How can Europe embrace a digital future?

The World Economic Forum has been enriched by the contributions of globally minded and digital innovators. So it will be no surprise that I view digital technologies and digitally delivered services as critical to fostering Europe’s competitiveness. When governments, companies and individuals embrace the new digital era, they open the possibility of driving innovation through new products, processes and services.

They can also enable more inclusive and democratic engagement in the economy for all Europeans.

Receiving an economic boost from the digital era is not a luxury – it is essential to ensuring that Europe continues to grow and deliver levels of prosperity that meet the rising expectations of its citizens. As the Forum’s Global Competitiveness Report and the Europe 2020 Competitiveness Report both highlight, Europe has significant gaps in innovation, both internally between member states and externally compared with other leading economies. In many cases, it is the concerted application of digital technologies – offering new sources of data and methods of analysis, new means of design or construction, expanded opportunities for controlling quality and new channels for accessing customers or suppliers – that will help Europe’s innovators and entrepreneurs drive inclusive and sustainable growth.

While many European member states, including Finland, Germany, Sweden and the Netherlands, are truly “at the frontier” of innovation, that same frontier is continually moving, leaving no room for complacency. In the meantime, other countries and regions are making rapid gains, catching up and challenging Europe’s position as an innovative, high-quality producer of goods and services. Europe’s future relies not merely on staying at the frontier of innovation, but pushing it forward. It can do so through both the basic research that expands our understanding of the world and, importantly, through the commercialization of new applications of technology that improve productivity and create whole new markets.

Leadership from some in Europe has not spread innovative cultures throughout the continent. Many European economies are performing well below average in terms of how they employ digital technologies and innovation to drive growth. Given the integrated nature of Europe’s markets and the monetary union, the gaps in competitiveness must be closed. For the majority of European countries experiencing high levels of unemployment, with the right set of skills and organizational structures, digital technologies could create jobs and provide an alternative path for under-employed youth and other groups to gain new skills and access the labour market.

How to make the most of Europe’s digital future

The World Economic Forum will continue to encourage the highest level decision-makers to embrace a digital future. Until recently, efforts to support digital innovation were seen as rather niche, or simply better left to entrepreneurs. As the entire economy has become digital, that attitude is no longer tenable. Digital issues are now political issues; the entire economy now relies on digital networks and services. Leaders must therefore take full part in this transformation.

Realizing the promise and prosperity of a digital Europe requires European policy-makers, business leaders and other key influencers to align policy and practice in three areas.

First, individuals of all ages must have the skills to participate in the digital economy and, wherever possible, in the creation of new services and platforms. Ongoing research on the future of jobs looks at the increasingly important link between shifting technology trends, labour market activity and demand for skills. As the Grand Coalition for Digital Jobs emphasises, intimate knowledge of digital tools will be an ever-increasing advantage for firms and job-seekers alike.

“Digital natives” may be intimately familiar with digital technologies, but Europe must go further: it needs people across all generations to have digital skills. A deep understanding of coding principles and knowledge of a number of programming languages may well become the most important dialect for Europeans of all ages in the digital era. To paraphrase a recent blogpost by Neelie Kroes, Europe needs to make sure it is “coding its own future”.

Second, a new mindset is needed in Europe where public and private sector organizations adapt their daily activities and business models to capture the efficiencies and growth promised by digital technologies. A recent Forum project, Fostering Innovation-Driven Entrepreneurship in Europe, highlighted the need for large and small European enterprises to adopt digital business models and practices, ranging from the relatively common adoption of systems to manage enterprise resources, to more cutting-edge collaborations between entrepreneurs and established businesses. As the European Commission’s Entrepreneurship 2020 Action Plan has shown, small and medium-sized enterprises that embrace novel digital technologies tend to grow two to three times faster. The Commission has been working to accelerate the transformation of the European business landscape through campaigns such as Watify and the Startup Europe Partnership, leveraging Europe’s businesses and entrepreneurs for the next wave of digitally driven economic growth.

Governments can also achieve significant efficiencies by embracing digital technologies. Estonia’s successful e-governance initiative, which delivers online services to citizens, is well known but, as yet, not well replicated.OECD research indicates that European member states can increase public service efficiency and impact, better implement reform agendas and raise levels of citizen engagement through the use of digital technologies. With high levels of public debt, a lack of trust in Europe’s institutions among its citizens, and an urgent need for reforms, investments in digital governance have never been so important.

Third, a digitally driven Europe is also one where all Europeans share access to enhanced digital public goods ‒ most importantly, a robust digital infrastructure that keeps pace with the latest technology and demands on bandwidth, coupled with smart, cohesive policies that support the creation and growth of a true digital single market. For example, the Forum’s Global Agenda Council on Europe is working to raise awareness of how important it is for the region to embrace the latest digital infrastructure, and supports wholeheartedly the call from Neelie Kroes for Europe to co-develop 5G. The European Parliamentary Research Service has estimated that not having a digital single market would cost Europe €260 billion per year in efficiency losses; having a digital single market would raise long-run GDP by at least 4%. This is a growth opportunity that cannot be ignored by European leaders.

From Europe to the world

Capable actors from all backgrounds and regions must step up to meet the digital challenge – both in improving what has already been created and by inventing the digital future. This means setting global frameworks for digital governance and closing the digital divide that exists between and within countries.

Take, for example, the new globalNET initiative. Building on the principles established by the NETmundial initiative under the leadership of the Brazilian government, the Forum will take a leading role to ensure that the internet remains an open platform for free expression and innovation – through a better multistakeholder system of governance. The internet cannot become the victim of inertia or the plaything of state actors. Taking advantage of the Forum’s interdisciplinary and high-level multistakeholder communities, the globalNET initiative aims to support broad policy dialogue on key issues linked to digital governance by engaging relevant expertise from ministries, industries, academia and civil society beyond those specializing in the ICT sector and participating in traditional internet fora.

Activities such as globalNET are important precisely because the contentious issues that are currently holding back Europe’s digital future – privacy and data protection concerns, cybersecurity protocols, the threat of censorship, intellectual property laws, among others – should be seriously negotiated at the global level. Indeed, Europe should be at the forefront of these issues, showing others that it is possible to agree on reasonable, workable standards, co-develop cutting-edge technologies that require significant investment, and, ultimately, demonstrate the power and promise of a digital economy through a European digital renaissance.

This vision of Europe’s digital future will not become a reality without global leaders from all sectors being open to the possibilities that the digital economy brings. Fast, ubiquitous access to information and the ability to shape online contexts in novel ways across traditional boundaries transforms not just how we consume and share data but how we structure our economy and live our lives. The digital era creates entire new platforms of economic activity such as those we see in the fast-growing sharing economy, and platforms yet to be imagined, let alone realized. It offers the chance for marginalized individuals and groups to engage in value-creating activities in environments where race, gender and disability are often irrelevant. It offers the chance for new and established businesses to become more productive, open, global and connected, and therefore have greater impact. And it provides European member states and the European Commission the opportunity to be more transparent, accountable, efficient and effective in delivering the services and public goods that European citizens demand and deserve.

I see Europe’s digital future as competitive, innovative, inclusive and sustainable. With the right attitude, investments and policy action today, this future can be realized. We are already on the journey towards that future, and I am very much enjoying being part of it.

Published in collaboration with the European Commission as part of a series: Digital Minds for a New Europe.

Author: Professor Klaus Schwab is a Founder and Executive Chairman of World Economic Forum 

Image: A child in first grade uses a new laptop as part of the Canaima project at a Bolivarian school in Caracas September 23, 2009. REUTERS/Jorge Silva