World Bank study: Open data for economic growth

Banca-Mondiala--Tarile-in-curs-de-dezvoltare-sa-se-astepte-la-un-soc-economic“Data usefulness depends not only on the availability of information itself, but also on the ideas and the tools for their creative and effective use.

Despite the difficulties in estimating the real economic impact of open data, their huge potential can not be denied.

Open-Data-for-Economic-Growth study highlights the beneficial economic and social impact of open data, based on a coagulation of monetary and statistical arguments.

Although opening of data is a relatively new initiative, a number of studies have been conducted, which collect evidence of the social implications of open data at the micro and macro-economic level on the one hand and serve as pillars in policy- and decision-making on the other hand.

Thus, a study by Vickery estimates that the (direct and indirect) benefits of open data for the overall economy of the EU reached an approximate value of 200 million Euro in 2008, at that time accounting for 1.7% of EU’s GDP.

A more recent study conducted in the UK (2013) estimates the direct economic benefits of open data to 1.8 billion pounds per year. Looking at the overall impact of open data (direct and indirect benefits), the values ​​amount to 6.8 billion pounds.

Another study revealed that the infomedia sector in Spain (companies that sell services based on open data) currently comprises 150 entities (4,000 employees), generating 330-350 million EUR annually, which can be assigned to the series of benefits of open data.

Although the studies were conducted in different time periods and concerned the economy of different countries, they revealed three identical key issues:

  1. Although the DIRECT economic benefit of companies that deliver services based on open data is remarkable, most of the benefits of open data are INDIRECT. These benefits are felt by end users of services;
  2. Open data generate new types of re-users of information, particularly SMEs, and new business types, living from advertising, without burdening the end user of the service;
  3. The value of open data is not limited to presence of information itself, but consists of a combination of data, data use ideas and proper infrastructure.
  4. The difficulty of assessing the benefits of open data is explained by the impossibility of separating data from the value of innovation on the one hand and by the real benefits of open data that are felt over time on the other hand.

Open data generate new types of re-users of information, particularly SMEs, and new business types, living from advertising, without burdening the end user of the service.

Another difficulty derives from entrepreneurs’ habit to enter the market with a service and then search for the information needed to improve that service, although the process should begin with development of a service based on open data available at a time.

Entrepreneurs have the habit of entering the market with a service and then search for the information needed to improve that service, while the process should begin with the development of a service based on open data available at a given time.

Thus, there has been an increase in the number of companies in North America and Western Europe specializing in the development of services based on open data and companies adapting their work so as to integrate open data in their services. Some of these companies have achieved impressive results, with a market value of over USD 3 billion, or companies that record annual sales of over 70 million pounds. (Case studies presented in the World Bank’s study).

Types of businesses established due to open data:

  • Suppliers: companies/organizations publishing the data in an open form, allowing data reuse;
  • Collectors: companies that collect and aggregate data;
  • Enrichers: companies that use open data to improve their products and services;
  • Developers: companies and freelancers that protect and develop open data based web applications;
  • Enablers: entities that provide platforms and technologies to be used by individuals and entrepreneurs.

Many governments have already launched “Open Data” programs to make information accessible both to ordinary citizens and business. For most governments, policy objectives are a mixture of incentives:

  • Economic growth, including business innovations, creation of jobs;
  • Citizen participation in improving public services possible only through complete information on the service operation standards;
  • Increased transparency and accountability;
  • Increased efficiency of public services themselves, with improvement of decision making processes due to data opening.

Despite multiple “Open Data” programs, the potential of open data has not been fully harnessed yet. Even the countries that have been the first to open the data still have much to do in order to transform data opening and use into a sustainable process with economic and social impact.

In achieving this objective, governments play a key role, and their participatory approach means awareness and acceptance of 4 distinct roles:

Government – supplier – opens the data it holds, data which are indispensable for economic development;

Government – leader – develops and provides policy support and tools / levers to encourage other institutions to open data relevant to the development of innovation and business environment;

Government – catalyst – serves as a catalyst for data use by maintaining an adequate infrastructure for data movement;

Government – user – by own example promotes use of data in public institutions at national and regional level.

Moreover, it is critical that governments perceive open data as a determinant of innovation in all area of economic activity, not just IT.

The key issue in all this proces is delivery of information which is detailed enough, without compromising the national security and the privacy rights protection policies.

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