EIB urges companies to invest in digital technologies to stay competitive – Economic Policy

Investing more and more in digital technologies: this is the tone given in the latest report of the European Investment Bank (EIB). Following the pandemic that has accelerated the digital transition, the EIB is summing up the digitalisation of European companies. Progress is too slow, threatening competitiveness.

After more than two years of pandemic, the European Investment Bank (EIB) published a report on digitalisation in Europe on 5 May. The aim is to assess the impact of the pandemic on the digital transition of European companies.

After more than two years of pandemic, the European Investment Bank (EIB) published a report on digitalisation in Europe on 5 May. The aim is to assess the impact of the pandemic on the digital transition of European companies. A transition period that the European Union still wants to accelerate in the face of major neighboring countries such as the United States and China, which it is lagging behind. Thus, the report shows that almost half of European companies say they are investing in digitization in response to the Covid crisis, for example, by providing online services. Until now, the use of digital technologies was considered important for market success, but was generally associated with the most innovative and modern companies. The pandemic disrupted this state of affairs by making digital transformation an integral part of society, and the “survival of companies” is even mentioned in the report. Quite logically, digital companies have better dealt with the disruptions caused by the pandemic. According to the report, they tend to be ahead of non-digital companies: they are more productive, export more, invest more, are more innovative, grow faster and pay higher wages on average. What does not happen to everyone. In fact, the report says the digital divide is also widening in Europe. Some EU companies risk falling behind, especially in regions where there is a lack of digital infrastructure. In its report, the EIB wanted to present an analysis of each country, which allows a clearer definition of the digital divide between European countries. She also wanted to illustrate the difference between companies that already use advanced digital products and those that invest after a pandemic (two categories that are not mutually exclusive). Thus, in Belgium, 64% of companies use the advancement of digital technologies. And 53% invested in becoming more digital during Covid. This is the fifth country where companies have digitized the most since the pandemic (see chart below). For a more detailed analysis, companies have been grouped into four different profiles to determine where they are in the digital divide. The four categories are again based on a combination of companies’ current adoption of digital technologies and the measures they have taken in response to the Covid crisis. Categories are divided into: no, basic numerical abilities, advanced numerical abilities and both. Thus, in Belgium, 38% of companies use advanced digital technologies and take additional measures in response to the pandemic; and 20% did not digitize. Increasing these figures, we see that there are more large companies that have invested in digital (more than 50%). Conversely, the smallest invested the smallest (40% of micro and small businesses are not digitized). In most European countries, on average, less than 50% of companies invested in digital technology during the Covid crisis, even in countries such as France, only 37%, or even Bulgaria by 24%. The European average is 46% and almost 10 points lower than in the US – 58%. According to the EIB, the search for qualified personnel and the cost of investment are the main obstacles to digital transformation. More than one in three European SMEs considers the lack of skilled workers to be a major obstacle. SMEs that have taken steps to become more digital in response to the pandemic are more likely to say that access to digital infrastructure limits their investment in digital technology. And, according to the EIB, these small businesses are less likely to implement digital technologies, which has a negative impact on long-term competitiveness. It states that “these companies must participate in the transformation, using opportunities that open up new technologies and investing in skills.” Of course, this will only be possible with the help of the states and the EU, which are called upon to further support the digital transition. The EIB concludes: “As we recover from the pandemic, Europe will need to advance green and digital transformation to become a leader.” Aurora Dessen