“Europe lagging behind USA in digital technology investment, including drones and robotics” – EIB

The 2022 edition of the European Investment Bank’s annual Investment Report, Recovery as a springboard for change, reports that Europe is lagging behind the USA in digital technology investment, including the drone industry.

“46% of EU firms report having taken action to become more digital during the COVID-19 crisis, compared with 58% of US firms Furthermore, the share of firms adopting advanced digital technologies is higher in the United States (66%) than in the European Union (61%). 42% of US firms fall into the “both” group, compared with 33% in the European Union. Only 18% of US firms have neither implemented advanced digital technologies nor invested in digitalisation as a response to the pandemic, compared with 26% of firms in the European Union,” says the report.

“This higher share of EU firms that have not invested in the digital transformation compared to the United States is worrisome as it could have long-term negative consequences for the economy. If policymakers want to close the gap in adoption rates between EU and US firms, they need to help European firms grow to a sufficient size. It is clear that large firms tend to be more digital in the European Union and in the United States.”

The EIB notes “Platforms and advanced robotics remain the most widespread digital technologies. The implementation of most advanced digital technologies has not changed significantly since the beginning of the pandemic. An exception is the implementation of the internet of things, which decreased slightly across all sectors, while the adoption of drones (used by firms in the construction sector) increased.”

The good news for the European industry is that governments have recognised the importance of digitisation research and innovation and developed new policies for their industries to close the gap with the USA.

“Across the European Union, governments have also strengthened both investments and policies to support digitalisation and research and innovation activities in the digital field at a national level. In 2019, the European Union’s five biggest public funders of ICT research and development were Germany (EUR 1.8 billion or 26% of public funding in the European Union for ICT), followed by Italy (EUR 802 million or 11%), France (EUR 689 million or 10%), the United Kingdom (EUR 652 million or 9%) and Spain (EUR 523 million or 7%). Together, those five countries accounted for 63% of total public funding for ICT research and development. However, when looking at the rates of ICT public funding as a proportion of total public R&D investments, Cyprus led the way in the European Union with the highest rate (29%), followed by Ireland (15%), Latvia and Sweden (both close to 13%), Finland (12%) and Hungary (11%).

“In 2021, national governments have chosen to allocate more than the required 20% of funding to digitalisation in their recovery and resilience plans. In total, across the European Union, more than 27% (about EUR 135 billion) of the Recovery and Resilience Facility is dedicated to digital, and 43% (EUR 210 billion) to green priorities (Darva et al., 2021). Moreover, it appears that artificial intelligence is the largest emerging trend in science, technology and innovation for a number of policies put in place at national level, gathering schemes that support the development, use, adoption or rollout of artificial intelligence systems (OECD, 2020).”

“In less than two years, real gross domestic product (GDP) and investment are back to pre-pandemic levels,” said EIB Chief Economist Debora Revoltella. “  Policy support has been crucial for the recovery, but the crisis is not over. Vulnerabilities and risks of asymmetries persist, while the capacity of firms and people to adapt to the new normal has still to be tested. Omicron is adding to the challenges, substantially increasing uncertainty,”

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