Europe does not operate with a high digital potential. Consequently, by increasing its digital intensity, the economy could flourish by adding a few trillions of euros to its economy in less than a decade.
Digital intensity is defined as being the degree at which digitization drives sectors and firms.
Driven mainly by consumers, flourishing technology hubs and well developed companies, Europe is presently involved in a digital transformation. Many benefits arise if the digital intensity of Europe is doubled. It can add around 2.5 trillion euros to GDP in the year 2025, which increases GDP growth by about 1% a year for the upcoming decade.
Nowadays, Europe has a digital potential at an estimated 12% which is not sufficient considering that the United States of America has now reached 18%. Furthermore, Europe lacks consistency between its countries. Germany operates at 10% of its digital potential, France is at 12%, and the United Kingdom is greatest at a 17% mark.
Clearly, Europe does not perform as well as the United States of America with regards to its digital potential. For instance, certain services, wholesale trade and real estate are less advanced in Europe than in the United States of America mainly due to the lack of digitization.
The corresponding continent also imports digital services from the United States of America. In addition, Europe has not yet developed itself into being a producer of global content nor a developer of major platforms like the United States. However, it has succeeded in retrieving Internet companies.
Recently, Europe’s economy has experienced the minor impacts of digitization as it has recently adopted new technologies and is correlated to a larger production growth.
There are many key actors that have an important role in accelerating the rate of Europe’s digital transformation. It is essential for companies to determine the value of digitization and to which extent they might want to transform their business models.
For more information on Europe’s digital intensity, click here.