World Bank report explores Europe’s digital options to boost competitiveness, inclusion, and convergence

The World Bank released a new report titled Europe 4.0: Addressing the Digital Dilemma, which tackles the digital dilemma in Europe where some new technologies can boost access to markets for smaller firms and in lagging regions, yet others can create challenges for European convergence if they concentrate economic activity among large firms and in leading regions. According to the report, this could be mitigated through reforms and investments that can help new digital technologies achieve Europe’s three objectives of enhancing competitiveness, inclusion, and convergence without compromising its social values by three main approaches. First, scaling markets: Completing the digital single market and closing gaps among ‘analog complements’ such as infrastructure, skills, and logistics. Second, shaping the commercial use of data: Addressing challenges posed by AI and new types of market dominance to balance competitiveness and inclusion while aligning with values of data privacy. Third, speeding technology adoption: Complementing investments in frontier innovation with digital catch-up through supporting applied research and development and strengthening management capabilities so smaller firms and firms in lagging regions can absorb new technologies. The report further elaborates on three types of process technologies within ‘Industry 4.0’ that are driven by the use of data and can be applied to a range of sectors: transactional technologies, informational technologies, and operational technologies.