László Szerb - The Digital Platform Economy Index 2020

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In April 2020, the GEDI launched a preliminary report about measuring the digital entrepreneurship ecosystem. Over time, the concept has gone through several iterations and is now ready to be published. Like the Global Entrepreneurship Index products, we are planning to continue this research and publish yearly reports.

The application of big data, new algorithms, and cloud computing is creating a global digital platform economy built around platform companies. The Digital Platform Economy Index (DPE Index) integrates two separate but related literatures on ecosystems, namely, the digital ecosystem and the entrepreneurial ecosystem. This new framework situates digital entrepreneurship within the broader context of users, platforms, and institutions, such that two biotic entities (users and agents) actuate individual agency, and two abiotic components (digital infrastructure and digital platforms) form the external environment. If a country builds out its digital ecosystem, there is no guarantee that it will be exploited by existing firms. Startups adoption of new technologies because of an entrepreneurial ecosystem is also uncertain. For technology to be introduced successfully, the digital ecosystem and the entrepreneurial ecosystem must be developed simultaneously.

To measure the size of the digital platform economy, we have developed the DPE Index, a multidimensional, composite indicator. The DPE Index framework includes 12 pillars that integrate the digital and the entrepreneurship ecosystems. Here, we report on the DPE Index, the four sub-indices, and the 12 pillar values for 116 countries; we also provide a cluster analysis based on the 12 pillars. The developed Anglo-Saxon and Nordic countries lead the DPE Index ranking, followed by other European and Asian nations, New Zealand, and Australia. Many mid-developed European, Asian, and Latin American countries and a group of oil-rich countries (i.e., Bahrain, Oman, Qatar, Saudi Arabia, and United Arab Emirates) report below-average DPE Index scores, while developing economies in Africa, Asia, Europe, and Latin America are in the group of poorly performing countries. The DPE Index results reveal that most European Union (EU) member states (22 out of 27) are on or above the trend line; however, except for The Netherlands, they are far below the two top DPE performers (the USA and the UK).

While it is useful to identify the common components of the digital platform economy ecosystem, policy recommendations should be individual and tailor-made. This report offers policy recommendations on three levels and are based on the harmonization of digital and entrepreneurship ecosystem components, and the 12 pillars. First, we identify the countries that are below the development-implied trend line, and which should spend more on improving their digital platform economy ecosystem. Next, we examine the balance of the digital and the entrepreneurship ecosystems. Imbalances could result in asynchronous operation, thus a healthy digital platform economy requires both digital and entrepreneurial ecosystem components. Finding the weak components of the digital platform economy ecosystem constitutes the third-level policy propositions. Weak components, called bottlenecks, could prevent a country from fully exploiting the possibilities provided by the stronger elements of the ecosystem. We center our focus on the European countries, including showing that the EU has paid a price for BREXIT. The UK is a dominant player in the digital platform economy arena, and it will be difficult to find a substitute.