Low PSI price – boosts GDP
Source: The Research Institute of the Finnish Economy - news alert via Ministry of Employment and the Economy, Finland
Lower pricing of geographic information stimulates entrepreneurship
Helsinki: 9 October 2009
The ELINKEINOELÄMÄN TUTKIMUSLAITOS (ETLA) has published a discussion paper on pricing principles and analysis when sharing geographic information. The paper published on the 9th October 2009 is titled: PAIKKATIETOJEN YHTEISKÄYTTÖ JA JAKELUPERIAATTEET – Hinnoitteluperiaatteiden analyysi ja - kansantaloudellisten vaikutusten simulointi (SPATIAL DATA SHARING AND DISTRIBUTION OF PRINCIPLES -- Pricing principles and analysis - People's economic impact simulation) (70 pages). The authors of the report are from the University of Helsinki, Department of Geography and Helsinki School of Economics, Organization and Management.
The report considers the Government of Finland’s pricing strategies with respect to geographic information and undertakes a sensitivity analysis of price changes on the value chain down stream of the public sector information holders and whether this boosts the GDP of Finland. Pages 52 to 65 document the histograms from the simulation.
The English language abstract states:
“Public sector organizations are important producers of the core geographic information (GI). Data sharing is aggravated by e.g. highly varying policies to sharing and pricing the data. For instance, since the governmental data producer sets the price level high, it seems to restrict innovative ways to use data sets especially among small sized companies as well as in research and development activity of their large counterparts. There has been public debate between GI experts regarding pricing policies, although the economic analysis of impacts has almost remained as an untouched area of research yet to be thoroughly studied. This study aims to fill the gap.
We conducted a survey covering leaders of 23 organizations, including both enterprises and public sectors organizations, involved in using geographic information. The respondents described how they generate or utilize geographical data. Their annual statements were also collected from 2001-2005 and anticipated key indicators for the year 2010. Interviews dealt with their definitions of geographical data, benefits and barriers to use the data, income made by creating value out of the data as well as their opinions about the pricing policies. Size of the organization and budgeting policies (incl. ability to use earnings within the organization) seemed to regulate the ideal pricing policy recommended by the organization. The principal component model was able to explain 82 percent of the variation of the variables regarding the recommendations and other features of the organizations.
We also applied input-output analysis in Monte Carlo simulation to anticipate the impact of different pricing policies on the entire Finnish economy. The simulation suggests an increase of 6-12 Million Euros to GDP in five years if pricing policies are fixed at their present mode. Sharing the publicly owned geographic information at the lowest possible price level, could boost the GNP by 16-24 Million Euros. This means approximately a rather modest growth contribution to the GDP, .0021-.0031 percentage points GDP growth on an annual basis. If low pricing stimulates entrepreneurship more vitally, this could mean even more significant multiplier effects on GDP. For boosting the economic growth by wider usage of geographical data, it would be essentially important to apply new innovative ways to use geographical information in new contexts and application areas. This kind of innovative activity could be strengthened by the low price regime.”
Table of Contents
1 Introduction
1.1 Background
1.2 Research Objectives
1.3 Research Methods
2 PSI and spatial data
2.1 spatial data sets representing a large part of the PSI to
2.2. PSI-material production
2.3 PSI-sets the valuation
3. The national spatial data infrastructure and public sector spatial data joint
3.1 "Information is collected only once, and society as favourable to it”
3.2 The national spatial data infrastructure
3.3 The role of national organizations
4 Government spatial data distribution
4.1 Pricing Strategies
4.2 Exchange of spatial data pricing
5 GIS organizations influences
5.1 Description of the interviews
5.2 Pääkomponenttianalyysit
5.2.1 Choice of the method and the suitability of the material
5.2.2 The state and local organizations
5.2.3 Companies
5.3 Qualitative analysis
5.4 economic realities are based on the opinions
6 principles of the Uniform distribution is an obvious need for
7 Forecast Simulation
8 Summary
Sources
Annexes
Annex 1: The National Spatial Strategy 2005-2010 classification of the key spatial data in Finland
Annex 2: The input-output model and the simulation results presented.