Romanian Experiences Related to ICT - R&D

Prof. Vasile Baltac President ATIC

1st IT STAR Workshop on Enabling ICT R&D Bratislava, 11 November 2006

ROMANIA: Economy
EU accession date 1 January 2007 The GDP per capita
rather small 4.411 USD in 2005
at exchange rate parity 8.400 USD in PPP (purchase power parity)

Rate of growth of GDP GDP composition

industry agriculture services 34% 13% 53%

remarkable in the last 5 years

Chart GDP Romania 2001-2006

ROMANIA: Economy
Stable exchange rate One digit inflation The labour force - 9.3 Million

not hit by unemployment - 5.5% an estimate of 2.5 million people work abroad

The average salary is slowly rising The productivity is still low Local investments and FDI Companies of hundred million dollars each investments
modernized old state owned companies made greenfield-type Mittal Steel, Renault, OMV, Lafarge, Orange, Vodafone, Alcatel, Erste Bank, EDF, Metro Cash & Carry, Carrefour

ROMANIA ICT: deep roots in the past

Romania was the first country in Easter Europe to build
first generation computers: CIFA-1957, MECIPT1961, and DACICC-1962 An industrial base was built in the 1970s with licenses from CII-France, Friden-Holland, Ampex, Memorex, Control DataUSA, etc. with research, manufacturing, service, trade and data processing organizations Reaching in 1980s a 40.000 people workforce Minicomputers Made in Romania exported to Czechoslovakia, East Germany, China, Middle East countries and other markets Technologies became obsolete in the period 1980-1989 due to lack of investments in hard currencies.

ICT in Romania 1990-2006

All world major ICT companies arrived in Romania Romanian ICT best assets Romanian education system
human resources a quickly developing market.

8.000+ software and IT services companies in Romania Many multinationals started create R&D, production or
a process of acquisitions & mergers entry in EU will probably accelerate this process

largely recognized as on of the best in the world of ICT 5.000 new graduates enter the labour market every year Brainbench Co. puts Romania first based on the number of skilled programmers in Europe

service centres in Romania Various reports appraise eReadiness of Romania But the IT accessibility, affordability, digital literacy and content availability are being yet inadequate

IT in Romania 2003-2009
High rate of all IT sectors in the period 2003
2005 continuing 2006-2009 Computer hardware looks a little bit saturated
Hardware spending will grow 10% in 2007 vs. 2005 continue their high rate of growth software will mark a substantial 31.5% IT services 21.5% services, financial communications and banking, trade and

Computer software and computer services

Highest increases of 32-42%

Romania: ICT Facts and Findings 2006 vs. 2003

Chart Main ICT Indicators Dynamics 2006 vs. 2003

Romania: ICT Facts and Findings 2006 vs. 2003

Population GDP ICT /GDP ICT Spending/GDP ICT Spending Computer users Cards issued Card Penetration Mobile phone users million $billion % % $billion % million % % 2003 22.4 57.2 7.00% 2.33% 1.333 24% 5 22.4% 25% 2006 21.44 90.8 8.00% 2.66% 2.412 35% 8.5 38.5% 60% Rate -4.3% 58.7% 14.3% 14% 80.9% 45.8% 70.0% 71.9% 140%

Sources MCTI, IDG, INS RO, Eurostat, Gallup

Romanian IT Industry 2000-2009

Chart Romanian IT Industry 2000 - 2009

Communications in Romania 2003-2009

The communication market: similar evolution In 1989 Romania had only a 10% telephone

penetration Romania - one of the first European countries to fully liberalize communications market Now 20% penetration of fixed line telephony
one big operator Romtelecom 74 alternative operators 4 big operators Orange, Vodafone, Cosmote and Zapp (CDMA) with a

The mobile market

Romanian Communications Industry 2001-2009

Chart Romanian Communications 2001-2009

Internet in Romania
The Internet penetration is explosive 980 Internet Service Providers In 2005 a number of 1,8 million access
places
dial-up access being in regress Broadband access 41% of the total a rate of 96% increase over 2004 28%

Rate of penetration of Internet in 2005

Digital Divide & Regional Aspects

The country is still affected by Digital Divide
Internet penetration still low ICT spending per capita far from EU15 average, less than EU25 average,.

ICT diffusion vs GDP

Romania at rank 66 from 180 countries surveyed

a middle position among the Eastern European countries this rank evolved from 77 in 1998 to 66 showing a positive trend Most of the other countries of the region listed show the same trend

rank countries according to ICT basic indicators

R&D
R&D capacity of Romania decreased gradually after 1989 Dismantling of old state owned research institutes
decreasing orders outflow of researchers to new private companies or to better positions abroad from 150,000 in early 1990s to 58,000 in 2005 30% of total in 2002 26% in 1995

Continuously diminishing workforce

Aging workforce; researchers 50-60 years old Brain drain Dispersion in many small R&D units

50 people per R&D Lack of orders and research grants from the
industry

607 R&D units 34 National R&D Institutes in 15 research fields 227 public research institutions 310 joint-stock public or private companies

ICT Diffusion Index 2004

ICT Diffusion Index 2004
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Access Index Connectivity Index ICT Diffusion Index Rank Slovakia 0.678 0.321 0.499 37 Hungary 0.64 0.349 0.494 39 Bulgaria 0.607 0.248 0.428 52 Romania 0.582 0.184 0.383 66 Turkey 0.535 0.193 0.364 73 Ukraine 0.543 0.141 0.342 81 37 39 52 66 73 81 90 80 70 60 50 40 30 20 10 0

Chart ICT Diffusion Index 2004 Source: UNCTAD

ICT Diffusion Rank 1998 - 2004

95 85 75 65 55 45 35 Slovakia Hungary Bulgaria Romania Turkey Ukraine 1997 47 45 55 77 78 82 1998 47 43 59 84 74 83 1999 47 44 60 87 71 81 2000 47 42 60 89 70 79 2001 47 39 58 77 68 90 2002 45 39 57 70 71 90 2003 45 37 56 68 75 85 2004 37 39 52 66 73 81

Chart ICT Diffusion Rank 1998 2004 Source: UNCTAD

EIU Innovation Performance relative to EU average

Chart 1 EIS Innovation Performance 2005 relative to EU Source: The European Innovation Scoreboard 2005

ICT R&D
Reflection of general R&D ICT R&D Romanian ICT R&D distinctive in
low public & business funding poor collaboration of the ICT SMEs

Coordinators

business sector; specialized institutions; universities Ministry of Education and Research, Ministry of Communications and Information Technology Romanian Academy other ministries and agencies most of them have the specifics of ICT (Software Park Galati, Softex Braila, CyberLAB Slobozia, Software Park Brasov, MinatechRo Bucharest, CTT-Baneasa, IPA SA - CIFATT Craiova, etc.). support of the implementation of Information Society in Romania little is known about the role of this high ranking body that after the 2004

several areas: Innovation in software field is higher than statistics show

No marketing channels to make known the innovation capacity of Romanian ICT R&D in SMEs and its potential for EU ICT R&D. ICT multinationals open and the trend continues R&D centres in Romania, mostly in software & ICT applications

Industrial & Software Parks 7

other

ICT Task Force

International support to ICT R&D

FP5, FP6 and forthcoming FP7 are the main
international drivers Romania has participation in all these programs FP6 compared with FP5
Romania had 3 times less proposals budget 5 times bigger that in FP5 main Romanian participation - software technologies, mobile communications, wideband communications, microsystems, etc. not best exploited by Romania grants received were less that Romanias contribution

Opinions that ICT related FP5 and FP6

International support to ICT R&D

Romanian contribution in 3 years 65.289
MEuros
Projects and contracts - 39 MEuros Deficit - 26 MEuros In conditions of a reduction of duties

FP6
3114 proposals 247 accepted

Driving forces, problems, success stories and setbacks

The main
driving force
Countrys progress in developing ICT infrastructure, both public and business GDP/capita vs. ICT spending

Chart ICT Spending and GDP per capita 2000-2009

Driving forces, problems, success stories and setbacks

Lack of enough national ICT R&D very high rate o imports of R&D, software and
hardware 90%+ of turnover of ICT companies is produced by branches of ICT multinationals or joint ventures Some have Romanian R&D centres output is exported with a small margin often re-imported with commercial margin Expect quick increase of absolute value of ICT business R&D in Romania
less effect on the general performance of ICT industry.

ICT R&D and societal development: The Four Pillars

ICT development is a must and is a

condition for societal progress. To bridge the gap most of the countries have to build the four pillars
Appropriate ICT Infrastructure Accessible and Affordable Internet Access Generalized Ability to Use ICT Availability of Useful Content

R&D and international co-operation

The necessity Less understood and less practiced
regional cooperation in ICT R&D experience the same problems transfer of experience is more natural wide accepted basic activities in EU.

FP7 - a new starting point? The European Institute of Technology (EIT) IT STAR could play a role
regional branches?

ATIC - A Bridge to Romania

The Association for Information Technology and
Communications of Romania (ATIC)
organization aiming to consolidate an appropriate framework for the development of IT&C in Romania maintains a database for co-operation projects available to members disseminates information to non-members

Member of WITSA (World Information Technology

Software Alliance); CEPIS (Council of European Professional Informatics Societies) and IT STAR http://www.atic.org.ro President Dr. Vasile Baltac Contact: officeATIC@atic.org.ro

Thank You!! Q&A?