‘Europe 4.0: Addressing the Digital Dilemma’ Explores Europe’s Digital Options for Boosting Competitiveness, Inclusion, and Convergence
SOFIA, November 9, 2020 – Bulgaria has large numbers of artificial intelligence (AI) players across industry, research and startups relative to the size of its economy, finds the latest World Bank report called Europe 4.0: Addressing the Digital Dilemma, which was launched today. The country’s AI adoption compares to the one in Malta, Estonia and Cyprus, although countries in the EU14 dominate the artificial intelligence landscape.
The report explores Europe’s digital options for boosting competitiveness, inclusion, and convergence. Digital technologies are transforming economic opportunities, a trend being accelerated as businesses and workers respond to the COVID-19 pandemic. The potential to raise productivity and to expand opportunities for firms that are small or in less developed locations is real. But it is not being fully realized, the report states. The evidence shows a tension in the region’s presence in the digital space and in building a vibrant digital economy that benefits more people. Those technologies where European firms are most competitive are those where the benefits are most concentrated in larger firms and existing production hubs; those technologies with the greatest potential for inclusion are those where European firms are less competitive.
“Europe is a global leader in a number of operational technology fields such as smart robotics and 3D printing. But it lags in the spheres of transactional technology, such as online retail and ride-sharing, and informational technology, such as cloud computing and social media. The Europe 4.0 report suggests Europe can pursue opportunities to use technology to do more as countries seek greater market inclusion, competitiveness, and convergence,” Gallina A. Vincelette, Director for the European Union Countries at the World Bank.
Despite its advantages in operational technology, however, Europe also faces challenges in this area, including the fact these technologies tend to foster geographic concentration. It can also make it more difficult for smaller firms to compete without access to high cost advanced technologies.
“Encouraging the use of digital platforms can foster job creation,” said Vincelette. “The report shows that nearly two-thirds of firms in Europe that implemented digital platforms in their businesses experienced an increase in employment growth over the past three years. These benefits have been reinforced during the COVID-19 pandemic, with more reliance on technology and home-based work reducing operational costs and increasing competitiveness and market inclusion. In the context of the pandemic, digital connectivity has become an essential public good and prerequisite for business and operational continuity.”
According to Fabrizio Zarcone, World Bank’s Country Manager for Bulgaria, the Czech Republic, and Slovakia “a young, energetic and indigenous private sector successfully competing internationally in areas such as machine-building and IT has emerged in Bulgaria before the pandemic. It demonstrated the potential of Bulgaria’s economy that has not yet been fully realized, therefore more streamlined efforts by policymakers are needed to strengthen the institutions and improve essential services delivery”.
While the report notes that transactional technologies have the biggest potential to boost market inclusion and geographic convergence in the region, only one in three small and medium enterprises in Europe use these platforms; few of those firms are globally competitive.
According to the report, Europe can make progress on its digital agenda by embracing new technologies in ways that can boost simultaneously economic competitiveness, market inclusion, and geographic convergence. Reforms and investments focusing on scaling markets, shaping the commercial use of data, and smoothing the adoption of technology will help Europe achieve their triple digital objectives without compromising its social values. Completing the digital single market and closing gaps in infrastructure, skills, and logistics can help scale markets, while addressing challenges posed by AI and boost the commercial use of data.
Finally, investments in frontier innovation, support to research and development, and capacity-building initiatives can help small firms and firms in lagging regions adopt technology more quickly.
