Report: Cloud Services and Export Performance: Evidence and Implications for EU Policy
Swedish companies using cloud services tend to be more international, exporting to a wider range of markets. A new report highlights key benefits for smaller firms in terms of productivity and global expansion, while also stressing the need to reduce trade barriers, particularly between the EU and the USA.
Hannes Berggren, what is the report about and what did you aim to investigate?
This report explores the relationship between Swedish companies use of cloud services and their export activities.
Since exporting companies are often more productive than non-exporters, we investigated whether Swedish companies using cloud services are more productive and whether there is an additional connection—beyond productivity—between cloud service usage and export activities.
What are the key findings?
Our findings indicate that those Swedish companies using cloud services tend to have a greater international focus, for instance that they have a larger volume of exports and export to more markets. Smaller companies in particular gain the most in terms of exports from using cloud services.
Can you give examples of how cloud services help companies boost productivity and expand internationally?
Cloud services enable faster and more flexible software applications, with scalability to manage fluctuations in demand, something which can be especially advantageous for companies attempting to expand into new markets.
Additionally, cloud services offer access to leading technology without requiring significant upfront investments. By reducing fixed IT costs, even small and medium-sized enterprises can quickly scale operations up or down and experiment with new products and features across different markets. I believe this agility will become increasingly important in the AI era!
Did any of the findings surprise you or differ from your expectations?
The results align with previous research showing that companies perceive value in software as cloud services. The fact that Swedish companies’ internationalisation benefits from cloud services—which often represent a form of service import—also corroborates earlier analyses from the National Board of Trade Sweden.
The findings from this report provide a concrete example of how imports can benefit a country by helping its companies become more productive and internationalised.
What concrete recommendations do you offer based on the results of the report?
Given that cloud services appear crucial for productive and internationalised European companies, particularly smaller ones, access to such services should not be unnecessarily obstructed by legislation. Therefore EU policy should focus on reducing friction in digital trade, especially with the US, to enable companies to continue using cloud services.
Reducing trade friction can enhance competitiveness, and in this regard, a priority for the EU should be to facilitate access to cloud services by easing barriers in digital trade with the US. Additionally, improved access to data for European companies can strengthen the export advantages of using cloud services. Digital and trade policies should also be designed with small businesses in mind.
What are the issues with digital trade between the EU and the US, and what can be done to reduce this friction?
The issues between the EU and the USA in digital trade stem from differing approaches to digital legislation. The EU has focused on privacy and personal data protection regulations, whereas the USA has adopted a more market-oriented strategy, complemented by statutes and regulations for law enforcement. These differences have been exacerbated by the cumulative effect of the EU’s unilateral regulation of the digital economy, as noted in a previous report by Kommerskollegium. Another source of friction is the pursuit of European digital sovereignty by certain member states.
The best solution, if I may suggest, would be for the EU and the USA to negotiate a digital free trade agreement. While this is undoubtedly challenging, there are strong economic and security reasons for the EU and the USA to move closer together in digital trade. Whether they succeed will largely depend on the forthcoming EU Commission and the USA administration.