The network recently presented its position paper Digital for Growth: Strengthening the Single Market and Reviving EU Competitiveness, analysing the role played by digital innovation and transformation and related policies and regulation in driving EU growth.
Considering the findings of the soon to be published Letta report on the state of the art of the EU internal market and to also contribute to Draghi’s report on EU competitiveness beyond sketching an agenda for the next EU mandate, the paper highlighted the challenges to EU digital competitiveness as well as the importance of working towards a functioning single market to foster the emergence of innovative EU players.
- Why are digital technologies so strategic for EU competitiveness?
Digital technologies, particularly Information and Communication Technology (ICT) impact various sectors due to their pervasiveness, continuous improvement, and ability to stimulate further innovation. Moreover, historically, technological revolutions have shaped economic progress.
Studies highlight the importance of ICT in driving productivity, with the US experiencing a productivity revival driven by ICT-intensive industries, while the EU has faced challenges due to insufficient ICT investments and adoption. The EU’s Digital Decade agenda aims to unlock significant economic value, as evidenced by estimates and studies projecting substantial benefits.
- The EU tech gap with the US and China.
Although Europe has many high-performing companies, in the aggregate European enterprises are growing more slowly, displaying lower returns, and investing less in R&D than their US and Chinese counterparts. This reflects the fact that Europe substantially missed the last technology revolution, delaying in terms of value extracted by ICT and other technological advancements. A wide range of data, such as patents and investments, confirms this analysis.
- Still no single market in place.
The level of European market integration in the service area remains low. The absence of a functioning single market in key aspects, such as in the digital and financial areas, hinders the emergence of innovative EU players by restricting access of EU startups to funding. Additionally, it increases the costs of operating outside the country of origin, does not allow for the full exploitation of economies of scale, reduces talent mobility, and does not provide R&D organisations with the opportunity to achieve the necessary critical mass to succeed at global level.
The slowness in achieving the single market is mainly due to the differences in each of the Member States in approaches, priorities, resources and mapping of capabilities, because of regional imbalances arising from structural factors.
4. EU Regional imbalances and the role of the Recovery and Resilience Facility.
The absence of a well-functioning single market and the growing distance to other countries is reflected by an uttermost heterogeinity among EU member states in terms of digital outcomes. These regional imbalances seem dependent not only on structural factors like employment rates or educational attachment, but also on the quality of a country’s digital policy.
Alongside already existing EU funds, the NGEU programme has been a timely opportunity to address some of the regional imbalances, thanks to the redistributive mechanism providing more resources to poorer Member states, which offered an occasion to accelerate the digital transition.
5. A decalogue of digital policy priorities for the next EU legislative term.
This last paragraph is an opportunity for the PromethEUs network to set a list of 10 policy recommendations to address the issues of the digital transition at the EU level.
Please find the position paper and the digital policy decalogue attached: