European countries could add an additional €760bn to their GDP by increasing investment in technology, finds study
Research conducted by Oxford Economics has found that Europe is behind the rest of the world in its investment in technology and telecommunications, which is effecting the economic growth of the region in a negative way.
The study found that if Europe increases its investment in Information & Communication Technology (ICT) to match levels elsewhere in the world, it could reap hundreds of billions of Euros of additional GDP thanks to faster productivity growth. The growth thus achieved will be critical to economic growth during an economic downturn, found the study.
The research shows European gross domestic product (GDP) could grow by an additional €760bn, or an extra 5% above forecasts, if Europe matched total US ICT levels by 2020. This would be worth around €1,500 per person at today’s prices. ICT driven innovation would contribute approximately one third of that growth – 1.5% of GDP or around €220bn, found the study.
For some countries currently experiencing sluggish growth — for example, Spain and Italy — the impact on GDP could be over 7 per cent, or €100 and €140 billion, respectively, at today’s prices, the study found.
The study was sponsored by US telecommunications group AT&T.
AT&T regional vice-president for Europe, Middle East and Africa Andrew Edison said productivity is the cornerstone of economic growth.
Edison added, "There is clear evidence that investing in technology can make European companies more productive and competitive."
Key measures that would improve productivity include harmonising data protection laws across the EU, reviewing regulations around data sharing and keeping policies up to date with technological developments.
"Our research shows that firms in Europe stand to benefit significantly from increased investment in ICT," said Adrian Cooper, CEO, Oxford Economics.
"However, they must also consider the critical intangible assets — such as employee know-how and organizational improvements — that will allow them to wring the most value from their investments. Governments, meanwhile, must keep regulations up to date with advancements in technology to ensure maximum benefit across the EU."
"There is a dire need for Europe to improve its productivity, and investment in ICT is the trump card to achieving this," said Fabio Colasanti, President of the International Institute of Communications and Senior Adviser at the European Policy Centre.
"But national governments must prioritise ICT investment more effectively and focus on creating the right conditions for investment. This means, improvements to ICT infrastructure, more flexible labour markets and better ICT education. These reforms will deliver significant productivity returns and boost European growth in the long term. There are also wider and equally important social benefits of investing in ICT including better access to education, more effective health care and improvements to transport security. Policymakers should take notice and do all they can to ensure the digital agenda in Europe is given the push it needs."