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Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia - Nordic Council of ...
Rural perspectives on
                    digital innovation:
                             Experiences from small enterprises
                              in the Nordic countries and Latvia

                  Linda Randall, Louise Ormstrup Vestergård & Mari Wøien Meijer

                                                 NORDREGIO REPORT 2020:4

nordregio report 2020:4                                                       1
Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia - Nordic Council of ...
Rural perspectives on
digital innovation:
Experiences from small enterprises in the Nordic
countries and Latvia

Linda Randall, Louise Ormstrup Vestergård &
Mari Wøien Meijer

NORDREGIO REPORT 2020:4
Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia - Nordic Council of ...
Table of Contents
Rural perspectives on digital innovation: Experiences from small enterprises
in the Nordic countries and Latvia

Nordregio Report 2020:4

ISBN 978-91-87295-89-8 (print)
ISBN 978-91-87295-90-4 (PDF)
ISSN 1403-2503
DOI: http://doi.org/10.6027/R2020:4.1403-2503
                                                                                 1. Introduction and background....................................................................................................... 7
© Nordregio 2020

Nordregio                                                                        2. Digitalisation in the Nordic-Baltic rural context........................................................ 10
P.O. Box 1658
                                                                                      2.1 The digital divide: Infrastructure......................................................................................................... 10
SE-111 86 Stockholm, Sweden
nordregio@nordregio.org                                                               2.2 The digital divide: Knowledge and skills............................................................................................ 23
www.nordregio.org
www.norden.org                                                                   3. Digitalisation in key rural sectors........................................................................................... 32
Analyses and text: Linda Randall, Louise Ormstrup Vestergård & Mari Wøien         3.1 The digital revolution in the bioeconomy.......................................................................................... 32
Meijer                                                                            3.2 A potential blessing, a possible curse: Digitalisation and sustainable tourism....................36
Contributors: Linda Randall, Louise Ormstrup Vestergård, Mari Wøien Mei-          3.3 Getting started on the digital journey: Digital transformation in the manufacturing
jer, Anna Berlina, Jukka Teräs, Laima Engere-Levina, Elin Slätmo, Hjördis Rut
                                                                                 		sector.......................................................................................................................................................... 39
Sigurjonsdottir, Pontus Arledal Thunell, Eeva Turunen & Jens Grelck
Cover photo: Unsplashed
Maps and data: Oskar Penje & Linda Randall                                       4. Supporting digitalisation of small rural enterprises in the Nordic
Layout: Marija Zelenkauskė
                                                                                    countries and Latvia......................................................................................................................... 44
Nordregio                                                                         4.1 Denmark..................................................................................................................................................... 45
is a leading Nordic and European research centre for regional development
                                                                                  4.2 Finland........................................................................................................................................................ 46
and planning, established by the Nordic Council of Ministers in 1997. We
conduct solution-oriented and applied research, addressing current issues         4.3 Iceland.................................................................................................................................................. 47
from both a research perspective and the viewpoint of policymakers and            4.4 Norway.......................................................................................................................................................48
practitioners. Operating at the international, national, regional and local       4.5 Sweden...................................................................................................................................................... 49
levels, Nordregio’s research covers a wide geographic scope, with an
                                                                                  4.6 The Faroe Islands................................................................................................................................... 50
emphasis on the Nordic and Baltic Sea Regions, Europe and the Arctic.
                                                                                  4.7 Greenland...................................................................................................................................................51
The Nordic co-operation                                                           4.8 Åland...........................................................................................................................................................51
Nordic co-operation is one of the world’s most extensive forms of regional        4.9 Latvia.......................................................................................................................................................... 52
collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, and the
Faroe Islands, Greenland, and Åland. Nordic co-operation has firm traditions

in politics, the economy, and culture. It plays an important role in European    5. Conclusions and advice for policy makers....................................................................... 54
and international collaboration, and aims at creating a strong Nordic
community in a strong Europe. Nordic co-operation seeks to safeguard Nordic
and regional interests and principles in the global community. Common            References....................................................................................................................................................... 57
Nordic values help the region solidify its position as one of the world’s most
innovative and competitive.

The Nordic Council of Ministers
is a forum of co-operation between the Nordic governments. The Nordic
Council of Ministers implements Nordic co-operation. The prime ministers
have the overall responsibility. Its activities are co-ordinated by the Nordic
ministers for co-operation, the Nordic Committee for co-operation and
portfolio ministers. Founded in 1971.

The Nordic Council
is a forum for co-operation between the Nordic parliaments and
governments. The Council consists of 87 parliamentarians from the
Nordic countries. The Nordic Council takes policy initiative s and monitors
Nordic co-operation. Founded in 1952.

Stockholm, Sweden, 2020

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Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia - Nordic Council of ...
1. Introduction and background
List of Figures

Figure 1. Digital Economy and Society Index, 2019....................................................................................... 7
Figure 2. Broadband network segments........................................................................................................ 11
Figure 3. Next Generation Access broadband coverage/availability in 2018 (as a % of
		        households). .........................................................................................................................................13         In April of 2017, the Ministers responsible for                        availability of digital infrastructure and the
Figure 4. Average municipal household coverage of fixed broadband by speed and municipality                                                                                digital development in Norway, Sweden, Denmark,                        adoption of digital technologies. As such, this
		        type....................................................................................................................................................... 20   Finland, Iceland, Faroe Islands, Greenland, Åland,                     project sought to provide a rural perspective on the
Figure 5. People with basic or above basic digital skills, 2017.................................................................. 23                                       Estonia, Latvia, and Lithuania met in Oslo and                         second goal: Strengthening the competitiveness of
Figure 6 Key indicators tracking digital progress, EU, 2018 (% enterprises)........................................ 25                                                     set an ambitious agenda for digitalisation across                      our enterprises through digitalisation. Specifically,
Figure 7. Pyramid of digital maturity.............................................................................................................. 25                     the Nordic-Baltic Region. Their vision is to make                      it aimed to demonstrate how smart, sustainable
                                                                                                                                                                           the Nordic-Baltic Region a digital frontrunner by                      and inclusive approaches to digitalisation can be
Figure 8. Digital transformation and maturity of companies step by step.
                                                                                                                                                                           pursuing the following policy goals (The Norwegian                     used as a tool to increase the competitiveness
		        Source: REG LAB, 2018..................................................................................................................... 26
                                                                                                                                                                           Ministry of Local Government and Modernisation                         and attractiveness of rural areas by exploring the
Figure 9. Challenges and opportunities associated with digitalisation for small rural
                                                                                                                                                                           & Nordic Council of Ministers, 2017):                                  challenges and opportunities for small enterprises
		        enterprises............................................................................................................................................ 30                                                                              in rural and sparsely populated areas. The project
                                                                                                                                                                               1. Strengthening the ability for digital trans-
Figure 10. Applications of digitalisation in the bio-based circular economy........................................ 33                                                                                                                            was funded by the Nordic Council of Ministers for
                                                                                                                                                                           formation of our governments and societies,
Figure 11. The travel cycle. Source: Visit Sweden, 2019..............................................................................38                                    especially by creating a common area for cross-                        Digitalisation (MR-Digital), the Nordic Thematic
Figure 12. Industrial Revolution......................................................................................................................... 39               border digital services in the public sector.                          Group for Innovative and Resilient Regions 2017-
Figure 13. Omstillingsmotor - Project model.................................................................................................41                                 2. Strengthening the competitiveness of our                        2020 and the North Atlantic Cooperation (NORA)
Figure 14. SIA BALTMA - Digitisation process.............................................................................................. 42                              enterprises through digitalisation.                                    and included a baseline study, local workshops
                                                                                                                                                                               3. Enhancing the digital single market in the                      and a webinar series. Its primary focus was the
                                                                                                                                                                           Nordic-Baltic Region.                                                  Nordic countries and Latvia; however, data is also
                                                                                                                                                                                                                                                  provided for Estonia and Lithuania where possible.
                                                                                                                                                                           In fact, the Nordic countries are already at the                            The baseline study explored the nature of
                                                                                                                                                                           forefront of digitalisation in Europe (see Figure 1).                  digital transformation in rural areas and reflected
List of Maps                                                                                                                                                               The Baltic States show a more mixed performance,                       on opportunities and challenges for small and
                                                                                                                                                                           but still score around or above average on the                         medium sized enterprises (SMEs) in rural areas
Map 1. Next Generation Access Household coverage, 2018..................................................................... 14                                             European Commission’s annual measure of digital                        in each of the Nordic countries and in Latvia. The
                                                                                                                                                                           progress, the Digital Economy and Society Index                        study was developed through desk-based research
Map 2. Next Generation Access Rural household coverage, 2018.......................................................... 15
                                                                                                                                                                           (DESI).                                                                conducted by Nordregio and a report prepared
Map 3. Household access to fixed broadband at download speeds >100 Mbps, 2018......................17
                                                                                                                                                                               Despite this positive development overall,                         by Vidzeme Planning Region which detailed the
Map 4. Household access to fixed broadband based on download speed available to >50% of
                                                                                                                                                                           disparities remain with respect to digital deve-                       Latvian context. It provided an overall context for
		     households, 2018..................................................................................................................................... 19
                                                                                                                                                                           lopment within countries; with rural and sparsely                      the digitalisation of SMEs in rural areas including
                                                                                                                                                                           populated areas often lagging behind on the                            sector-specific information on the bioeconomy,

                                                                                                                                                                                        1 Connectivity   2 Human Capital    3 Use of Internet   4 Integration of Digital Technology   5 Digital Public Services

                                                                                                                                                                            80

                                                                                                                                                                            70

                                                                                                                                                                            60

                                                                                                                                                                            50

                                                                                                                                                                            40

                                                                                                                                                                            30

                                                                                                                                                                            20

                                                                                                                                                                            10

                                                                                                                                                                             0
                                                                                                                                                                                 FI   SE NL DK NO UK LU       IE   EE   BE MT ES DE AT EU LT         FR    SI   LV CZ PT HR SK CY HU             IT   PL   EL RO BG

                                                                                                                                                                           Figure 1: Digital Economy and Society Index, 2019.
                                                                                                                                                                           Data source: European Commission, 2019f.

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Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia - Nordic Council of ...
manufacturing and tourism sectors. It also pro-                          The webinar series brought together parti-
vided an overview of the policy context in each of                  cipants from the local workshops to present their                    Workshop location and theme2                                    Regional characteristics3                  Number of
the Nordic countries and independent territories                    perspective to practitioners and policy makers.
                                                                                                                                                                                                                                                    participants
and in Latvia. The baseline study was designed to                   Episodes were presented weekly during March                          Ii Municipality, Finland                                        Northern Ostrobothnia -                              6
inform the local workshops and was circulated to                    2020 and were based on the following topics:                                                                                         predominantly rural
                                                                                                                                         “Digital transformation in rural enterprises”
all participants in advance.                                        ■ Webinar 1: The digital divide
      Local workshops were held in rural locations                  ■ Webinar 2: Digitalisation in the manufacturing                     Trøndelag County, Norway                                        Nord Trøndelag -                                     5
throughout the Nordic-Baltic Region, including the                     industry                                                                                                                          predominantly rural; Sør-
                                                                                                                                         “Digitalisation of rural SMEs”
five Nordic countries, Latvia and the Faroe Islands.1               ■ Webinar 3: The digital revolution in the bio-                                                                                      Trøndelag - intermediate
                                                                                                                                                                                                         region
The workshops were developed and promoted in                           economy
partnership with local stakeholders and aimed to                    ■ Webinar 4: Digitalisation and sustainable                          Ísafjörður, Iceland                                              Westfjords - predominantly                         13
provide an opportunity for local capacity building                     tourism                                                                                                                           rural, remote
                                                                                                                                         “Digitalisation: From threat to opportunity”
and networking as well as a source of data. Each
workshop was organised in partnership with a local                  This Nordregio Report presents the results of                        Vesthimmerland Municipality, Denmark                            Region Nordjylland -                                10
stakeholder and contained several presentations                     these activities. It builds on the original baseline                                                                                 predominantly rural
                                                                                                                                         “Digitalisation of rural SMEs4“
deemed to be of relevance to the audience. This                     study by including practical examples and
                                                                    insights from the local workshops and webinar                        Vingåker Municipality, Sweden                                   Södermanland - intermediate                         10
was followed by a discussion guided by a series of
                                                                                                                                                                                                         region
questions:                                                          series to provide a genuine rural perspective on                     “Meet the challenge of rural farming with
■ How do you currently use digital solutions in                     digital innovation. The report is presented in four                  simple digital tools”
    your company?                                                   sections. The first section provides an introduction
                                                                                                                                         Tórshavn, The Faroe Islands                                     The Faroe Islands -                                  11
■ What opportunities do digital solutions present                   to digitalisation in the Nordic-Baltic rural context.                                                                                predominantly rural, remote
    in your company / sector?                                       It is structured around the two aspects of the                       “Digitalisation: what are the great
■ What are the main challenges for implementing                     urban-rural digital divide: digital infrastructure                   opportunities for Faroese businesses?”
    digital solutions and tools in your company                     and digital knowledge and skills. The section                        Līgatne, Latvia                                                 Vidzeme Region, predominantly                       18
    (e.g. skills, knowledge, access to finance, poor                includes a series of maps illustrating the current                                                                                   rural, remote
                                                                                                                                         “Improving bioeconomy value chains through
    connectivity, regulations, lack of time)?                       situation with respect to broadband connectivity.
                                                                                                                                         digitalisation”
■ What kind of support do you need for increasing                   It also presents a broad introduction into the
    digitisation within your company / industry?                    challenges and opportunities that rural enterprises
                                                                    face in the context of digitalisation. The second                   Table 1: Nordic-Baltic workshop locations, themes and attendance.
The tailored approach in each location resulted in a                section discusses the effect of digitalisation on
unique constellation of stakeholders attening each                  small rural enterprises, shining a spotlight on
event. As such, we are cautious in our interpreta-                  three sectors deemed to be particularly relevant
tion of the data and have avoided making cross-                     in the rural context: bioeconomy, sustainable
country comparisons or drawing strong overall                       tourism and manufacturing. The third section
conclusions about digitalisation practice in each                   addresses the support structures that are
region. Instead the workshop data provides a                        expected to facilitate the digital transition
rich series of practical examples and personal                      for rural enterprises. It presents the ideas for
experiences from Nordic-Baltic rural areas that                     support raised by workshop participants before
illustrate (and at times challenge) the findings of                 describing the support structures available in
the desk-based research. This provides a strong                     each country and independent territory. The
basis for future research and is an important first                 fourth and final section provides the overall
step in highlighting the need to include rural areas                conclusions from the project, along with advice
in the conversation about digital innovation. The                   for policy makers about how to best support
locations, themes and participant numbers from                      rural and sparsely populated areas to make the
the workshops are shown in Table 1.                                 most of the opportunities digitalisation offers.

                                                                                                                                    2
                                                                                                                                      The workshop titles listed here are translations. All workshops were promoted in the local language. With the exception of Iceland
                                                                                                                                    and Latvia, the quotes provided throughout the report are also translations as the workshops were held in the local languages. In
                                                                                                                                    Latvia the workshop event was held using a combination of Latvian and English, with simultaneous translation provided for both
1
  The workshop in the Faroe Islands was made possible through additional funding from NORA (Nordic Atlantic Cooperation). This      languages.
funding was also intended to allow for a workshop in Greenland but unfortunately this workshop was cancelled due to the outbreak    3 Based on the Eurostat urban-rural typology.
of Covid-19. As such it was not possible to include results from Greenland in this Report. Nordregio hopes that this workshop may   4
                                                                                                                                      Due to limited registrations, study visits to three local companies were conducted in place of the workshop. The same questions
still be conducted at some point in the future.                                                                                     were addressed in the study visit in the form of an informal interview.

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2. Digitalisation in the                                                                                             Box 1. Understanding digital
                                                                                                                     infrastructure – how fast is
                                                                                                                                                                      DOCSIS 3.0, VDSL (Very high-speed Digital
                                                                                                                                                                      Subscriber Line) and other types of fast

   Nordic-Baltic rural context                                                                                       fast?
                                                                                                                     The European Commission defines three cat-
                                                                                                                                                                      broadband (at least 30 Mbps download)
                                                                                                                                                                      (European Commission, 2015). The aim was
                                                                                                                                                                      that all Europeans should have access to
                                                                                                                     egories of download speed (European Court        30 Mbps by 2020, however it is unlikely that
                                                                                                                     of Auditors, 2018):                              this target will be reached (European Court
                                                                                                                     ■ Basic broadband - speeds between               of Auditors, 2018). In the Nordic countries,
                                                                                                                        144 Kbit/s and 30 Mbps;                       governments are increasingly striving for
Digitalisation holds considerable potential for          countries is unequal; with rural and sparsely               ■ Fast broadband - speeds between                100 Mbps coverage for all households and
rural areas. It allows us to overcome the challenges     populated areas often lagging behind with                      30 Mbps and 100 Mbps;                         businesses (see Box 2).
associated with geographical distance, ensuring          respect to the availability of digital infrastructure       ■ Ultra-fast broadband - speeds above                 But what does all this mean from a
equal opportunities regardless of where people           and the adoption of digital technologies. These                100 Mbps                                      practical perspective? Think of an internet
live (Gillespie et al., 1994). This includes new modes   urban/rural disparities are often referred to as                                                             connection as being like a pipe. Just as the
of service provision through the emergence of            the digital divide and are caused by shortcomings           The upper limit of the connection speed          diameter of the pipe determines how much
                                                                                                                     is generally determined by the type of           liquid can pass through at any given
eHealth, distance learning and eGovernment               with respect to supply (e.g. infrastructure) and
                                                                                                                     infrastructure used (see Figure 2). Fixed-line   moment, the speed of the internet
solutions. It also relates to new ways of organising     demand (e.g. lack of knowledge or skills to unlock
                                                                                                                     infrastructure delivers the highest speeds (up   infrastructure determines how much data
work, for example, new business models that allow        the opportunities associated with digitalisation)
                                                                                                                     to 2.5 Gbps/1.2 Gbps (down/up) in the best       can pass through in any given second. More
a single entrepreneur to start a business with           (Labrianidis & Kalogeressis, 2006). This section will       case (fibre to the premises)) and wireless       complex activities require more data and
limited capital, opportunities for self-employment       address both sides of the digital divide, beginning         links deliver the lowest speeds (up to 60        thus a faster connection. For example,
through the platform economy (e.g. renting               with digital infrastructure before moving on to             Mbps/10 Mbps (down/up) for terrestrial           activities like general browsing of the
out rooms though Airbnb), and remote working             discuss digital knowledge and skills.                       wireless and 20 Mbps/8 Mbps (down/               internet or checking emails only require
arrangements (OECD, 2017; Vironen & Kah, 2019).                                                                      up) for satellite technology) (European          about 1 Mbps, while a high-definition video
Together, these developments are expected to             2.1 The digital divide: Infrastructure                      Court of Auditors, 2018, p. 11). Within the      conference call requires at least 6 Mbps
play a role in addressing many of the challenges         Access to modern digital infrastructure and                 European Union, Next Generation Access           (Federal Communications Commission,
rural areas face, including population ageing,           the services it facilitates is crucial for rural            (NGA) is a commonly used indicator of            2020). If multiple people are using the same
out-migration of young people, skills shortages,         communities. This infrastructure is the foundation          progress and is defined as including the         connection at the same time, the capacity of
                                                                                                                     following technologies: FTTH (Fibre to the       the infrastructure is divided across the users
accessibility challenges, and lack of labour-market      for competitiveness, attractiveness, innovation,
                                                                                                                     Home), FTTB (Fibre to the Building), Cable       (Woodall, 2018).
diversity (Interreg Europe, 2019a; Roberts et al.,       and    economic     growth    (Interreg     Europe,
2017; Vironen & Kah, 2019).                              2019a). At the national level, the Nordic-Baltic
     Nordic rural communities are well placed to         countries mostly perform well on measures of
realise these potentials, as the region is generally     digital connectivity. Taking, for example, Next
considered to be at the forefront of digitalisation      Generation Access (NGA) coverage, which is
in a European and even global context (Alm et al,        generally considered fast broadband (see Box 1),
2016; Chakravorti & Chaturvedi, 2017; European           almost all countries had coverage that is better
Commission, 2019c; 2019d). The Baltic States             or equivalent to the EU average in 2019 (83%).
show a more mixed performance, with Estonia              Iceland (97%), Denmark (95%) and Latvia (93%)
generally considered a frontrunner – particularly        have the highest percentage of overall household
in the context of eGovernance (European                  access followed by Sweden (86%), Norway (84%)
Commission, 2019c; 2019d) – and Lithuania and            and Estonia (84%). Finland (75%) and Lithuania
Latvia performing around the European average            (63%) are the only Nordic-Baltic countries in which
(European Commission, 2019b). Despite this               NGA coverage levels are below the EU average
positive picture overall, digital development within     (European Commission, 2019f).

                                                                                                                   Figure 2: Broadband network segments.
                                                                                                                   Source: European Court of Auditors, 2018.

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All households        Rural households

                                                                                                                         Malta
                                                                                                                  Netherlands
                                                                                                                       Iceland
                                                                                                                 Luxembourg
                                                                                                              United Kingdom
                                                                                                                      Belgium
                                                                                                                       Ireland
                                                                                                                     Portugal
                                                                                                                         Latvia
                                                                                                                        France
                                                                                                                       Greece
                                                                                                                    Germany
                                                                                                                       Estonia
                                                                                                                      Slovakia
                                                                                                                     Hungary
                                                                                                                    Denmark
                                                                                                                        Cyprus
                                                                                                                     Slovenia
                                                                                                                      Czechia
                                                                                                              European Union
                                                                                                                       Austria
                                                                                                                      Norway
                                                                                                                    Lithuania
Photo: Andreas Dress / unsplash.com                                                                                  Romania
                                                                                                                       Poland
                                                                                                                         Spain
A regional perspective on broadband coverage                The maps that follow show the same two                        Italy
The infrastructure accessibility figures cited above   indicators from a regional perspective. Map 1                   Croatia
go someway to explaining the Nordic countries'         shows NGA household coverage for all households                Bulgaria
reputation as digital frontrunners. It is important    at the NUTS 3 level for the Nordic-Baltic Region.              Sweden
to note however that these figures are based on        Map 2 shows the same indicator but includes                     Finland
coverage for the population as a whole and, as         only rural households. Here, rural households are
such, hide the urban-rural divide. Once urban-rural    defined as ‘households in square kilometres with a                         0    10      20      30       40      50     60       70    80   90   100
differences are taken into account, we see that the    population of less than one hundred’ (Point Topic,                                                       % of households
Nordic countries actually perform fairly poorly in     2013, p. 17). This means that the map showing
a European context. Using the same measure of          rural household coverage only includes households
NGA coverage (as a % of households) in 2018, for       in areas with a density of less than one hundred      Figure 3: Next Generation Access broadband coverage in 2018 (as a % of households).
example, Finland and Sweden were the European          houses per square kilometre. In some regions this     Data source: European Commission.
countries where the gap in access between rural        is a very small proportion of households (e.g. Byen
and urban households was the largest (see Figure       København, Denmark = 0.1%), while in others it
3). Lithuania and Norway also performed below          includes a substantial proportion of households
the European average on this indicator. Iceland        (e.g. Utenos apskritis, Lithuania = 62.4%). This
and Latvia stand out as regional frontrunners          is quite different to the approach that is often
in this regard, both with high levels of coverage      taken to urban rural comparisons, which involves
overall and relatively small gaps between urban        classifying a whole region or municipality as
and rural households.                                  “urban”, “rural” or “intermediate” (see for example
                                                       Grunfelder et al., 2020).

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Map 1: Next Generation Access Household coverage, 2018.          Map 2: Next Generation Access Rural household coverage, 2018.

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Considered together, Map 1 and Map 2 provide
a clear demonstration of the digital divide from         Box 2. National broadband
the infrastructure perspective. Map 1 shows NGA
                                                         targets in the Nordic-Baltic
coverage for all households and presents a regional
picture largely consistent with the national             countries
averages. Over 75% of households have access to          Denmark: 100 Mbps download and 30 Mbps
NGA coverage in most regions for most countries,         upload accessible to all households and
with the exception of Finland and Lithuania              businesses by 2020 (Agency for Digitisation,
                                                         2016).
where overall household coverage is below 75% in
                                                         Finland: 100 Mbps providing 100 % coverage
several regions. Map 2 shows the same indicator
                                                         by 2025 (The Ministry for Transport and
but only includes rural households and reveals a
                                                         Communications of Finland, 2018).
picture that is in stark contrast to the national        Iceland: 99,9 % coverage of 100 Mbps for
averages. In most of Finland and Lithuania, as           households and businesses by 2023 (Icelandic
well as many regions in Sweden, less than 35% of         Parliament, 2019).
rural households have access to NGA coverage.            Norway: 90 % accessibility by 2020, with
Norway performs somewhat better, with NGA                access to at least 100 Mbps (The Norwegian
access for 35-65% of rural households in most            Ministry of Local Government and
regions. Perhaps unsurprisingly, the countries with      Modernisation, 2016)
the highest level of connectivity overall – Iceland,     Sweden: 100 Mbps covering 95 % of
Latvia and Denmark – are also the countries with         households and businesses by 2020 and
                                                         a completely connected Sweden by 2025
the smallest urban-rural divides.
                                                         (The Swedish Ministry of Enterprise and
                                                         Innovation, 2017).
A municipal perspective on broadband coverage
                                                         Latvia & Lithuania: 50 % coverage of
The urban-rural disparities described above can          100 Mbps by 2020 and 100 % coverage
largely be explained by the market driven nature         of at least 30 Mbps by 2020 (European
of broadband development. Long distances                 Commission, 2019b).
and low population density mean that, in                 Estonia: 60% coverage of 100 Mbps &
many rural and sparsely populated areas, the             100% coverage of 30 Mbps by 2020 (The
demand is insufficient to recoup the cost of the         Estonian Ministry of Economic Affairs and
infrastructure investment and thus broadband             Communications).
providers struggle to make a business case for
rural expansion (Houzet, 2007; OECD, 2017).
The ‘last mile’ of coverage is generally the most      several municipalities where coverage drops
challenging (see Box 1), but it often affects those    below 60% of households (Skinnskatteberg, Berg,
remote areas for whom digital access could be          Strömsund, Torsås, Vansbro, Borgholm, Älvdalen,
most transformative.                                   Högsby & Nordanstig). The poorest coverage can
    The implications of this are best revealed by      be found in Finland and parts of Norway. It should
zooming in to the municipal level. Map 3 shows         be noted that in some Norwegian regions, satellite
the significant variation in the percentage of         technology is used, as opposed to fixed broadband.
households with access to a broadband connection       As noted in Box 1, satellite technology is not
of at least 100 Mbps. This speed has been chosen       currently capable of reaching this speed so including
as it is the national target in all Nordic countries   this technology in the map would not affect the
(see Box 2). Unfortunately, municipal level data is    results. In Iceland, the poorest coverage can be
not available for the Baltic States, so the map only   found in the eastern part of the country and in the
shows the Nordic countries.                            Westfjords. Outside of these areas the coverage
    As Map 3 demonstrates, a substantial pro-          is relatively good, with at least 60% of households
portion of households (>75%) have access to 100        having access to minimum download speeds of 100
Mbps in most Danish municipalities. Sweden also        Mbps in many municipalities. It should be noted
has relatively good fixed broadband coverage           that, due to the limited availability of municipal
across most of the country, though there are           level data, figures for Iceland are from 2020.

                                                                                                                Map 3: Household access to fixed broadband at download speeds >100 Mbps, 2018.

nordregio report 2020:4                                                                                  16    nordregio report 2020:4                                                           17
Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia - Nordic Council of ...
Åland has the highest percentage of high-                         broadband with minimum speeds of 30 Mbps,
speed broadband availability among households in                      Map 4 shows the percentage of households who
Finland, with 97% of all households having access                     have access to fixed broadband with minimum
to fixed broadband with a minimum speed of 100                        speeds of 10 Mbps (orange shading).
Mbps. More remote municipalities fare worse, with                          The most striking finding in Map 4 is the small
only 9% of the households in Föglö having access                      but significant portion of households in the Nordic
to 100 Mbps and only 1% at Kökar. In the Faroe                        Region who do not have access to fixed broadband
Islands the majority of the population (92%) have                     coverage with a minimum speed of even 10 Mbps.
access to the internet from home and, even in the                     This suggests that there is substantial work to
outlying islands, the connection is generally good                    be done if the Nordic countries are to reach the
(Ministry of Foreign Affairs, Trade, and Industry                     broadband provision targets set out in Box 2.
and Ministry of Finance, 2018). In Greenland, 83%                     With the exception of Samsø (Denmark, 82%),
of the population have access to the internet from                    these municipalities are all in Finland and Norway.
home (Epinion, 2018).5                                                In Norway, the most problematic regions appear
    It is important to acknowledge that fixed line                    to be Trøndelag (an intermediate region), and
broadband of at least 100 Mbps is an ambitious                        the predominantly rural regions of Hedmark
measure and that larger proportions of the                            and Oppland6 and Møre og Romsdal. In Finland,
population in each municipality have access to                        municipalities with comparatively poor levels of
some form of internet. To explore this, Map 4                         coverage are scattered around the country.
integrates speeds of 30 Mbps (for municipalities                           We compared the figures for “all technologies”
where less than 50% of the population has                             in the Norwegian context to allow for the possibility
access to speeds of 100 Mbps) and 10 Mbps                             that coverage in these municipalities improves
(for municipalities where less than 50% of the                        substantially once satellite technology is taken
population has access to speeds of 30 Mbps).                          into account. Using this method, there remains 86
    Map 4 shows different speeds for municipalities                   municipalities where less than 50% of households
based on the coverage accessible to the majority                      have access to minimum speeds of 30 Mbps.
of households (>50%). In municipalities where over                    However, in all but one of these municipalities
50% of households have access to fixed broadband                      100% of the population has access to 10 Mbps.7
with minimum speeds of 100 Mbps (blue shading),                       Notably, these figures are similar even once
Map 4 presents much the same picture as Map 3. In                     satellite technology is removed from consideration,
municipalities where less than 50% of households                      suggesting that the majority of these households
have access to fixed broadband with minimum                           access these speeds using mobile technology. In
speeds of 100 Mbps, Map 4 instead shows the                           Finland, mobile coverage is comparable to that
percentage of households who have access to                           provided in Norway, with almost all households
fixed broadband with minimum speeds of 30 Mbps                        having access to 4G (European Commission,
(green shading). Finally, for municipalities where                    2019a), suggesting that a similar result may be
less than 50% of households have access to fixed                      obtained for Finland if the data was available.

5
  Neither Greenland nor the Faroe Islands are included on the map due to difficulties in obtaining municipal level data.
6 Due to a regional reform which took effect on 1st January 2020, the regions of Hedmark and Oppland are now one region: Innlandet.      Map 4: Household access to fixed broadband based on download speed available to >50% of
7
  The only exception was Masfjorden where 99% of the population have access to minimum speeds of 10 Mbps.                                households, 2018.

nordregio report 2020:4                                                                                                           18   nordregio report 2020:4                                                                     19
rural areas in recent years. While 63% of houses        Applications are evaluated on the basis of the
                                                Urban        Intermediate           Rural                                                   and companies in rural municipalities had access        following criteria: 1) Areas with no basic need; 2)
                                                                                                                                            to a fast connection in 2015, 81% had access in         Areas with basic need, but without the need for
  100                                                                                                                                       2018 (Energistyrelsen, 2018). This is compared          a high-capacity broadband; 3) Cost-efficient
   90                                                                                                                                       with 91% at the national level (Energistyrelsen,        network development; 4) Local co-funding; 5) Plan
   80                                                                                                                                       2018). Generally speaking, the companies we             for sustainable operation after development, and
                                                                                                                                            visited in Denmark did not consider connectivity        6) Significance for local community development
   70
                                                                                                                                            a problem. One exception was companies which            and value creation (Oslo Economics et al, 2017).
   60                                                                                                                                       produce machinery for farms that are reliant on         The total annual grants may differ and was in
   50                                                                                                                                       access to store data in a cloud solution. Here, poor    2019 close to 250 MNOK following the increase of
   40                                                                                                                                       connectivity was raised as an issue.                    50 MNOK in the revised national budget in May
   30                                                                                                                                            In Finland, state funded, targeted support         2019 (Norwegian Communications Authority,
                                                                                                                                            mechanisms aim to support rural municipalities to       2019). The upper limit of state aid for broadband
   20
                                                                                                                                            implement the optical fibre network. Through this       development purposes are set in concordance
   10                                                                                                                                       funding, the Municipality of Ii has implemented an      with the GBER (general block regulations) set out
    0                                                                                                                                       optical fibre network to secure broadband access        by the European Commission and applies to the
                        10 Mbps                                  30 Mbps                                 100 Mbps                           across the town, including in remote localities. Just   Norwegian case through the European Economic
                                                                                                                                            because such a network exists however, does not         Area and the EFTA Surveillance Authority
Figure 4: Average municipal household coverage of fixed broadband by speed and municipality type for                                        guarantee its use, and, according to participants in    (The Norwegian Ministry of Transport and
Denmark, Finland, Norway and Sweden, 2018.                                                                                                  the Nordic-Baltic workshop, uptake has been slow,       Communication, 2019).
Data source: National Public Telecom Agencies.                                                                                              particularly among older residents. Participants             In Sweden, broadband development is largely
                                                                                                                                            also mentioned challenges for businesses when it        characterised by a bottom-up approach with
                                                                                                                                            comes to the reliability of the network.                local fibre networks operating in almost 200
     In order to more clearly understand the                           timeframe has now been revised to 2023 (Icelandic
                                                                                                                                                 In Norway, the Norwegian Communications            municipalities and accounting for 60% of the
distribution of speeds between urban and rural                         Parliament, 2019). Through the program, local
                                                                                                                                            Authority provides needs-based government               total network (Svenska stadsnätsföreningen,
municipalities, we looked at the average municipal                     governments can apply for state aid from the
                                                                                                                                            grants for the development of high-speed                2014). The Swedish Local Fibre Alliance (Svenska
household coverage by municipality type for                            Telecommunications Fund. Around 5500 house-
                                                                                                                                            broadband. Counties and municipalities are the          stadsnätsföreningen) supports local communities
three speeds: 100, 30, and 10 Mbps (see Figure 4).                     holds and businesses had been connected in 2019,
                                                                                                                                            only ones eligible for funding and must go through      to develop these networks, which are, in
Average household coverage was substantially                           with approximately 1500 buildings in sparsely
                                                                                                                                            a public tendering process. Other public and private    most cases, municipally owned and managed
lower for rural municipalities than either                             populated areas still to be connected in order
                                                                                                                                            actors may participate in the planning processes.       (see Box 3).
intermediate or urban municipalities at all three                      to reach the targets. The project has a strong
speeds. Perhaps unsurprisingly, the largest gaps                       emphasis on cost effectiveness, seeking synergies
were found at the higher speeds. Intermediate                          with other utilities development projects wherever
municipalities fell behind urban regions with
                                                                                                                                                Box 3. Vingåker Municipality                        a reliable, independent assessment of the
                                                                       possible (Government Offices of Iceland, 2019).                                                                              reception that they then use in dialogue with
respect to the two faster speeds, but a comparable                     Connectivity was not raised as issue in the Nordic-                      – One of Sweden’s smartest                          the operators to advocate for a more stable
proportion of households have access to at least                       Baltic workshop held in Iceland.                                         rural areas                                         connection across the municipality.
10 Mbps. This suggests that, regardless of the                             Government policy has also played an                                 Vingåker Municipality is proactively                     Vingåker is among few municipalities
method of classification8, there is substantial                        important role in Denmark. In particular, the                            working towards the goal of access to fibre         in Sweden that have installed a sensor
evidence to support the existence of an urban-                         broadband fund which was a part of the strategy                          for all households and businesses in the            network. This LoRa-WAN network covers
rural divide when it comes to digital infrastructure                   “Growth and development in all of Denmark”                               municipality by 2020. It employs a standard         the whole municipality and enables a vast
in the Nordic Region.                                                                                                                           cost rate, ensuring affordable access to            range of applications using the Internet
                                                                       (2016-2019) (Regeringen, 2015). Though deve-
                                                                                                                                                infrastructure regardless of where in the           of Things. For example, the municipality
                                                                       lopment of digital infrastructure is principally
                                                                                                                                                municipality someone is located. Associations       can monitor the moisture in the soil to
A policy perspective on broadband coverage                             market-driven in Denmark, this state fund sought
                                                                                                                                                that own houses can apply for monetary              ensure that plants are only watered when
The relatively high levels of coverage in Iceland are                  to improve opportunities for development and
                                                                                                                                                compensation to connect to the fibre                necessary. The investment in LoRa-WAN is
largely a result of the Rural Fibre Project (Ísland                    growth for businesses and citizens everywhere                                                                                expected to cut costs and transport needs
                                                                                                                                                without any extra cost. Over 300 persons
ljóstengt), a Government program launched in                           in Denmark with an explicit focus on access in                                                                               both within the public and private sectors.
                                                                                                                                                have participated in workshops about how
2016 which aims to provide ≥100 Mb/s internet to                       rural and sparsely populated areas where the                             to choose operators and to connect to the           Vingåker participates in two regional
99.9% of households and businesses (Government                         telecommunication companies were not planning                            fibre infrastructure. WiFi-zones in the centre      networks related to digitalisation. The first
Offices of Iceland, 2019). The original goal was                       to expand (Erhvervsministeriet, 2018a). This has                         of Vingåker have also been installed. To            is focused on municipal cooperation on
to provide this coverage by 2020, however the                          significantly improved access to the internet in                         ensure good mobile-phone connectivity, the          digital infrastructure (bredbandssamordnare
                                                                                                                                                municipality measure speeds using devices           nätverk) and the second focused on
                                                                                                                                                attached to the garbage trucks. Through             coordinating digitalisation work across
8
  Figure 3 determines rurality by classifying whole municipalities as urban, intermediate or rural while Map 2 classifies individual
households as rural based on the density of the surrounding area.                                                                               this activity the municipality is able to make      Region Södermanland.

nordregio report 2020:4                                                                                                                20   nordregio report 2020:4                                                                                  21
Alongside these municipally owned networks,        and large-scale producers in the bioeconomy.              2.2 The digital divide: Knowledge and                       United Kingdom, Belgium, Malta and Switzerland,
there are also over 1 000 associations representing    Availability of Internet of things applications that          skills                                                  people in cities were significantly more likely to
community owned networks. In these cases, a            are suitable for small-scale application is vital to      Alongside the infrastructure shortcomings                   report having at least basic digital skills than
lack of interest from both the market and the          ensuring the benefits of digitalisation are shared        described above, rural and sparsely populated               people in rural areas or in towns and suburbs.
state has resulted in communities installing           equally between large-scale and capital-intensive         areas also experience barriers when it comes to             This relationship was evident across countries
their own broadband infrastructure, either by          agriculture and small-scale farms (The Swedish            the knowledge and skills required to unlock the             regardless of the overall level of digital skill.
investing their own funds, seeking grant funding,      Board of Agriculture, 2017).                              opportunities associated with digitalisation (ENRD,         Perhaps unsurprisingly, the largest gaps among
or a combination of the two. These associations             A final consideration with respect to                2017; Labrianidis & Kalogeressis, 2006). Digital            the Nordic-Baltic countries were evident in Finland
can get support from the Village Internet Forum        connectivity is that not all internet access is from      competence is often found to be concentrated in             and Lithuania, the countries found to have the
(Byanätsforum), a national network consisting of       a fixed line. In fact, mobile access is increasingly as   the capital regions and other larger urban areas            poorest infrastructure coverage in the previous
over 400 community owned internet associations.        important as household coverage and accelerating          (Danmarks Erhvervsfremmebestyrelse, 2019).                  section. The smallest gap among the Nordic-Baltic
    The Swedish case is often used to illustrate       the deployment of fifth-generation mobile                      Figure 5 is based on regional data collected           countries was found in Sweden. The remainder of
how the challenge of broadband expansion to            systems (5G) in the Nordic countries is among             as part of the European Commission’s Digital                this section will consider the implications of this
rural areas can be addressed through grass-            the prioritised items on the Nordic Cooperation           Economy and Society Index and shows the                     dimension of the digital divide in the context of
roots action. While the work happening in              agenda. The Letter of Intent from the Nordic              percentage of people aged 16-74 years with basic            small rural enterprises in the Nordic-Baltic Region,
these communities is of course impressive, it is       Prime Ministers on development of 5G in the               or above basic digital skills, based on where they          using the notion of “digital capital” to frame the
important that the existence of such networks          Nordic Region promotes the deployment of 5G               live. With the exceptions of Luxembourg, the                discussion (see Box 4).
does not shift the focus from the responsibility       technology in several sectors, including transport
of the state to provide an equal level of service      and energy, environment, agriculture and
and infrastructure to all residents, regardless        aquaculture. 5G is expected to provide considerably
of where they live. Not all communities have the       higher speeds than 4G, and has a theoretical
resources and capacity to develop such networks        maximum capacity for download speeds of up
or make such investment, yet all have a right to be    to 10 Gbps (European 5G Observatory, n.d.).
connected. This is particularly relevant to farmers,   Thus, 5G deployment has the potential to enable
foresters and companies alike who may want to          the development of new industries and services
use sensor networks or cloud services. A study by      beyond communications and provide better and
the Swedish Board of Agriculture (2017) found          faster connections for rural areas. At the same
that unequal access to financing for new digital       time, a lack of critical mass and high costs of a
solutions has the potential to further exacerbate      5G system may limit its deployment to rural areas,
the unbalanced power relations between small           further widening the digital divide.

Photo: Nicholas Doherty / unsplash.com

                                                                                                                 Figure 5: People with basic or above basic digital skills, 2017.
                                                                                                                 Source: Eurostat.

nordregio report 2020:4                                                                                    22    nordregio report 2020:4                                                                                      23
more than 250 employees (The Norwegian
  Box 4. What is digital capital?                    Ministry of Local Government and Modernisation,                                                               SMEs        Large enterprises

  One way of understanding digital knowledge         2019; Statistics Norway, 2020). Ensuring
  and skills is through the concept of digital       that these enterprises have the capacity to                                             Exploit B2C eCommerce
  capital (Ragnedda, 2018). Digital capital is       embrace digitalisation is vital to ensuring the
                                                                                                                         Buy medium‐high cloud‐computing services
  defined by Ragnedda (2018) as ‘the accumu-         continued competitiveness of the Nordic-Baltic
  lation of digital competencies (information,       Region in European and global markets.                     Sending eInvoices suitable for automated processing
  communication, safety, content-creation,                According to the Digital Economy and Society
  and problem solving), and technology’              Index (European Commission, 2019f), SMEs fall                             Selling online (at least 1% of turnover)
  (p. 2367).
                                                     behind large companies on all key indicators used                               Pay to advertise on the internet
       Digital capital is a useful concept, as it
                                                     to track digital performance (see Figure 6). Several
  infers the potential for exponential growth.                                                                >20% of workers with portable devices for business use
                                                     explanations for this have been suggested in the
  As with other types of capital (e.g. social,
  cultural, political), the more a person or         literature, including: lack of knowledge about
                                                                                                                  Fastest broadband connection is at least 30 mbit/s
  group has, the more likely they are to have        digital opportunities and their benefits, low level
  opportunities to accumulate more (Putnam,          of ICT skills, limited ability to adapt to rapidly         >50% of persons employed use computers & internet
  2000). Put another way, those with higher          developing technologies and know-how, limited
                                                                                                               Website has reference to the enterprise's social media…
  levels of digital capital to begin with are more   access to capital and finance, lack of appropriately
  likely to interact with digital tools in a way     tailored support structures, lack of engagement                    Website has some interactive functionalities
  that further increases their digital capital.      with support structures and limited capacity to
  Thus, investments in digital capital develop-                                                                                          Access to ICT specialist skills
                                                     employ ICT specialists or professionals to direct
  ment may have benefits that go well beyond         digital strategy or drive organisational change                      Enterprises having a website or homepage
  the initial support provided. To take a simple
                                                     (European Commission, 2018, 2017d; European
  example, a municipality may engage with                                                                                                                                  0    10     20    30     40   50    60     70   80   90   100
                                                     Investment Bank, 2019; OECD, 2017; Interreg
  elderly residents for the purposes of teaching
                                                     Europe, 2018).                                                                                                                                % of enterprises
  them to use eGovernment services. The skills
  acquired may in turn enable further digital             Although these findings are not specific to
  interactions (e.g. skype with grandchildren),      rural areas, the tendency for digital competence to
                                                                                                             Figure 6: Key indicators tracking digital progress, EU, 2018 (% enterprises).
  providing an additional boost to the person’s      be concentrated in urban areas may result in SMEs       Data source: European Commission.
  digital skills as well as generating other indi-   in rural areas experiencing a double digital divide.
  rect benefits (e.g. decreasing social isolation)   Challenges that have been highlighted in the
  (Forsman & Nordmyr, 2017).                         literature as particularly relevant to SMEs in rural
                                                     areas include: lack of access to information about
                                                     support instruments and funding possibilities,
                                                     brain drain, and insufficient innovation potential
Digital capital and small and medium sized           of SMEs (Interreg Europe, 2018).
enterprises                                               Several tools have been developed that aim
In 2017, about 93% of all EU enterprises were        to support SMEs to engage successfully with
micro-enterprises with less than 10 employees and    digitalisation. Figure 7, for example, provides
5.8% were small enterprises with 10-49 employees     a useful framework for assessing a company’s
(European Commission, 2017a; Tillväxtverket,         digital maturity. It contains six levels, ranging
2018). In Sweden, the corresponding figure           from no digital engagement to a situation where
was 94.7% and 4.4% respectively (European            technology transforms the entire business model.
Commission, 2017a), while in Denmark micro           According to research by the Latvian IT cluster,
enterprises accounted for 88.7% and small            approximately half of Latvian SMEs sit at level 2
enterprises for 9.2% (European Commission,           on the pyramid (Irmeja, 2020). The next largest
2017b). Over 99% of all enterprises in Norway are    groups are at level 3 (25%), followed by level 0
considered small and medium sized enterprises        (15%) and level 1 (10%). Only 5% of Latvian SMEs
(SMEs), with only 0.1% of all enterprises having     can be considered digitally transformed based on
                                                     this model (Irmeja, 2020).

                                                                                                            Figure 7: Pyramid of digital maturity.
                                                                                                            Source: Irmeja, 2020

nordregio report 2020:4                                                                               24    nordregio report 2020:4                                                                                                        25
A similar model has been developed by             A key distinction between the complexity levels is       These models demonstrate that, much like            capacity for digital innovation in rural areas. This
REG LAB, in this case using the staircase as a        the degree to which the business is transformed      other forms of capital, the accumulation of             includes building the digital capital of individuals
metaphor (see Figure 8). This model is based on       through the implementation of digital tools.         digital capital is a gradual process. A business        but can also be achieved by building digital capital
research with Danish SMEs who have successfully       The steps within the low complexity group            may need to spend some time working at the              in companies, organisations and even at a whole-
undertaken a digital transformation process           mostly involve the implementation of digital         lower levels to generate the capital necessary          of-community level (see Box 5).
and aims to provide a deeper and more nuanced         tools within the constructs of existing work         to make the next step in their digital journey.             For companies who took part in the Nordic-
understanding of the key steps and drivers            practices while the steps in the high complexity     Further, companies may return to the lower levels       Baltic workshops, a lack of knowledge about
along the digital journey (REG LAB, 2018).            group are more likely to require or enable           with a new perspective further down the track           digitalisation was a common challenge (see Figure
Here the steps are grouped into high and low          some form of organisational transformation           (REG LAB, 2018). Such models can be useful for          9). Participants discussed feeling confused about
categories based on the level of complexity.          (REG LAB, 2018).                                     companies who are not sure where to start and           which solutions were best suited to their company,
                                                                                                           may also help authorities to determine the level at     as well as uncertainty about how to get the best
                                                                                                           which to pitch capacity building activities (Irmeja,    out of the solutions they already had access to.
                                                                                                           2020). Although neither model is specific to rural      Interestingly, some participants also spoke about
                                                                                                           areas, the notion of a step-by-step approach is         a lack of knowledge in a much more fundamental
                                                                                                           quite relevant, as small rural enterprises may have     way, struggling to relate to what this concept
                                                                                                           limited time and financial capital to invest in rapid   of digitalisation actually means in the context
                                                                                                           digital development.                                    of their company. Others talked about a need
                                                                                                                                                                   to change the mindsets of others as a first step
                                                                                                           Digital capital in Nordic-Baltic rural areas            to truly embracing digitalisation. For example,
                                                                                                           The example of digital capital accumulation             the perception that a digital meeting is a (less-
                                                                                                           given in Box 4 is, in many ways, indicative of the      favourable) substitute for a physical meeting
                                                                                                           discourse surrounding digitalisation in rural           rather than a genuine communication tool in its
                                                                                                           areas. Throughout the Nordic-Baltic Region,             own right (see Box 6).
                                                                                                           rural populations are experiencing considerable
                                                                                                           challenges with respect to both the outmigration
                                                                                                           of young people and population ageing (Kull et
                                                                                                                                                                          I think when you say
                                                                                                           al, 2020; Stjernberg, 2020). In this context, rural
                                                                                                           communities are often positioned as receivers
                                                                                                                                                                         digital, you often think
                                                                                                           of technological solutions designed to improve          about a smartphone, and then
                                                                                                           access to services for citizens while at the same       some people might think, then
                                                                                                           time resulting in increased efficiency for providers    digitalisation is not for me. But
                                                                                                           (Johnsen et al., 2018; Mergel, Edelmann & Haug,         digitalisation is much more
                                                                                                           2019). Where capacity building comes into focus,        than that: it is about optimizing
                                                                                                           it is generally in the context of programs designed
                                                                                                                                                                   production. And that is something
                                                                                                           for those whose skills are most limited (e.g. the
                                                                                                           elderly, people with limited education), so that
                                                                                                                                                                   everybody wants. So I also
                                                                                                           they can access these digital services (Löfving,        think it is about being better at
                                                                                                           Norlén & Heleniak, 2019).                               articulating what digitalisation
                                                                                                                 Ensuring everybody has the skills required        actually is.
                                                                                                           to access basic digital services is, of course,
                                                                                                           important. Equally important, however, is the           Workshop participant, Vesthimmerland
                                                                                                           need for a broader focus that works to build the        Municipality

Figure 8: Digital transformation and maturity of companies step by step.
Source: REG LAB, 2018 (translated to English by the authors).

nordregio report 2020:4                                                                              26    nordregio report 2020:4                                                                                  27
Box 5. Country #196 (Valsts                            To achieve this goal, the initiative
                                                                                                                  Box 6. Rural actors lead the                       entrepreneurs the chance to spend some
                                                      “Country#196” is engaging with Cēsis city in
    #196, in Latvian)                                 two ways. First, they have worked with the                  way on eLearning and remote                        time working from the unique environment
    In the world today, there are currently 195                                                                                                                      of the Arctic. In this respect, participants
                                                      municipality on their data strategy, setting
    officially registered Nation States. Country
                                                                                                                  working                                            in the Isafjordur workshops discussed the
                                                      up working groups with the view to opening
    #196 is thus a metaphor for the digital state,                                                                The Westfjords (Iceland) covers 22,271 km²         opportunity to “sell” the simpler, cleaner
                                                      up data on the city and using it in new and
    a country to which we all belong. This social                                                                 and has a population of just 6 994, almost         lifestyle of the Westfjords, in a context
                                                      innovative ways.
    movement was founded a year ago and is an                                                                     one third of whom live in Isafjordur, the          where choosing this lifestyle does not
                                                           Second, they are working with local
    initiative from international data technology                                                                 region’s largest town (Statistics Iceland,         necessarily mean being shut off from the
                                                      business and society to improve their
    company “Squalio”. The initiative brings                                                                      2018). The remainder of the population is          world or turning ones back on outside
                                                      capacity to work with digital tools and data
    together researchers, national and local                                                                      dispersed in a number of very small towns          opportunities. The Westfjords Development
                                                      management. This work began with a large
    government representatives, entrepreneurs                                                                     and the region is characterised by limited         Centre has staff located all over the region
                                                      conference about digital awareness which
    and opinion leaders to develop knowledge                                                                      accessiblity, particularly during the winter       meaning that digital meetings between
                                                      raised questions like: What is data? What is
    and tools that can be put into practice                                                                       months. As a result, the people of the             staff are commonplace. The team have
                                                      digital identity? How can I survive and know
    so that change can take place now. The                                                                        Westfjords are no strangers to eLearning           developed several strategies to ensure
                                                      this digital world? How can I benefit from
    Latvian IT cluster actively participates                                                                      and remote working.                                the effectiveness of online collaboration
                                                      this? Following on from this, they held a
    in and supports this movement with its                                                                             In fact, distance learning first started in   and make sure that those outside of the
                                                      series of workshops and meet-ups with local
    knowledge, experience and resources. Cēsis,                                                                   the Westfjords in 1998 when a trial program        main office in Isafjordur feel included. For
                                                      entrepreneurs about how they can make the
    which is home to just 18,300 people, was                                                                      for training nurses was introduced by the          example, if one meeting participant needs
                                                      most of digital tools within their business.
    the first place in Latvia to get involved in                                                                  University of Akureyri (Peer Review Group,         to join via digital means, everyone joins
                                                           Finally, Riga Technical University is
    the movement “Country#196” as pilot city.                                                                     2001). Today, communications technology            individually via their computers – even if
                                                      running the first vocational education course
    Through the movement, Cēsis Municipality                                                                      is used in the region in a range of ways.          they are sitting in the same building. This
                                                      on data analytics for beginners in Cēsis.
    hopes to discover ways in which technology                                                                    One third of the students in Isafjordur’s          helps to even out the power dynamic and
                                                      The intention was to start with one group
    can be used to develop a sustainable city.                                                                    secondary school are distance learners             avoids marginalising the person who is not
                                                      of 14 students, however, after receiving
    While this “smart city” concept is by no                                                                      from around the country and the Center for         physically present.
                                                      135 applications, the program received
    means new, it does looks quite different in a                                                                 Lifelong Learning offers online courses in              The diverse ways in which the
                                                      additional funding from the city and instead
    rural context. Here, sustainability goals are                                                                 Icelandic for immigrants as well as working        communities of the Westfjords are using
                                                      started with two groups (28 students). The
    primarily related to addressing outmigration,                                                                 to increase digital competence among the           information and communications technology
                                                      ambition is that, within 2 years, 1% of Cēsis
    particularly among young people.                                                                              population. The University of the Westfjords       highlights the need for a critical perspective
                                                      residents will have undertaken this course.
         The idea is that, by increasing digital                                                                  offers on-campus master programs (in               when discussing the knowledge and skills
                                                      The overarching idea is that, in this data
    literacy, people can have the opportunity to                                                                  cooperation with the University of Akureyri)       dimension of the digital divide. While there
                                                      driven world, understanding data flows can
    stay in rural areas while at the same time                                                                    as well as eLearning. The online courses           may be an overall tendency for people in
                                                      be a powerful tool to support citizens of
    taking advantage of global opportunities and                                                                  benefit local students but can also be             rural areas to have lower levels of digital
                                                      “Country #196” to identify new opportunities
    markets.                                                                                                      attractive to international students who           competence than those in urban areas, the
                                                      in their businesses, organisations and society
                                                                                                                  might come to the Westfjords for only some         very experience of remoteness may also
                                                      (Irmeja, 2020).
                                                                                                                  parts of their course. Here, digitalisation has    necessitate digital skill development. Here,
                                                                                                                  the potential to be a driver of population         the concept of “digital skills” is less about the
                                                                                                                  growth by both supporting young people             technology itself, and instead relates more
                                                                                                                  to stay in the region and attracting new-          to the ability to derive value from online
                                                                                                                  comers.                                            interactions that is equivalent to that which
     Importantly, there was no evidence of a          not always well suited to the specific needs of
                                                                                                                       Actors in the Westfjords are also             can be achieved face-to-face.
lack of curiosity or competence as a barrier          enterprises. In the Latvian workshop, lack of trust
                                                                                                                  challenging traditional models of work.                 According to participants in the
to engagement with digitalisation. Instead,           also appeared to be a substantial barrier when                                                                 Isafjordur workshop, the limited value
                                                                                                                  The Blue Bank, offers accommodation
limited time and lack of financial resources were     considering a new investment. Opportunities to              and access to a coworking space to people          attributed to these skills outside of rural
emphasised as the main barriers. When it came         participate in the provision of public services is one      from all around the world. It describes itself     areas means that they are currently most
to time, participants clearly appreciated the long-   avenue through which to support the long-term               as “ a community of ideas, at the service          useful in connecting actors within the
term efficiency benefits of digital technologies      sustainability and financial security SMEs need             of the village and the world” (Blue Bank           region. Participants suggested that a fairly
but were often simply too busy to invest in their     to prioritise investments in digital development.           CoWorking, 2020). The centre is part of            dramatic mind-set shift is required if digital
initial adoption. From a financial perspective,       This requires more equitable access to public               Arctic Digital Nomads, a project funded by         tools are to have the same degree of success
investments in technology were perceived as           procurement processes which, according to                   the North Atlantic Cooperation that aims           in facilitating urban-rural connections (e.g.
high risk, particularly if there was a long pay-      workshop participants in Norway, tend to favour             to inspire micro-innovation by offering            through “placeless jobs”).
back time. Development of tailored solutions was      larger companies.
found to be expensive and existing solutions were

nordregio report 2020:4                                                                                  28    nordregio report 2020:4                                                                                   29
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