Positive Economic Impact of Open Source Software on EU’s ICT Sector


The EU commission recently released an impressive 280+ pp. study on the economic impact of open source software on innovation and the competitiveness of the ICT sector in the EU. The report analyzes, among other things, FLOSS’ market share, and its direct and indirect economic impacts on innovation and growth. It also discusses trends and scenarios and formulates policy recommendations. Some of the findings that I find particularly interesting:

  • Almost two-thirds of FLOSS is written by individuals, while firms contribute about 15% and other institutions 20%. The existing base of FLOSS software represents about 131.000 real person-years of effort.
  • Europe is the leading region as far as the number of globally collaborating FLOSS developers and global project leaders are concerned. Weighted by average income, India is the leading provider of FLOSS developers, followed by China.
  • The existing base of quality FLOSS applications would cost firms almost 12 billion Euros to reproduce internally. The code base has been doubling every 12-24 month. FLOSS potentially saves the industry over 36% in software R&D investment.
  • FLOSS is an important growth factor for the European economy. It encourages the creation of SMEs and jobs and is unlikely to cannibalize proprietary software jobs. The FLOSS-related share of the economic could reach 4% of the European GDP by 2010.
  • Europe’s strength regarding FLOSS are its strong community of active developers, small firms, and secondary software industry. In contrast, a generally low level of ICT investment and a relatively low rate of FLOSS adaptation by large industry (if compared to U.S.) are among its weaknesses.

As to policy recommendations, the report suggests a focus on the correction of existing policies and practices that currently favor proprietary software. Among the recommendations: support FLOSS in pre-competitive research and standardization; encourage partnerships among large firms, SMEs and FLOSS communities; provide equitable tax treatment for FLOSS creators.

1 Comment »

  1. dhaeusermann

    February 6, 2007 @ 5:18 pm


    12G€/131kyears = 91,603 €/year (about 119,000 USD/year). Remarkable productivity–and a sign that peers appear to be able to co-ordinate their efforts very efficiently.

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