Going digital in Latvia.

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Foreword Table of Contents Acronyms, abbreviations and units of measure Executive Summary Enhancing connectivity Increasing adoption and use of digital technologies Upgrade digital skills Increase digital uptake by firms Foster digital government Enhancing trust in a digital environment Foster digital security Enhance privacy Enhance consumer protection online Unleashing digital innovation Building a whole-of-government approach Chapter 1. Latvia in the digital transformation: Opportunities and challenges Recent economic and social trends in Latvia The digital transformation has the potential to foster productivity Figure 1.1. Labour productivity growth in Latvia and selected OECD countries, 2000-19 Digital innovation is key for productivity Figure 1.2. Business R&D in information industries1 in Latvia and selected OECD countries, 2016 Active labour market policies can help close the digital skills gap Figure 1.3. ICT specialists in employment in the European Union, 2018 Using digital tools to foster inclusive growth Figure 1.4. Individuals living in poor households in Latvia and selected OECD countries, 2017 Enhancing well-being along the digital transformation Figure 1.5. Life satisfaction in the OECD, 2018 The Latvian Digital Transformation Strategy Table 1.1. Information Society Development Guidelines 2014-2020: Action directions The Going Digital Integrated Policy Framework Figure 1.6. Going Digital Integrated Policy Framework Access Use Innovation Jobs Society Trust Market openness Going Digital in Latvia References Note Chapter 2. Key future uncertainties in digital transformation and potential implications for Latvia Introduction Why scenarios? Decision making in a context of uncertainty Box 2.1. What is strategic foresight? How to use this chapter Box 2.2. Implications of the COVID-19 pandemic Directions for a desirable digital Latvia Three scenarios: Imagining Latvia in various future contexts #Me2.0 Summary #Me2.0 Signals: Self-organised communities, digital commons and open source intelligence How this world came about What this world looks like Insights about Latvia’s digital strategy Platform governments Summary Platform governments Signals: Digital public services, citizen ranking, unique identity systems, foreign investment screening and provider regulation How this world came about What this world looks like Insights about Latvia’s digital strategy Corporate connectors Summary Corporate connectors Signals: Superstar firms, market concentration and fields of public interest How this world came about What this world looks like Insights about Latvia’s digital strategy Strategic perspectives for Latvia to consider Strengthen Latvia’s internal and external partnerships for digital transformation Identify smart approaches to education and skills for adaptive, critical Latvians Identify pathways to an inclusive digital Latvia for and by the people Strengthen the capacity to access and use personal data, while safeguarding digital security and safety Conclusion References Notes Chapter 3. Infrastructures for Latvia’S digital economy Communication policy objectives for Latvia’s digital transformation Table 3.1. National broadband coverage targets in the OECD State of connectivity in Latvia Broadband penetration Figure 3.1. Mobile broadband subscriptions per 100 inhabitants in OECD countries, June 2019 Figure 3.2. Fixed broadband subscriptions per 100 inhabitants in OECD countries, June 2019 Figure 3.3. Percentage of fibre connections in total fixed broadband in OECD countries, Q2 2015 – Q2 2019 Figure 3.4. Fixed broadband subscriptions in Latvia, by technology, 2009 – Q2 2019 Figure 3.5. Fixed broadband subscriptions in Riga and outside Riga, by technology, 2018 Broadband speeds Figure 3.6. Average experienced download speeds of fixed broadband connections in OECD countries, July 2019 Figure 3.7. Fixed broadband subscriptions per 100 inhabitants in OECD countries, by speed tier, June 2019 Figure 3.8. Percentage of households in total and rural areas1 with minimum 30 Mbps of fixed broadband coverage2 in selected OECD countries, June 2018 Figure 3.9. Percentage of households with LTE mobile coverage, total and rural areas1 in selected OECD countries, June 2018 Prices of fixed and mobile broadband services Figure 3.10. Trends in fixed broadband prices in Latvia and OECD countries, June 2013-December 2019 Figure 3.11. Trends in mobile broadband prices in Latvia and OECD countries, May 2013-November 2019 Mobile data usage Figure 3.12. Mobile data usage per mobile broadband subscription in OECD countries, 2016-18 The Internet of Things Figure 3.13 M2M/embedded mobile cellular subscriptions in selected OECD countries, June 2019 Internet exchange points Figure 3.14. IPv6 adoption in selected OECD countries, 2020 Developments in communication markets in Latvia Figure 3.15. Trends in communication revenue and investment in Latvia, 2010-18 Table 3.2. Main players in the Latvian communication markets Fixed market developments Figure 3.16. Fixed broadband market shares in Latvia, 2010 and 2018 Mobile market developments Figure 3.17. Mobile broadband market share in Latvia, 2010 and 2018 Spectrum allocation Figure 3.18. Spectrum availability in Latvia, 2019 Table 3.3. Spectrum auctions conducted in Latvia Convergence Figure 3.19 Customers subscribing to bundled services in Latvia, 2018 Regulatory and policy developments in Latvia Institutional framework and design Policy and regulatory initiatives to enhance access Box 3.1. Broadband for schools in Latvia Policy recommendations Box 3.2. Policy recommendations References Notes Chapter 4. Fostering the digital transformation among people, firms and government Usage of digital technologies by individuals Internet use by group Figure 4.1. Internet users by educational level in selected OECD countries, 2018 or latest available year Figure 4.2. Internet users by category in selected OECD countries, 2018 or latest available year Figure 4.3. Trends in Internet users in Latvia and selected OECD countries, 2005-18 Figure 4.4. Trends in Internet users by category in Latvia, 2008-18 Figure 4.5. Internet access at home in selected OECD countries, 2018 Figure 4.6. Reasons for not having Internet access at home in Latvia, 2018 Figure 4.7. Rural-urban gap in broadband access in Latvia and selected OECD countries, 2018 The uses individuals make of the Internet Figure 4.8. Internet use by individuals in Latvia, 2017 or latest available year Promoting ICT usage among individuals Figure 4.9. Online purchases in Latvia and selected OECD countries, 2018 Box 4.1. Distant learning during the COVID-19 pandemic Figure 4.10. Individuals with basic or above basic digital skills1 in Latvia and selected OECD countries, by sex, 2017 Figure 4.11. Rural–urban gap in digital skills in Latvia and selected OECD countries, 2017 Box 4.2. Australia and Norway take community-based approaches to encouraging digital literacy among adults Usage by individuals: Conclusions Usage of digital technologies by firms Current rate of ICT usage by firms Figure 4.12. Business connections to fixed broadband in Latvia and selected OECD countries, 2018 or latest available year Figure 4.13. Internet use by businesses in selected OECD countries, 2018 or latest available year Figure 4.14. Turnover from web sales in Latvia and selected OECD countries, 2017 Obstacles to greater usage of digital technologies Figure 4.15. Business use of advanced digital technologies in selected OECD countries, 2017 or latest available year Figure 4.16. Employment by firm size in Latvia and selected OECD countries, 2016 Figure 4.17. Use of advanced digital technologies by firm size in Latvia and selected OECD countries, 2017 Figure 4.18. Reliance on professional management in selected OECD countries, 2017-18 Box 4.3. A wide range of supports are available to help firms digitalise Skills required for the digital transformation Figure 4.19. Skill shortages in Latvia, 2017 Figure 4.20. Relative earnings of tertiary-educated adults in the OECD, by field of study, 2017 Figure 4.21. Firms finding it difficult to hire ICT specialists in Latvia and selected OECD countries, 2019 Box 4.4. The digital transformation requires a broad mix of skills Steps taken to improve digital skills Figure 4.22. Total number of tertiary ICT graduates in Latvia, 2013-17 Figure 4.23. Businesses providing ICT training to their employees in Latvia and selected OECD countries, 2012 and 2018 Box 4.5. Changing the education and training system to keep up with a changing economy Box 4.6. Germany and the United Kingdom use simplified procedures to hire ICT specialists from abroad Figure 4.24. Online hiring by occupational group in Latvia and selected OECD countries, 2018 Usage by business: Conclusion Usage of digital technologies by the government Current strategy for use of ICTs by government Box 4.7. Latvian’s Information Society Development Guidelines Progress in digitalising services Figure 4.25. Trends in the use of online services in the European Union, 2010-19 Figure 4.26. Individuals who made an appointment with a health practitioner on line in Latvia and selected OECD countries, 2012 and 2018 Box 4.8. Establishing clear rules is necessary to facilitate the sharing of medical data Use of ICTs to improve services Box 4.9. Promoting digitalisation in regional locations Figure 4.27. Open Useful Re-Usable data (OURdata) Index 2019 Table 4.1. More government data has become publicly available Using government procurement to promote the digital transformation Usage by the government: Conclusion Conclusions and policy recommendations Box 4.10. Policy recommendations References Note Chapter 5. Enhancing trust in the digital economy Latvia’s digital security policies Recent trends Figure 5.1. Most common malicious code attacks in Latvia, 2018 Figure 5.2. Most common malicious code attacks in Latvia, Q1 2020 Figure 5.3. The four dimensions of “cybersecurity” Governance Figure 5.4. Digital security governance framework for Latvia (2019-2022) Figure 5.5. Digital security policy in Latvia Figure 5.6. Governance framework for digital security policy in Estonia Recent initiatives Conclusions and policy recommendations Box 5.1. Principles of the OECD Recommendation of the Council on Digital Security Risk Management for Economic and Social Prosperity Box 5.2. Policy recommendations Developing trust through greater privacy Legal framework on data protection Institutional oversight Box 5.3. Main regulatory powers and activities of Latvia’s DSI under the PDPL Box 5.4. Rights of the DSI under the PDPL Table 5.1. Decisions taken in administrative violation cases Technical measures for data protection Figure 5.7. Reported personal data breaches in Latvia Conclusions and policy recommendations Box 5.5. Policy recommendations Consumer protection Policy framework Implementation of OECD principles on the protection of digital consumers Box 5.6. General principles for protecting digital consumers Box 5.7. Main enforcement powers of the CRPC Table 5.2. CRPC budget and staff, 2017-19 Table 5.3. Consumers complaints received and resolved by CRPC, 2017 – June 2019 Table 5.4. Complaints related to e-commerce, 2017 – June 2019 Table 5.5. Official consumer complaints related to unfair online commercial practices, 2017 – June 2019 Table 5.6. Unlawful e-commerce practices, 2017 – June 2019 Table 5.7. Domestic and cross-border consumer disputes Conclusion and policy recommendations Box 5.8. OECD recommendations for Latvia to enhance consumer protection References Notes Chapter 6. Seizing the potential of the digital transformation of the economy and society Unleashing digital innovation State of innovation and research in Latvia Figure 6.1. Productivity gap in selected OECD countries, 2017 Figure 6.2. Business R&D expenditure in Latvia and selected OECD countries, 2018 Figure 6.3. Innovative SMEs1 in Latvia and selected OECD countries, 2014-16 Figure 6.4. Patent applications to the European Patent Office, 2017 Figure 6.5. Researchers and new doctoral graduates in Latvia and selected OECD countries, 2018 Figure 6.6. ICT PhD graduates in Latvia and selected OECD countries, 2013-17 Figure 6.7. Top 10% most cited scientific publications in computer science in selected OECD countries, 2018 Figure 6.8. Scientific publications resulting from international collaboration in selected OECD countries, 2018 Innovation policy Box 6.1. Implementing the Guidelines for Science, Technology Development and Innovation Box 6.2. Sweden’s Innovation Strategy Promotion of R&D Figure 6.9. Government funding and tax support for business R&D in Latvia and selected OECD countries, 2017 Box 6.3. Various approaches used to promote R&D Figure 6.10. SMEs co-operating on innovation activities with higher education or government institutions in selected OECD countries, 2014-16 Promotion of innovation within firms Promotion of start-ups Figure 6.11. Firms declaring that availability of finance is a major obstacle to long-term investment, 2018 Conclusion and policy recommendations Box 6.4. Policy recommendations Latvia’s Smart Specialisation Strategy Table 6.1. Latvia’s Smart Specialisation areas Table 6.2. Funding instruments for Smart Specialisation, 2014-18 Table 6.3. Smart Specialisation: Competence centres and clusters Box 6.5. Smart Specialisation: Overarching recommendations Latvia’s bioeconomy strategy Figure 6.12. Contribution of the bioeconomy to manufacturing value added, 2010 and 2017 Figure 6.13. Latvia’s revealed comparative advantage, 2005 and 2015 Figure 6.14. Value added of forestry products in Latvia and selected OECD countries Figure 6.15. R&D expenditure by industry in Latvia relative to the OECD, 2015 Figure 6.16. Latvia’s R&D expenditure in natural sciences and engineering, by performing sector Box 6.6. Technology Transfer Offices (TTO) Flanders Box 6.7. Leapfrogging potential: Big data for better policies in agriculture and forestry Biomedical research and health innovation Box 6.8. Policy recommendations: Bioeconomy Figure 6.17. Latvia’s exports of high-tech and medium-high tech products, 2010 and 2018 Figure 6.18. Latvia’s publications in the top 10% most cited documents Box 6.9. Policy recommendations: Biomedicine Improving targeting of innovation policies Figure 6.19. Latvia’s publications in the top 10% most cited documents on material sciences and engineering Figure 6.20. Business use of 3D printers in manufacturing in Latvia and selected OECD countries, 2018 Box 6.10. Platform Industry 4.0 Box 6.11. Policy recommendations: Smart materials and engineering Smart Energy technologies and Smart City solutions Figure 6.21. Latvia’s publications in the top 10% most cited documents on smart energy Figure 6.22. Industrial electricity prices in Latvia and selected OECD countries, 2017 Box 6.12. Enhancing the contribution of digitalisation to smart cities of the future Box 6.13. Policy recommendations: Smart energy Improving synergies within RIS3 areas Figure 6.23. ICT services1 exports from Latvia and selected OECD countries, 2010-15 Figure 6.24. Latvia’s publications in the top 10% most cited documents on computer science, electronic engineering and related fields Table 6.4. Support for ICTs does not align with needs of other Smart Specialisation areas Box 6.14. Policy Recommendations: ICT References Notes Chapter 7. Policies for digital transformation: Recommendations for a whole-of-government approach Going Digital in Latvia: An Integrated Policy Framework Figure 7.1. Going Digital Integrated Policy Framework Strategic foresight Enhancing access and connectivity Fostering effective use of digital technologies Enhancing trust in a digital environment Unleashing digital innovation Building a whole-of-government approach for digital transformation policy Latvia’s Sustainable Strategy 2030 Figure 7.2. Latvia’s national development planning The National Development Plan 2014-2020 The Information Society Development Guidelines 2014-2020 Table 7.1. Information Society Development Guidelines 2014-2020 Clear budgetary appropriations for the digital strategy Stronger co-ordination mechanisms within government Table 7.2. Governance of national digital strategies in OECD countries Box 7.1. Policy recommendations for a whole-of-government approach References List of Figures List of Tables List of Boxes