To date, Europe
has invested far too little in the digital future. In the USA, venture capital
equivalent to about EUR 17.5 billion is channeled into this field every year
– compared to a meager EUR 3.5 billion for the whole of Europe. Nor is this figure
linked to a shortage of capital: Around the globe, EUR 170 trillion of free
capital is in search of sound investment opportunities. To reinforce our digital
future, we must therefore create necessary conditions that make private
investment in infrastructure and start-ups worthwhile. Suitable levers could be
to stagger the licensing of internet services based on performance and
security or to grant tax breaks on venture capital.
Governments and industry also need to
engage in a structured discussion about sharing the burden of investment within
the framework of digital transformation. All relevant players should be
involved in finding out how huge pent-up demand for investment can be spread
across providers, consumers and governments.
The public sector itself must likewise
take action to work off the existing investment backlog in Europe's economy.
Funds from investment programs should be used primarily to promote the digital
transformation and exploit the resulting opportunities. For instance, it is urgent for more funds from the Juncker plan to be channeled
into investments in digitization. This money could be used to
achieve progress in many important areas, including:
·
The production of technical
infrastructure for the digital economy (Europe-wide expansion of broadband
networks)
·
The promotion of digital
start-ups
·
The development of new
instruments to mobilize private investment in the digital economy
·
Research into and development
of a European cloud with high security standards
·
Changes to the educational
offerings available to schoolchildren and students and for employee
development, with the aim of acquiring, improving and updating core
capabilities for the digital future
·
The promotion of flagship
projects within the framework of the putative European economic alliance
·
The promotion of big data
applications by the scientific and corporate communities
Creating access
Big data, cloud computing and e-commerce: These and other digital technologies are influencing the whole of Europe's economy and society. Access to them must be advanced, while damage and abuse must be prevented. It might sound tempting to cultivate a harmonized digital industry in Europe with subsidies, as was once done in aircraft construction. The cost would, however, be astronomical – and many times more complex than the successful example of Airbus. On top of these considerations, too much state intervention could stifle innovative capabilities in this rapidly-changing technological environment. It follows that the EU should, first and foremost, adjust conditions such that a European digital industry can develop itself, and that businesses are also free to source critical ICT skills with transatlantic and Asian partners, without this putting them at a disadvantage. In particular, these conditions must include a single European market, a legal framework for partnerships with the USA and with Asian countries, and a strict procurement law.
There is much at stake. Digital
transformation presents huge opportunities for European industry. That means
that policy has to speed up – as companies have to do, too. As Daimler CEO
Dieter Zetsche put it: "Basically, the political and business communities
must give clear visibility to digital transformation as a key future topic
in Germany and Europe. Closer cooperation is urgently needed. Only then can political
goals and business planning be reconciled with each other; and only then can a
divergence between political statements of intent and the reality on the
markets be prevented." That's exactly what the US and Apple did.
To learn more about the digital transformation of industry, click here.
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