Bank’s World Development Union’s markets as an important dimension for cooperation Report (WDR) for 2016, the impact of digital technologies in all common markets of the Union aiming to create an on economic growth is mediated through three mechanisms: enabling environment for the development of entrepreneur- inclusion (engaging a maximum number of citizens in social ship based on digital technologies. processes), increase of efficiency, and innovation17. The report The digital transformation of the EAEU is opening oppor- further explains that these three mechanisms boost growth by tunities to transform several economic activities. expanding trade, increasing capital and labor utilization, and intensifying competition. For example, cross-border digital public services enable citizens and residents of neighboring countries to easily According to the calculations for this study, the effect of request and receive public services outside their home coun- the increase in fixed broadband access as part of the Digital tries. The European Commission considers cross-border Agenda by 2025 on the EAEU GDP will be significantly greater than the effect of increasing broadband access on a strictly country level. Providing universal broadband access 12 Digital transformation, European Commission can secure a total GDP growth of 1.7 percent for the EAEU https://ec.europa.eu/growth/sectors/digital-economy_en 13 ECLAC Encourages the Creation of a Regional Digital Market by 2025. The savings resulting from removing legal barriers to in Latin America and the Caribbean, ECLAC, 2016, the implementation of the EAEU Digital Agenda can poten- http://www.cepal.org/en/pressreleases/eclac-encourages- tially reach 2.6 percent of GDP. creation-regional-digital-market-latin-america-and-caribbean 14 EEC Glossary, http://www.eurasiancommission.org/ru/act/dmi/ workgroup/Pages/glossary.aspx 15 Digital transformation: online guide to digital business transformation, i-Scoop, https://www.i-scoop.eu/digital- 16 Digital Single Market, European Commission, 2017, transformation/#The_digital_transformation_economy_ https://ec.europa.eu/digital-single-market/en/public-services-egovernment DX_moves_to_the_core_of_business 17 World Development Report 2016 9 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS Figure 7  Digital dividends from the implementation of the EAEU Digital Agenda Productivity & Growth Growth Access to Global Markets & Competitiveness Additional Digital Digital dividends from dividends from the the introduction of Jobs Innovative Jobs & Digital Assets introduction of the the EAEU Digital Agenda EAEU Digital Agenda Increased Oportunities & Reduced Risks Services Improved Qualityof Gov. & Inter-Gov. Services The implementation of the EAEU Digital Agenda is Creation of new jobs expected to accelerate the penetration of mobile communica- The development of the digital economy inevitably leads to a tions closer to saturation levels due to regional harmonization significant transformation of the labor market. This transforma- of regulations, falling of prices, and increased competition. tion is complex and occurs gradually as more and more tradi- The impact of these processes on the GDP of the EAEU may tional sectors of the economy are engaged in the digital economy. include an increase of up to 0.76 percent by 2025. Such a transformation affects job creation on multiple As indicated by the European Parliament, innovations levels. Undoubtedly, due to process optimization, robotization, such as cloud services and data analytics, could add more and overall efficiency improvement, several jobs will leave the than EUR 2,000 billion to Europe’s GDP by 2030 through economy. As a rule, jobs for the least competitive and most increasing the industrial outputs18. vulnerable segments of the population will disappear; therefore, Even though the use of cloud computing technologies is the EAEU member states need to consider the possibility of not yet extensive among the EAEU member states today, it is implementing special measures to support adaptation of such expected to grow considerably over the next decade. categories of citizens to the potential difficulties that they may experience along with the development of the digital economy. Given the EAEU’s unique geographical location, data centers could become important nodes of the global digital However, according to global studies, the net effect of the information network19. One could also envisage the creation development of the digital economy on the number of jobs of cloud services for the research community, as well as will be positive. for public authorities of the member states with a view to For instance, according to McKinsey estimates20, one new job providing a new generation of cross-border services. Such in the ICT sector creates two to four jobs for the overall economy. cloud initiatives will provide an opportunity for member PwC estimates indicate that an increase in digitalization by 10 states to consolidate existing data centers, increasing their percent reduces the level of unemployment by 0.84 percent.21 A sustainability while reducing maintenance costs. detailed analysis of the French economy over the past 15 years Support for the development of cloud technologies has shown that an additional 1.2 million jobs have been created through the introduction of cloud services at the Union level, for 500,000 jobs that disappeared due to digitalization22. the formation of a regional Eurasian network of data centers According to the calculations for this study, with a 30 percent and of regional operator companies, and provision of internet average fixed broadband penetration rate in the EAEU, one may traffic cache services for European and Chinese providers will expect that about 2 million to 4 million new jobs will be created significantly accelerate economic growth. According to the by 2025, 1 million of which would be in the ICT sector. calculations of the World Bank, the potential increase in GDP of the EAEU due to this sector is 0.95 percent by 2025. Achieving target values of up to 3 percent employment in the ICT sector for EAEU member countries upon implemen- Despite the fact that the data industry is just emerging at tation of the EAEU Digital Agenda may ensure a 2.4 percent the EAEU level, significant growth of the “data economy” is increase in employment rates by 2025. expected in the future, which may lead to 2 percent growth in EAEU GDP by 2025. 20 http://www.mckinsey.com/business-functions/digital-mckinsey/ our-insights/digital-globalization-the-new-era-of-global-flows 18 Digital Economy, BusinessEurope, 2015, https://www.businesseurope.eu/ 21 https://www.strategyand.pwc.com/media/file/Strategyand_ policies/digital-economy Maximizing-the-Impact-of-Digitization.pdf 19 Data Center, Gartner IT Glossary, http://www.gartner.com/ 22 http://economictimes.indiatimes.com/tech/internet/internet-creates-2- it-glossary/data-center/ 4-jobs-for-every-job-it-destroys-mckinsey/articleshow/8586070.cms OVERVIEW REPORT 10 According to the WDR, “the number of direct jobs created easier for citizens to access public services and make the shift by digital technologies is fairly modest, but the number enabled from simply administering services to regularly engaging by it can be quite large”23. The rise of e-commerce platforms is and empowering citizens to participate in the design and the creating a new group of micro-entrepreneurs, who can access delivery of these services26. This not only helps to increase global markets in a way that was impossible before24. citizens’ choices of available services, but to also boost govern- ment productivity and efficiency of public administration and For instance, China’s State Information Center estimates increase citizens’ trust in government. that the recent boom in the country’s e-commerce sector has created 10 million jobs in online stores and related services, Implementation of the open government concept may about 1.3 percent of the country’s employment. offer significant opportunities and dividends. An EU study on this topic explores services such as support for entrepre- Information, counseling, recruiting and job search neurship, street maintenance service, feedback management, services should be provided at the regional level, along with publication of regulations, participatory budgeting, and the appropriate legal and regulatory framework, to ensure the participatory decision making, among others. free movement of citizens in the Union to seek employment as new jobs are created throughout the EAEU. There will be It is important to note that for open government services a need for a new employment and migration information to be provided, there is a need for a sufficient amount of open system at the level of the Union to provide workers and data that is accessible to the public and business. Approving employers with cross-border services related to employment common open data standards and ensuring data’s synchroniza- and relocation from one country to another. tion and quality are important for the creation of such a repos- itory at the Union level. According to World Bank estimates, Transformation of the services sector the potential impact of creating a regional open data repository may be a growth of 1.34 percent in the EAEU GDP by 2025. Achieving a high digitalization level for the EAEU by 2025 will entail economic and social dividends in all fields and In general, according to World Bank estimates, the sectors of the Union’s economy. increase of digitalization of the EAEU by 20 percent by 2025 may lead to an increase in the services market by 2.2 percent According to the calculations for this study, the most of the Union’s GDP. significant effect will be in manufacturing, retail, and services. Thus, if the digitalization level25 reaches 20 percent by 2025, the manufacturing industry is expected to see an additional Figure 8  Transformation of the services sector growth of 0.98 percent of EAEU GDP, retail — 0.92 percent of EAEU GDP, and services — 2.2 percent of EAEU GDP. Examples of potential digital dividends (in bln. USD) from the introduction of the EAEU Digital Agenda The digital services’ share of total exports, represented 28.3 (2018-2025) percent in the EAEU in 2015. To achieve the EAEU target— which is 34–36 percent — several measures are needed to foster and support the export focus of ICT services in the Elimination of legal barriers 42.3 EAEU. This involves services such as information technology (IT) outsourcing, business process outsourcing, cloud services, offshore programming, and customized development. Digitalization of public procurement 1.6 According to the calculations for this study, the additional increase in the volume of exports of ICT services by 2025 can be between 51 percent and 74 percent upon implementation of the EAEU Digital Agenda. State open government services 1.3 Practices of many digitally advanced countries show that digital technologies help improve public services for the popu- lation and businesses. Innovative governments are making it Cross-border e-government services 0.5 23 World Development Report 2016 24 Enabling Digital Entrepreneurs, Background paper, Digital Dividends, World Development Report 2016, http://pubdocs.worldbank.org/ en/354261452529895321/WDR16-BP-Enabling-digial-entrepreneurs- DWELSUM.pdf Government by design: Four principles for a better public sector, 26 25 As defined by the WEF: http://www3.weforum.org/docs/WEF_ McKinsey, 2013, http://www.mckinsey.com/industries/public-sector/our- GITR_Report_2013.pdf insights/government-by-design-four-principles-for-a-better-public-sector 11 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS CHALLENGES TO THE DIGITAL TRANSFORMATION OF THE EAEU AND THE POSSIBILITY OF ACHIEVING DIGITAL DIVIDENDS In recent years, the EAEU countries have developed different In addition to that, according to the WEF Competitiveness national strategies and programs for ICT development. This Index 2016–2017, the EAEU region shows a low level of indicates an increased understanding by governments of the institutional development, efficiency of financial markets, importance of ICT for economic development. The different and technological readiness. There is a noticeable lag in the country initiatives, however, differ from each other in program development of the EAEU infrastructure when compared to priorities. Most strategic documents do not include plans, indicators, or actionable projects aligned with the efforts the EU and the Organization for Economic Co-operation and toward integration within the EAEU, nor are they supported Development (OECD) countries (Figure 9). To address these by the necessary investment funding.27 gaps and ensure economic growth and competitiveness in the region, strategic objectives of the Digital Agenda should WEF Competitiveness Index for 2016-2017 27 include reforms that foster innovation. Figure 9  WEF Global Competitiveness Index in the EAEU versus EU, ASEAN, OECD27 EAEU EU ASEAN OECD Institutions Innovation Infrastructure Business Macroeconomic sophistication environment 0 1 Health and Market size 2 primary education 3 4 5 6 7 Technological Higher education readiness and training Financial market Goods market e ciency development Labor market e ciency OVERVIEW REPORT 12 As for the efficiency of goods markets and the labor development of the Union’s economy, as is the case for more market, the EAEU is at a comparable level of development and developed regions. only marginally lagging behind the EU, ASEAN, and OECD. The low level of penetration of digital technologies in According to the WDR 2016, indicators on analog foun- the EAEU is determined by several factors. For example, as dations28 and digital technology penetration demonstrate that indicated in the World Bank’s study on Digital Dividends in the EAEU is at the bottom of the list of transitioning econo- Europe and Central Asia, for more than 80 percent of the mies in Europe and Central Asia. population of Armenia and the Kyrgyz Republic, the most Analytical data shows that the level of adoption of digital basic plan for mobile communication services represents at technologies by the population and the private business sector least 10 percent of the total of their household expenditure. remains low. This may be due to low awareness of the benefits This is a vicious circle because of the high cost and low quality of digitalization, as well as lack of competence or low level of of internet services, low demand, which, in turn, does not trust of citizens and businesses in ICT and digital technologies. stimulate infrastructure investments. The fixed broadband penetration rate is only 3 percent in the Kyrgyz Republic. As part of the development of the digital economy of the Union, there is a need to provide measures aiming to stimu- Will universal access to the internet be a sufficient condi- late the business sector to adopt digital technologies, as well as tion to reap digital dividends? Most likely not. The EAEU to implement a program to raise public awareness about the member states lag behind in a number of areas related to opportunities and benefits of digital interactions. analog foundations, such as the legal framework, skills, and institutions. An integrated approach to addressing these Based on WEF Networked Readiness Index research, the issues should be developed at the level of the EAEU, under the EAEU is among the weakest regional performers in terms of economic impact. This means that digital technologies have EEC’s guidance. not yet sufficiently penetrated the economy and that digitali- In the Reaping Digital Dividends in Europe and Central zation does not yet have an equally significant impact on the Asia Report (2017), countries are divided into three groups, depending on their level of development of digital technolo- World Development Report 2016 28 gies: emerging, transitioning, and transforming (Figure 10). Figure 10  Development of digital economy in Europe and Central Asia TRANSFORMING 0.95 FIN CHE NLD DNK BEL NOR 0.85 IRL SWE GBR ISL OECD EST LUX Complements_CFI DEU TRANSITIONING CYP LTU FRA SVN EU 0.75 LVA AUT PRT CZE HUN ESP GEO POL SVK 0.65 HRV ROU ITA MKD BGR GRC ARM BLR ALB SRB RUS 0.55 UKR EAEU KAZ EMERGING TUR KGZ TJK AEAN UZB 0.45 0.35 0.45 0.55 0.65 0.75 0.85 Technology_DAI 13 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS Countries with different levels of development of digital tech- group for the Kyrgyz Republic, and opportunities for the nologies face different challenges, and therefore differ over majority of EAEU members to join efforts and leap into the priorities of various strategies. group of leaders. Countries where the digital economy is emerging include The experience of new EU members suggests that the those where the specific number of internet users is so low countries lagging behind have a wider choice of technologies that they practically do not benefit from any drastic changes to implement as a priority, and the transformation process that new technologies may bring. itself can take much less time than has been taken by the dig- italization leaders. Transitioning countries have an adequate level of internet access, but new technology leads to lack of take-up due to the The report also notes that the priority of digitalization absence of certain analog complements. policy for transitioning countries should be the launch of a national plan to ensure broadband access, labor market reform, Finally, transforming countries are the ones with well-de- and cross-border integration. These three areas should be veloped telecommunications markets, where some of the placed at the center of the EAEU digitalization strategy. analogue foundations might be insufficiently developed, thus The EEC’s task is to focus on overcoming these obstacles hindering the positive impact of new technologies. by creating favorable political, legal, business, and innovation In terms of this classification, EAEU members (except for environments. Concerning the development of these com- the emerging Kyrgyz Republic) are in the transitioning group. ponents, the EAEU is almost on par with ASEAN, but at the If the digital transformation process is pursued correctly, same time it scores lower than the EU and OECD countries this will create opportunities for a leap into the transitioning (Figure 11). Figure 11  Network Readiness Index in the EAEU versus EU, OECD, ASEAN EAEU EU OECD ASEAN Political and regulatory environment Social impacts Business and innovation environment Economic impacts Infrastructure 0 1 2 3 4 5 6 7 Government usage A ordability Business usage Skills Individual usage OVERVIEW REPORT 14 As the experience of developed countries shows, the level Regarding fixed broadband access (per 100 people), the of business and innovation environment development has Union is placed almost on par with the countries of East Asia significant impact on the level of ICT usage by business sector. To date, the level of ICT use in the countries of the Union is and the Pacific, but, at the same time, is at half the level of the low and is lower than in ASEAN and the EU (Figure 12). EU and OECD countries (Figure 13). Figure 12  ICT usage levels 7 SNG 6 environment score (1-7) Business and innovation UAE ВЕЛ USA UK DNM POR EST FIN SWE 5 BEL MAL АРМ RUS EU LUX GER ASEAN FRA AUT KYR 4 EAEU PHI CHN KAZ MYA CAM IND 3 2 3 4 5 6 7 Business ICT usage score (1-7) Figure 13  Fixed broadband access EAEU Developed countries 31.35 31.84 29.02 18.77 15.2 15.76 13.05 9.56 3.71 Southeast OECD Asia Armenia Belarus Kazakhstan Kyrgyzstan Russia EAEU EU OECD 15 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS digital economies using integration synergy, and on the other The four pillars of the strategy to create the EAEU hand, to generate additional dividends as a result of regional digital space integration transformation providing new mechanisms for implementation of economic initiatives in various sectors, 1. Development of vision, strategies and policies for the Digital Agenda of EAEU with smaller resources and greater efficiency. 2. Establishment of ‘analog foundations’ (governance The multiplier effect will lead to an acceleration of and institutions, legal and regulatory framework, economic growth, an increase in the number of jobs created, skills and entrepreneurship) and an increase in the quality of services at the regional 3. Building a digital infrastructure and common digital level, creating a solid foundation for further development of platforms common markets for goods and services (Figure 14). 4. Implementation of digital solutions for sectoral, The application of this approach requires, among other inter-sectoral, and government transformation things, ensuring technological compatibility and interoper- ability of the digital solutions, digital platforms, and digital infrastructures needed to provide an efficient, inclusive, and The EAEU multiplier effect secure digital economy throughout the EAEU digital space. The concept of added value creation because of the integration Since the digital economy, businesses, and services depend was applied at the Union level to determine the advantages of on infrastructure, the importance of quality digital infra- EAEU digital transformation. It shows how the measures taken structure is not limited to the national economy. Common at regional level may create a multiplier effect and reap additional platforms that provide broadband internet access and the digital dividends, including for each of the EAEU member states. development of regional platforms, applications, and digital The multiplier effect allows member states to accelerate solutions will have a positive impact on the development of the development and increase competitiveness of their own the regional economy. Figure 14  EAEU Digital Agenda: the multiplier effect Digital Dividends Multiplier E ect Growth Jobs Services EAEU Integration Additional Digital Directions Dividends Digital Leadership Vision & Strategy Digital Transformation of EAEU Improved Qality Integration Processes of Gov. & Inter-Gov. Services Digital Transformation of Digital Digital Digital Key Markets in the EAEU Innovatine Jobs & Solutions Solutions Solutions for for for Digital Assets Businesses Citizens Government Digital Transformation of Economic Sectors and Across Sectors in the EAEU Productivity & Digital Foundations: Development of Digital Infrastructure Growth Shared Digital Platforms and Infrastructure of the EAEU Access to Global Markets Analog Foundation/Enabling Environment: Enabling Initiatives & Pojects & Competitiveness Regulations, Institutions, Skills Dialogue & Knowledge Sharing Policies & Regulations Harmonisation Increased Public-Private Partnerships Opportunities National Digital Economy & Reduced Risks Building Blocks EAEU Integration Mechanisms OVERVIEW REPORT 16 Analysis of analog enablers in EAEU coordination functions and are not institutional engines for ICT development. WDR 2016 emphasizes that relying only on the use of digital technologies is not sufficient for fully fledged growth, and that The implementation of many ICT programs is delegated countries will need to work on ‘analog complements’. These to state-owned enterprises, which often lack coordination include effective leadership, strengthening of the regulatory among themselves; this leads to fragmentation and the framework that meets the needs of the digital economy, and creation of isolated ‘digitalization islands’ outside the overall developing the necessary skills to enable effective and economi- strategic vision of a coherent and scalable digital base. cally advantageous employment of the population29. Certain state bodies also create their own state-owned According to one of the key findings in the latest Global ICT enterprises, which focus on sectoral IT projects outside Information Technology Report of the WEF, new trends in the overall strategic vision of the Union-level digitalization digital economy require urgent innovations in the manage- program. ment and regulatory framework to ensure its sustainability30. Setting up EAEU organizational structures at the highest Analog enablers include laws and regulations, professional political level to monitor and coordinate the implementation skills, and entrepreneurial potential, as well as management of the commonly shared vision of digital transformation is and institutions. necessary. There is a need to form strong interstate institu- For many years, several measures have been put in place tions that can become the main catalysts for the development by the EU to create a legal framework and corresponding of digital economy in the EAEU. rules that ensure the development of new digital services, Therefore, the EEC faces a difficult task of building a their successful implementation, and wide application by end governance structure at the Union level to administer the users, businesses, and government employees. Such analog delivery of the Digital Agenda and coordinate it with national enablers are now considered as important as the digital Digital Agendas of each of the Union’s members. factors, and they should be viewed as complementary to the technological factors. There is a need to set up a flexible and effective governance model that would ensure development of a common vision The following are among the most important ‘analog’ for digitalization, identify Union-level priority areas, create a factors for the successful implementation of the EAEU Digital roadmap, define implementation principles and mechanisms, Agenda: provide a reliable technical base, and ensure the necessary First, a political consensus and leadership on the transfor- sources of funding. mation processes is needed at the highest level; Second, there is a need for a high level of engagement of Improving the legal and regulatory EAEU various institutions, including government agencies, private framework for the delivery of the Digital Agenda sector, research and academic institutions, mass media, and Creating an enabling regulatory and legal environment for the public; the implementation of the Digital Agenda is crucial for its successful implementation and will lead to reaping tangible Third, having experienced managerial and technical digital dividends. human resources is important; and; For instance, in 2016, the EEC completed the development Finally, a coherent policy is needed to raise public aware- of the regulatory and legal framework for the introduction of ness about the overall vision of digitalization and the transfor- the EAEU cross-border area of trust, with a view to ensuring mation process, as well as the expected economic and social national recognition of electronic signatures in the exchange of dividends. legal electronic documents, as well as to maintain an appropriate level of information protection in the interaction of the member Strengthening governance systems for delivery states through the EAEU integrated information system31. of the EAEU Digital Agenda However, some of the adopted legal documents, strategic Governance bodies in EAEU countries are at different levels programs, and initiatives are already obsolete, or have lost of maturity. To date, most of the structures that perform their relevance and need to be updated in accordance with the the role of regulatory institutions are mainly engaged in emerging global challenges and opportunities of digital economy. World Development Report 2016 29 Executive Summary, The Global Information Technology Report 2016, 30 Meta.KZ, http://meta.kz/novosti/kazakhstan/1066566-sformirovana- 31 WEF, http://reports.weforum.org/global-information-technology- normativnaya-baza-eaes-dlya-vnedreniya-transgranichnogo- report-2016/executive-summary/ prostranstva-doveriya.html 17 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS Personal data security is legally regulated in all countries in the EAEU following the results of step-by-step harmoniza- of the Union. Some countries have taken important initiatives tion of the legislation, the member states agreed to establish a to strengthen the protection of personal data. However, the single supranational body for regulating the financial market growth in the penetration of new digital technologies requires by 202533. new approaches for the legal use and storage of personal data, To ensure the free movement of capital in the territory without violating the rights of EAEU citizens. of the EAEU, there is a need to integrate electronic finan- According to World Bank estimates, the growth of the cial systems in the member states. Principles and standards EAEU’s GDP up to 2025 may amount to 2.6%, through the of interaction of such systems should be harmonized at the elimination of the legal and regulatory barriers for implemen- Union level and include a security policy, data standards and tation of the EAEU Digital Agenda. Therefore, further work is personal data security. needed to harmonize and enhance the effectiveness of coop- On the other hand, there is need to actively engage compa- eration in terms of common standards and regulations. nies, entrepreneurs, and start-ups to create and provide inno- There is a need to ensure the harmonization of the legal and vative financial products and services. There is also a need regulatory environment for the telecommunications sector, to consider the creation of a dynamic mechanism to interact which allows for the creation of the EAEU single telecommu- with businesses so as to obtain their proposals related to key nications market. It should ensure an effective decrease in the problem areas. barriers to entry to the market, including legal obstacles. Implementation of the Digital Agenda implies strength- There is also a need to review the entire legal framework ening confidence in digital technologies, simplifying and creating the legal digital foundations for new methods of improving the security of cross-border electronic trans- doing business and interacting with public administrations. actions, and adopting a comprehensive harmonized legal framework for a digital economy, especially for international Harmonized legislation should provide the adoption of e-commerce. uniform and clear rules and standards to simplify procedures of interaction for actors at the regional level, to remove barriers At the regional level, simplification of rules on digital to the movement of human resources, goods, services, data, cross-border purchases will increase the cross-border trade and capital flows, and provide for open and fair competition conducted by business online and increase consumer confi- rules within the Union. These rules should be supported by dence in cross-border electronic commerce. the relevant institutions that ensure their implementation. In addition, legislation on protection of personal data, in Developing professional skills and entrepreneurial particular the cross-border transfer of personal data within potential in the EAEU the EAEU, will need to be improved and harmonized to build The EAEU countries have a high level of general literacy, but confidence. The creation of relevant institutional structures will at the same time, the population’s and businesses’ level of be required to ensure the security of the new digital ecosystem32. digital skills is still low. Creating ‘uniform rules of the game’ for digital innova- The connections between universities, research institutes, tions by establishing relevant technical standards for digital innovation centers, and private and public sectors are weak. equipment and digital services and publishing them on the internet is important. The EAEU countries have a solid groundwork of technical and mathematical education from Soviet times. Nevertheless, The current jigsaw of fragmented markets prevents busi- the EAEU does not export large volumes of innovative nesses from expanding and trading within the EAEU, and also products due to the lack of a complete ecosystem of scien- prevents consumers from taking advantage of common digital tific research and innovations, a shortage of highly qualified markets. This obstacle can be overcome by eliminating legal personnel, and also due to the low level of research infrastruc- barriers, promoting electronic payments, electronic billing, ture development. and electronic dispute resolution. As far as digital entrepreneurship is concerned, its growth It is also important to create a single market for financial rates have increased in the EAEU in recent years. Partially, services, to enhance confidence and develop regional busi- this is due to the measures taken by the EAEU member states, ness. To ensure a harmonized regulation of financial markets namely the creation of financing and supporting institutions for start-ups and the construction of technology parks, incu- Rebooting public service delivery: How can open government 32 bators, and accelerators. data help to drive innovation, OECD, https://www.oecd.org/gov/ Rebooting-Public-Service-Delivery-How-can-Open-Government- Data-help-to-drive-Innovation.pdf https://barriers.eaeunion.org/about?tab=MARKET 33 OVERVIEW REPORT 18 Nevertheless, there are few such incubators and the lack of venture financing and initial investment to support start-ups 6 priorities for the implementation of the EAEU and digital entrepreneurship is a serious obstacle in the devel- Digital Agenda 2025 opment of this field. 1. Approval of the concept and strategy of the EAEU A digital economy requires employees, entrepreneurs, digital transformation by 2025 and government workers with appropriate professional skills 2. Approval of the governance structure for implemen- to use new digital opportunities. Transitioning countries tation of the Digital Agenda 2025 should strengthen basic skills, and emerging countries should increase their efforts to obtain more advanced skills. 3. Creation of an investment fund for digital transformation Entrepreneurial skills training for young people is a key area. Digital knowledge-sharing networks should be estab- 4. Harmonization of the legal and regulatory framework for digital transformation lished within the Union and access to cutting-edge master’s programs in business administration should be provided. It is 5. Development of cross-border telecommunications, necessary to create institutions and procedures aimed at solving cybersecurity, electronic identification, and logistics issues of digital security, preparing for cyberattacks, combating systems cybercrime, and increasing general public confidence in the 6. Creation of the unified digital platform of the EAEU digital ecosystems underlying the digital economy. In the field of education, the development of general cognitive skills as a foundation for further mastering of digital skills plays an important role. Incubators provide technical training, targeted mentoring Identification of digital competencies and relevant skills programs in the private sector, and opportunities for commu- play an important role in the education sector. In light of this, nication with colleagues, investors, research institutes, and the launch of a Union-level program to develop digital skills well-known companies, as well as free or reduced-price office and improve digital literacy is recommended, as is the adoption space and internet connection. of the EAEU policy on digital literacy and skills. This requires Accelerators are focused on supporting start-up compa- increased funding to universities for the organization of ICT nies that are already making a profit and moving to the stage courses, as well as applied digital technology research programs. of rapid growth by offering intensive training and equity Digital entrepreneurship development can be stimulated investments. Such approaches can be combined with financial by creating digital incubators, accelerators, and early stage support at the riskiest and early stages of a start-up company’s funding programs. development. 19 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS PRIORITY INITIATIVES FOR IMPLEMENTATION OF THE EAEU DIGITAL AGENDA “Improvement of conditions for the functioning of the EAEU will create opportunities for regional cooperation, integration, internal market” is a priority for the EAEU. It is based on transformation, and inclusive growth, thereby contributing to four “freedoms”—freedom of movement of goods, services, the achievement of the EAEU’s political objectives. capital, and labor. The active transformation of the EAEU’s internal market Creating shared digital platforms based on digital technologies to create a single digital space Shared digital platforms are the drivers for the development of is extremely important in line with global digitalization and innovation and play an important role in achieving dividends for the achievement of the EAEU’s social and economic at the regional level. They change the economy of cross-border objectives. business, reducing the cost of international transactions in creating market and user communities on a global scale. More Considering similar development strategies in other specifically, companies can more effectively access a much regions of the world, in particular ASEAN and the EU, and larger number of potential customers. considering the progress in this field in the EAEU, the stra- tegic directions for the implementation of the EAEU digital According to the Massachusetts Institute of Technology space by 2025 are currently being developed. (MIT), the digital platform is a platform that “uses tech- nology to connect people, organizations and resources in an The introduction of digital technologies to achieve interactive ecosystem.”34 Shared digital platforms facilitate economic objectives of the EAEU assumes a joint proactive interaction between users, the collection and use of data on approach that includes a shared vision agreed upon by all such interactions, and contribute to the emergence of network stakeholders in the private and public sector, common strate- effects, which increase the value of the digital platforms as the gies, objectives, and long-term measures. number of users grows. To implement this vision, extensive complementary measures are needed, based on the creation of the necessary analog and digital foundations, along with the development The EAEU has recently launched a pilot project on the introduc- and implementation of cross-border, intersectoral, and inter- tion of electronic document exchange between the member departmental digital solutions and services for citizens, busi- states and the EEC nesses, and government employees. The electronic ecosystem of technologically compatible In 2015, the share of electronic procurement reached 42 percent digital solutions, common digital platforms, and digital infra- in the EAEU. The openness of public procurement information posted on the web reached 60 percent by 2016 structure will facilitate the free movement of goods, services, capital, and labor and the development of a data-driven economy. It will bring dividends in the form of creating Return of platforms (and how to not fail at building one), 34 new jobs, accelerating economic growth, and improving the 2016, MIT, http://mitsloan.mit.edu/newsroom/articles/ quality and accessibility of public services. These dividends the-return-of-platforms-and-how-to-not-fail-at-building-one/ OVERVIEW REPORT 20 The portals of integrated public services35 can be distin- unified, integrated free trade zone in the region, using the guished among the examples of common platforms: digital advantages of e-commerce. platforms that unite government websites; shared data Increase in trade, turnover of goods and services in the platforms; interoperable platforms that enable participants, EAEU, and better use of transit potential between Asia and including government agencies and private enterprises, to Europe can be accomplished by ensuring unimpeded transfer interact and exchange data; mobile application development of vehicles through digital interaction of the customs author- platforms; and platforms of common services, including ities of the EAEU member states. Such interaction leads to digital identification and authentication, digital payments, restriction of paper-based procedures, full transition to auto- and digital procurement platforms. mated systems, and electronic document flow. Special attention should be paid to the possibility of Simplification of the procedures for implementation of creating a digital platform for the exchange of geospatial digital cross-border purchases can increase cross-border trade information at the level of the Union of the EEC member conducted by online business and increase consumer confi- states based on the integration of existing systems and the dence in cross-border e-commerce in the EAEU countries. corresponding harmonized legislation. The use of spatial Digital solutions can support the simplification of trade data and their combination with external sources of data can procedures and ensure the free movement of people, goods, contribute to the creation of new cross-border and cross-sec- and services. These digital solutions include, among other toral services. things, finance, customs, procurement, taxation, logistics, and Such platforms are particularly important in the regional migration. Successful implementation of such solutions leads context of the EAEU, as they increase the effectiveness and to reaping tangible digital dividends. security of interactions, reduce the need for direct contact An example of such solutions are public sector base regis- between officials and suppliers, and help in deterring tries that are reliable and official sources of basic informa- corruption. tion about citizens, the business sector, companies, vehicles, licenses, land plots, buildings, settlements, and roads. They Implementing shared digital solutions are the cornerstone of digital public services. Base registries There are already actions underway leading to the spread of are a key element in the development of new digital services. electronic cross-border transactions for consumers and busi- Another example is cross-border public procurement. ness in the EAEU member states and the formation of a truly Multilateral public procurement agreements reduce the gap between the share of imports from member states in govern- https://www.gov.uk/help/about-govuk 35 ment consumption and private consumption. According to Figure 15  Indicators of the EAEU countries in digital trade in comparison with other regions ICT use for business-to-business transactions Business to consumer Internet use B2C E-commerce Index value, UNCTAD (2014) EAEU Developed economy score score score Russia 4.8 Russia 5.1 82.6 Kazakhstan 4.8 Kazakhstan 4.7 >30% Armenia 4.7 Armenia 4.4 Kyrgyzstan 3.9 Kyrgyzstan 4.1 57.6 USA 5.7 USA 6.3 50 Japan 6.1 UK 6.4 36.6 36.5 EAEU 4.5 EAEU 4.5 ASEAN 4.8 ASEAN 4.7 23.8 EU 5.3 EU 5.2 OECD 5.4 OECD 5.4 USA Russia Belarus Armenia Kazakhstan Kyrgyzstan 21 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS results published by the EU’s Trade Directorate, the reduction services, including logistics, customs clearance and licensing/ of this gap by 50 percent leads to an increase in the total GDP certification. of the member states by 0.01 percent per year. In particular, a single-window trade facilitation system The measures aimed at simplifying the cross-border would unite all government agencies involved in the export/ procurement—that include the elimination of barriers, import procedure, which would allow companies to submit launching a single electronic portal, and switching to an elec- documents electronically once from anywhere (Figure 15). In tronic procurement format—are estimated to boost economic the Asia-Pacific Economic Cooperation regional economic growth resulting in a EAEU GDP increase of 0.1% by 2025. association, by 2013, 14 countries implemented the single- window system at various stages and aim to cover all A Union-level information system for cross-border elec- 21-member states by 2020. tronic public procurement should provide the functions of electronic filing and bidding, including electronic billing, and The development of electronic customs declaration sys- the exchange of electronic procurement documents between tems in the EAEU countries began 20 years ago. There are sev- the government of one country and suppliers of another eral good examples of the successful implementation of digital country. At the same time, the terms and costs of public solutions in the field of customs. Nevertheless, the problem procurement may be significantly reduced, and efficiency and of integration of the customs systems of the EAEU countries remains unresolved. In 2017, the EEC completed the prelimi- transparency of the decisions taken on procurement and the nary work on the creation of a ‘single-window’ mechanism in award of contracts increased. the system of foreign trade activities of countries36. Solutions in the field of digital trade and customs include online processes related to exports/imports and accelerate 36 http://www.eurasiancommission.org/ru/nae/news/Pages/26-05- cross-border trade in goods and services, as well as related 2017-5.aspx Figure 16  Quality Index of Logistics in the EAEU Logistics Performance Index (2016) EU OECD USA EAEU Score from 1-5 Ability to track and trace consigments Qualitu of trade and transport Competence and quality related infrastructure of logistics services 0 0.5 1 1 .5 2 2.5 3 3.5 4 4 .5 Ease of arranging competitively E ciency of customs priced shipping clearance porcess SOURCE: World Bank and Turku School of Economics, Logistic Performance Index Surveys OVERVIEW REPORT 22 A coherent concept for the modernization of the electro- to the development of logistics, including the creation of nic customs systems of the EAEU should follow the principle hubs for the transit of goods (Figure 16). This can promote of ‘digital by default’. The basis of modernization should in- economic growth and create new jobs. clude common intersectoral business processes, semantic in- terrelatedness, and a unique identifier for economic operators. By creating solutions for warehousing, transportation, It will be necessary to impose more stringent requirements goods delivery based on transcontinental transport chains, on availability, scalability, and security to ensure continuous the interrelatedness and compatibility of the corresponding operation and real-time data exchanges. systems in the member states, including the regulatory legal framework, common business processes, standard docu- ments, and data formats, as well as technically compatible A pilot project has been developed to label products with radio platforms, will have crucial importance for the EAEU. frequency identification (RFID) labels in the EAEU countries. On January 1, 2015, the EAEU agreement on the digital ex- Implementation of the EAEU Digital Agenda will have a change of information between customs authorities of the member states on indirect taxes paid came into force. significant impact on the growth in cross-border electronic trade as soon as online buyers can use duty-free internet purchases in any member state based on common digital plat- forms, including identification and authentication platforms The governments of the EAEU countries are investing in and digital cross-border logistics platforms. According to the development of transport corridors and road transport in- World Bank estimates, the development of regional e-com- frastructures. Nevertheless, the potential of these corridors and merce can lead to an increase in the GDP of the EAEU of at logistics services in the region remains underutilized. The level least 0.88% by 2025. of automation of logistics services is low, and today such services The dividends of the modernization will have a positive are provided by foreign companies. There are practically no impact on the EAEU foreign trade. digital channels for interaction among carriers, consignors, and passengers, and the opportunities for forecasting the demand Solutions in the field of digital logistics facilitate the growth for freight and passenger traffic is severely limited. of trade and allow logistics companies to meet the growing needs of customers in faster deliveries. Modern solutions use Within the framework of the IV Eurasian Conference, it sensors, data, and software to track physical deliveries, which was announced that the EAEU plans to implement the Trans- allows reduction of losses during transportation and delivery, Eurasian Logistics Platform. The main goal is to integrate the as well as for insurance of valuable goods. According to the processes of all participants through electronic data interchange, WEF, the enhanced digital cross-border logistics, in partic- which will serve as the basis for creating an algorithm for inter- ular, can increase the volume of international trade for the action between businesses and the state and will lay the founda- small and medium enterprise (SME) sector37. tion for electronic document flow in the field of airfreight. The geographic location of the EAEU, which can be Increasing the degree of digitalization, standardization, and described as a ‘bridge’ between Asia and Europe, contributes coordination of projects in the EAEU countries will improve the efficiency of transport hubs throughout the Union. Digital logis- Digital Transformation of Industries: In collaboration with Accenture, 37 tics can become a driving force for the economies of the EAEU 2016, WEF], http://reports.weforum.org/digital-transformation- of-industries/wp-content/blogs.dir/94/mp/files/pages/files/wef-dti- countries, creating new links between producers and consumers logisticswhitepaper-final-january-2016.pdf across the region and in all sectors of the economy. 23 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS THE MAIN DIRECTIONS AND METHODS FOR IMPLEMENTATION OF THE EAEU DIGITAL AGENDA Promotion of the EAEU Digital Agenda and the development of It is important to understand that, in contrast to the EAEU a digital single market require a long-term commitment both at which faces similar challenges today, the EU already has insti- the level of the EAEU and the member states. Consistent gover- tutions responsible for the common policy at the regional level, nance attention is required at the regional and country levels, including ensuring international competition in the telecom- as is the engagement of all strata of the society, strong state munications and IT market and making investments in digital institutions, investments, durable legal framework, and targeted infrastructure and security, as well as in pan-European research priority measures. programs. The implementation of the Digital Single Market for Europe has developed and continues to evolve within these Within the EU and ASEAN, where long-term programs for pan-European institutions and governance structures. implementing the digital economy have been adopted, the creation of a digital single market has become an important political priority. Based on the EU experience, the creation of the manage- ment structures of the digital transformation of the EAEU In 2010, the EU adopted the Digital Agenda for Europe, with a wide range of powers at Union level is crucial for the aiming “to achieve sustainable economic and social benefits success of the transformations. through the creation of a digital single market based on high- speed and ultra-high-speed internet and compatible applications”, By developing a shared vision and strategies for the digital and identified a number of problems that need to be solved to space of the EAEU, it is necessary to have an agreed consensus achieve the potential benefits. of all stakeholders with the definition of the main goals and stages of the transformation. The problems included fragmented digital markets, insuf- ficient interoperability, increased cybercrime and the risk of It is necessary to clearly articulate and communicate the diminishing trust, insufficient investments in networks and transformative nature of the agenda and to emphasize the research and innovation, lack of digital literacy and skills, and advantages for society which are ensured by digital technol- lost opportunities in solving societal challenges. ogies in the process of the free movement of goods, services, capital, labor, and data across borders within the Union and in To overcome these obstacles and to unlock the potential all branches of industry and public administration. of digital technologies, a “comprehensive and unified political Once the target vision is approved, it is recommended response at the European level” was required. to develop an implementation strategy with clear goals and In 2015, the EU adopted its Digital Single Market Strategy, budget. which, based on the measures envisaged in its 2010 Digital An e-government program for the provision of new and Agenda, emphasized the need to provide more efficient improved cross-border digital public services within the access to services, to create the appropriate environment for Union should be approved. networks and services to flourish and to maximize the growth potential of the European Digital Economy38. Particular attention should be paid to the development of an EAEU Interoperability Program to facilitate the emer- Shaping the Digital Single Market, 2017, European Commission, 38 gence of the technologically compatible and interoperable https://ec.europa.eu/digital-single-market/en/digital-single-market architectures, standards, data, processes, services, platforms, OVERVIEW REPORT 24 infrastructures, and networks that are critical to the successful Recommendations on delivery of development of the digital economy. EAEU digital transformation It is necessary to adopt an investment program for the Regarding specific recommendations of paramount modernization and expansion of broadband digital infra- importance for the implementation of the Digital Agenda structures at the Union level with a long-term budget and (Figure 17), the following points should be noted: reliable sources of funding. In addition, it is important to identify and prioritize a Firstly, there is a need to coordinate and approve the Digital package of basic digital services, the implementation of which Transformation Strategy of the EAEU by 2025, including a will accelerate the processes of integration and digitalization roadmap and action plan and the corresponding budgets for across the EAEU. projects. The Strategy should include a communication policy, Given the scale and intersectoral nature of the Digital Agenda, as well as the mechanisms for adjusting the Strategy, roadmap, it is essential to establish mechanisms to monitor the measures action plan and budgets. taken, monitor and quantify progress and its results, and to keep There is a need to agree on priority projects to achieve the citizens informed of the ongoing transformations so as to main- objectives, taking into account the subsidiarity principle, and tain the involvement and commitment of all sectors of society. to develop plans and budgets for each project. Finally, to ensure the widespread use of new digital solu- tions and to exploit their innovative potential, it will be neces- The implementation of the Strategy implies close cooper- sary to solve the problems of the lack of qualified personnel ation between the EEC and the EAEU member states in the with the professional skills needed today and in the future, as processes of harmonization of legislation, exchange of infor- well as to increase the overall digital literacy of the population. mation, and development of systems. Figure 17  Overview of the recommendations for implementation of the EAEU Digital Agenda EAEU Digital Space 2025: Key actions at Union level A B C D Vision, strategy, Enabling environment Digital Infrastructure Digital solutions policy A1 Vision and strategy B1 Management structure C1 Telecommunications D1 Electronic customs and Internet A2 Legislation B2 Investment Fund: connection D2 E-commerce (telecommunications, Strengthening data, e-commerce) the Union C2 Services of electronic D3 Electronic logistics identi cation A3 New Business Models B3 Institutions and electronic D4 Digitalization (telecommunications, authentication of industries A4 Digital Innovation data protection, Policy and the CERT-EU) C3 Information Security D5 Data Economy ICT Industry B4 PPP Guidelines C4 Cloud infrastructure D6 Trading platform A5 Communication policy and initiatives B5 Measuring the D7 Digital Finances / bene ts and results Fintech of monitoring D8 The EAEU digital B6 Applied research integration platform and development D9 Interoperability, B7 Skills development IT Standards 25 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS The roadmap and action plan should be regarded as a guidelines for high-level architecture solutions for sectors and dynamically developing document that will be updated and markets, as well as monitoring the development of projects, supplemented with new activities on a regular basis, consid- ensuring their compatibility, and creating critical elements of ering the rapid development of digital technologies and newly the digital infrastructure, platforms, and system. emerging conditions, requirements and circumstances. Similarly to the practice of the EU, ‘ambassadors’ of the As part of the development of the Vision and Strategy for Digital Agenda and leaders of digital transformation in the digital transformation, the EAEU should envisage important EAEU member states could promote the digital transforma- elements of communication and develop a communication tion initiative and raise awareness of current processes, the policy at the Union level to explain and promote the Vision development of digital literacy, and citizens’ involvement in and Strategy and to involve all stakeholders in the implemen- the formation of new opportunities for digital cooperation tation of the Strategy. and innovation. Like the existing practice in the European Commission, In addition, consideration should be given to providing the creation of a permanent working body within the EEC the EEC with additional functions to develop and comply which would be responsible for collecting, collating, summa- with the agreed rules in the EAEU countries on cross-border rizing, and disseminating information on all aspects of digital telecommunications, data protection within the EAEU, and transformation should be envisaged. providing cybersecurity. There is a need to develop assessment tools for monitoring There is a need to agree and approve mandatory require- the implementation of the Digital Agenda and measurement ments to ensure cybersecurity in the EAEU countries and a of the dividends of digital transformation for the EAEU Union-wide action plan to ensure cybersecurity. It is important member states with relevant indicators and a scorecard. to consider the possibility of creating public-private part- Secondly, as indicated by international experience, to nerships for investments in cybersecurity of the EAEU and coordinate and monitor the implementation of the Digital developing a digital cybersecurity platform for the exchange Agenda, there is a need to create structures for implementing of information, knowledge, experience, skills, training, and the strategy at the highest level, with the appropriate gover- practice between the member states and the private sector. nance structures and powers. Thirdly, the approaches to strengthening the existing regu- The lack of coordination of efforts will lead to the intro- latory framework at the Union level for the safe cross-border duction of incompatible digital solutions. As a result, the exchange of data, telecommunications, e-commerce, and digital ecosystem can become too expensive, inefficient, and services with the harmonization of the relevant legislation of incapable of achieving the expected results. the EAEU member states should be agreed upon. The governing body for the delivery of the EAEU Digital These approaches should encourage competition, guar- Agenda should have the authority not only to develop a shared antee user rights and promote the development of a ‘data vision for change, but—what is crucially important—to also economy’ with an emphasis on protecting personal data, intel- guide the delivery of the Digital Agenda at cross-country level: lectual property rights, and free flow of data across borders. to make key decisions; determine priorities and principles of It is necessary to develop and approve a Union-level implementation at the strategic, technical, and financial level; unified framework for the compatibility and interoperability assign management personnel; set tasks; set deadlines for of the EAEU’s digital systems and platforms and to align them their implementation and monitor results; and adopt a budget with the national frameworks of the member states and with and monitor its distribution and use. existing international standards. Establishing a separate unit within the EEC may be neces- It is important to study, update, and expand the current sary to ensure that initiatives and activities for implementing set of ICT standards to cover new digital technologies (broad- the Digital Agenda are in line with the strategic goals and band technologies, cloud computing, Internet of Things, Big objectives, effective coordination and communication with Data and open data, cybersecurity, etc.) in accordance with the numerous stakeholders involved in the implementation existing international standards. process, and monitoring and corrective actions. Cooperation in the field of standardization at the interna- As such, the option of establishing a Division for Digital tional level will ensure the EAEU integration in global digital Agenda Program and Project Implementation (Division) processes, and cooperation with the private sector in this within the EEC should be given due consideration. subject will help accelerate the achievement of economic divi- Within the division, a group of ‘designers’ should be dends. Issues related to patents, intellectual property rights, established, responsible for recommending and developing and competition will also need to be addressed. OVERVIEW REPORT 26 In addition, a system of cross-border electronic identifica- There is a need to identify key cross-border digital public tion and authentication should be launched to enable cross- services, especially the first-priority services for citizens to border digital trade and e-commerce. It is also necessary to use easily outside their own countries and also to move freely harmonize a centralized certification of the corresponding within the EAEU for work or personal purposes. systems in the member states to ensure compatibility and Fragmented markets services and data sources, and lack of effective cross border interaction. technological compatibility are the barriers to digital connec- Lastly, consideration should be given to the possibility tivity and transformation in the EAEU. The technological of creating a mechanism to attract investments at EAEU compatibility and interoperability of architectures, standards, level for the development of common digital infrastructures data, processes, services, platforms, infrastructures, and throughout the EAEU. networks at Union level are crucial for the development and In this context, it is particularly important to envisage implementation of the digital ecosystem—the foundations of mechanisms to attract investments and coordinate actions the digital economy. of the EAEU member states to improve broadband internet The critical factor that will be helpful for overcoming those access in rural and remote areas and to modernize telecom- barriers is the implementation of an active EAEU policy and munications networks in cities and among cities. framework for interoperability at the legal, organizational, Consideration should also be given to creating a single semantic, and technical levels: digital platform of the EAEU based on the experience of Legal interoperability ensures that legislation is designed to developing the integrated information system (IIS) and using enable uninterrupted economic cooperation allowing organ- innovative solutions for cross-border data exchange among isations to work together and to ensure that data exchanges member states in priority industries and markets. haves a legal significance. It is important to find new forms of public-private partner- Organizational interoperability ensures that the business ship (PPP) to attract private companies to the implementation processes of administrations and companies are aligned. of the digital transformation of the Union, both at the stage of financing and at the stage of introduction and provision of Semantic interoperability ensures that the format and services39. meaning of exchanged data and information is preserved and understood by all parties PPPs can provide not only project financing, but also higher efficiency; state participation represents the necessary Technical interoperability ensures that formal technical level of stability and scalability of the achieved results. At specifications and standards are complied with while devel- the same time, because of the PPPs, the state will gain access oping and connecting digital services, platforms, systems, and to new innovative technological solutions, in particular in infrastructures. the field of cybersecurity, and to effective models of project The promotion of interoperability at each of these levels management. is an indispensable condition for the technological compat- ibility of digital communications and real-time digital Principles for digitalization of the EAEU data exchanges, which are the characteristics of the digital Efficient, cost-effective cross-border digital public services economy. and digital solutions in various sectors of the economy are the Thus, the basis for interoperability and guidelines for basis for gaining benefits from the Union’s digital economy, developers at the EAEU should be designed and adopted by including lower transaction costs for non-digital businesses. all stakeholders; and technological compatibility and infor- The introduction of such services requires close cooper- mation management should be the foundations of the design ation, simplified cross-border procedures, common services, process to ensure the continuous development and deploy- and reliable information exchange mechanisms based on ment of cross-border, cross-sectoral, public services. compatible digital infrastructures and reusable systems. The transformation of the EAEU member state adminis- Interoperability at the legal, organizational, semantic, and trations is based on the need to manage information in the technical levels all play an important role in achieving success. public sector, in which data and information would be consid- ered as key state public assets that must be appropriately http://www.eurasiancommission.org/ru/act/dmi/workgroup/ 39 generated, collected, managed, shared, exchanged, protected, Documents/5.%20А.Хотько_Трансформация%20ИИС_ЕЭК.pdf and preserved. 27 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS Identification of a set of digital initiatives It is recommended to develop and adopt an EAEU Interoperability Framework for digital public services, The deployment and widespread use of digital solutions focused on ensuring technological compatibility at the level that will transform the economic and government sectors is of particular importance in obtaining the expected digital of the Union for components of the electronic ecosystem that dividends from implementation of the Digital Agenda. These form the basis of the digital economy. It is also recommended decisions will become critically important. The provision of to publish and disseminate EAEU guidelines on project integrated, compatible digital services and compliance with management and information management in the public new more stringent requirements for confidentiality and sector, which are based on the requirements for user-centric, security will require updating or replacing of existing solu- integrated and secure digital public services. tions or abandoning existing ‘manual’ processes. While creating new solutions, it is necessary to focus on working across borders, on the exchange of information and SIGNIFICANT PROGRESS IN THE FIELD OF TECHNOLOGICAL the development of open data in the public sector for its reuse. COMPATIBILITY WAS ACHIEVED BY EEC IN THE IMPLEMENTATION OF THE INTEGRATED INFORMATION SYSTEM OF THE EAEU. Adopting an open data model at the state level will lead to THIS SYSTEM AND ITS UNDERLYING DATA EXCHANGE cultural shifts towards more active cooperation at the inter- INFRASTRUCTURE COULD EVOLVE TO FACILITATE THE agency and intercountry level, as well as to the emergence INCREASED ECONOMIC INTEGRATION OF THE EAEU. of the industry of creating digital applications in the private sector. The combination of public and private sector data with the scientific research data will for the first time allow It is suggested to focus efforts on implementation of the development of evidence-based policies for a new digital Union-wide solutions and to maximize digital dividends, society. where necessary, through appropriate national initiatives for Solutions that offer international services as a part of the their successful implementation. evolving global digital economy should also be identified and encouraged. Most projects are complex, with long delivery times and many interdependencies. The resulting ecosystem of digital In addition, e-government services should provide an solutions, common digital platforms, and digital infrastruc- improved level of interaction with users, reduce costs, and ture will consist of interrelated and closely integrated compo- promote the creation of open and transparent government nents at the regional and national levels, which implies a high bodies. level of cooperation and coordination in the development and It is recommended to consider the introduction of the first implementation process. series of digital solutions, including those that have a signif- icant cross-border, cross-sectoral effect. Possible candidates Thus, a step-by-step approach with end-user-oriented may be the following components: trans-border purchases ‘quick benefits’ should be considered so as to gradually achieve portal, digital taxation, electronic trade, and digital customs; the expected benefits, maintain a high level of engagement of digital logistics; e-health; e-commerce; and electronic public all stakeholders of the digital ecosystem, and create the condi- services. It is also necessary to consider launching the initia- tions for development of innovative new digital services and tive of public sector base registries at the regional level. solutions. OVERVIEW REPORT 28 CONCLUSION The EAEU is on the verge of a historic transition to the new In the future, the provision of high-speed network digital world, where digital technologies play a key role in the services, high-performance cloud services, provision of transformation of all spheres of society and economic activity cybersecurity and interoperability will become the digital and of the Union. To ensure an effective, responsible, holistic, and analog components of the information ‘highway’ linking Asia, active transition, the participation, knowledge, and experience Eurasia, and Europe. of a multitude of stakeholders (private and public) is required. The stakes are high, and it is essential not to waste time. As a result of the implementation of the digital EAEU The measure of success will be a digitally transformed, inclu- strategy, as described in this document, digital dividends are sive, and secure EAEU, which has the potential for global expected in the form of accelerated economic growth, new job leadership in the digital future. creation, increased global competitiveness, improved living standards, and quality of services in the region. With the current active position of the EEC, there are real opportunities for the development and implementation of The deployment of the digital platform for the integration the Digital Agenda of the EAEU, based on close cooperation of the EAEU and the framework for interoperability within among member states, pooling resources, targeted invest- the EAEU will serve as an impetus for the development of ments and engaging qualified personnel. the next generation of interoperable systems that support the creation of the common digital economic space and the devel- These are the ideas and there is the political will. Now it is opment of data economy. time to bring these ideas to life. 29 THE EAEU 2025 DIGITAL AGENDA: PROSPEC TS AND RECOMMENDATIONS REFERENCES 1. Fact Sheet: Key Barriers to Digital Trade, https://ustr.gov/ 9. 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