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Launching the European Digital City Index

Author: Nesta
Published Date: 21 October 2015

Today Nesta are launching The European Digital City Index (EDCi) - an index which describes how well different European cities support digital entrepreneurship.

It was produced as part of the European Digital Forum, which exists to support digital entrepreneurship and digital startups across Europe.

For startups and scale-ups, the Index provides information about the strengths and weaknesses of local ecosystems, allowing them to plan accordingly and consider where they may need to devote more resources.

For policymakers aiming to encourage digital entrepreneurship in their own city, the Index helps to identify existing and promising hubs of activity in order to learn from their practices. Additionally, it allows benchmarking of performance against other European hubs, and helps identify which policy areas to prioritise.

Comparison with other indices

The European Digital City Index aims to provide a holistic and local view of what matters to digital startups. In Nesta's view, it is the most complete description of what impacts digital entrepreneurs on a local level, and how different digital startup ecosystems compare within Europe.

Other indices exist which touch on this area - such as the Global Entrepreneurship Index (GEDI); the Regional Entrepreneurship and Development (REDI); the Digital Entrepreneurship Monitor (DEM), the Digital Economy and Society Index (DESI); the Atlas of ICT Poles of Excellence (EIPE); the IESE Cities in Motion Index; the Global Innovation Index (GII); the Compass / Startup Genome Global Startup Ecosystem Ranking; the Kauffman Index; the World Economic Forum Networked Readiness Index (NRI); the European Regional Economic Growth Index (E-REGI) and others.

However, many of these do not acknowledge the particular characteristics which apply to digital entrepreneurship - as opposed to other startups, or, indeed, innovation more broadly. Some are focused on outcome measures rather than inputs - that is, they describe numbers of startups or entrepreneurs but not the factors which help create them. Others take an overly coarse-grained view of geography, ignoring the manifest differences which exist between cities. 

Nesta's own CITIE project attempts to understand many of these local differences, providing a tool which supports city leaders in developing policy to catalyse innovation and entrepreneurship. EDCi differs from CITIE, however, by focusing specifically on what matters for digital entrepreneurship - whereas CITIE looks at broader aspects of innovation as well. In addition, EDCi looks at a wide set of environmental factors relating to digital entrepreneurship, including cultural & social aspects - whereas CITIE is focused primarily on the quality of the policy environment.

Geographical Coverage
The Index covers all capital cities in the EU. Additionally, it includes seven non-capital cities in the EU that are important hubs of digital entrepreneurship.

These extra cities were chosen by reference to other indicators of digital activity or entrepreneurship. Nesta hope that future versions of this Index will expand the number of non-capital cities.

The Index is comprised of a number of composite indicators, clustered into ten 'themes'. These themes summarise the environment of a given city, as it relates to digital entrepreneurship.

The themes were chosen by reference to the academic literature on entrepreneurship, through consultation with experts, and through a process of primary research with digital startups - in other words, asking entrepreneurs from across Europe what matters to them. The themes are similar to the OECD's six categories of entrepreneurial determinants, with some additions.

Within the themes Nesta deliberately aimed to include some novel metrics that they felt provided an interesting, but under-utilised, indicator of digital activity.

The total score was calculated using a method which penalises 'weak links' and makes it more difficult for a city to compensate for weak performance on one theme by having a strong performance in others. This results in a ranking which better reflects the richness of an ecosystem, in their view.

Please take a look at the Index and let them know what you think!