Europe risks heading into a ‘digital recession’ warn Bhaskar Chakravorti and Ravi Shankar Chaturvedi in the Harvard Business Review.
Chaturvedi and Chakravorti base their concerns on the Digital Innovation Index they created that looks at the sophistication and speed of digital change across fifty developed countries.
Most Northern European countries, along with Japan and Australia, were advanced but their rate of adoption was falling risking their economies dropping behind the researchers found.
The solution offered by the authors was for the countries to encourage investment, immigration and exports.
The only way they can jump-start their recovery is to follow what Stand Out countries do best: redouble on innovation and continue to seek markets beyond domestic borders. Stall Out countries are also aging. Attracting talented, young immigrants can help revive innovation quickly.
A striking problem in Europe is the state of e-commerce across the continent where consumers prefer to buy from US based sites than from those of fellow EU countries.
In many of the nations government Austerity policies have also hurt investment while risk averse cultures have discouraged innovation and new business formation.
For Europe, the risks of being left behind are real and with an aging population a fall in living standards is a likely possibility. It would be a shame if the European Union experiment ends up failing due to a digital recession.