The Harvard Business Review has shared a worrying report on Europe’s new crisis. Not refugees, but digital innovation – or lack thereof. Based on their Digital Evolution Index, the HBR researchers have tracked alarming backsliding in Europe’s digital buildout. They identified only three European countries – Switzerland, Ireland, and Estonia – in their ‘Stand Out’ category: where “high levels of digital development are attractive to global businesses and investors and that their digital ecosystems are positioned to nurture start ups and internet businesses that can compete globally.” Meanwhile, 15 European states are actually slipping behind in digital development, with the Netherlands the worst of all out of the entire 50 countries covered.
As the HBR researchers highlight, “this dismal performance points to a glaring – and growing – digital gap as Europeans watch the U.S. and China take the lead in tech innovation.” Even the continent’s largest economies – France and Germany – are in digital decline mode, as is the supposedly entrepreneurial and anti-statist Anglo-Saxon UK. Admittedly, even the U.S. could be doing better, and a lot of the fastest developing economies are starting off a very low base, but even so, the contrast is stark.
Observers of EU developments like the VAT MOSS rules for small businesses and anti-Amazon anti-trust probes won’t be surprised to find the researchers identifying Euro-chauvinism and politically driven vendettas as some of the most negative and self-harming symptoms of Europe’s growing tech divide. They do, however, recommend more effective solutions. One is the creation of a true European single digital market, to match its harmonization of trade rules in more traditional commerce. Initiatives such as the ban on data roaming charges within the EU, due to take effect by June 15th, 2017, are a start, but even this has taken long enough, and has a woefully long implementation time.
Another is the development of a more risk-tolerant culture within the EU, and the financial mechanisms to fund it, as well as – surprise, surprise – reform of Europe’s immigration policy to attract skilled workers to compensate for its skills shortfall and declining birth rates. That may be political dynamite right now. But the alternative to putting a bomb under the EU economy appears to be slow death.