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Digitalization and recovery: it’s not only about technology

Digital conversion is proceeding slowly in many countries inside the European Union (EU). Available digital technologies are not being implemented and utilized to improve government administration processes and healthcare. Also, many companies have not yet implemented digital technology in their businesses.

This deficiency became especially evident with the current crisis related to the pandemic. For example, in high-tech countries such as Germany, the federal administration and the healthcare system could not perform well in terms of adequately tracking infection chains because of the outdated equipment. Therefore, they, at some point, failed to ensure immediate quarantine.

The EU’s NRRPs (National Recovery and Resilience Plans) aim to improve this situation through extensive fiscal stimulus in the member countries. The Recovery and Resilience Facility intends to assign a minimum of 20% of the total of just under EUR725 billion available for promoting digital transformation. The financing of digital tech includes the modernization of public administration. Development of the digital infrastructure, and education/training to support digital skills. This plan will stimulate digitalization in the EU, and it will mainly benefit countries hit by the pandemic with limited investment resources. But the NRRPs can also improve digitalization in some western and northern-European countries with more advanced technological development.

However, the question is to what degree they can overcome the previous deficits with this financial injection. There is a risk that on the way to making investments in new technologies, increasing social resilience will still suffer at some point. The little introduction of digital technologies alone can not lead to the wanted structural changes in companies, institutions, or organizations.

It will happen because digital technologies are more like general-purpose technologies. They can flexibly integrate into institutional and organizational structures and do not create tremendous change pressure. For example, according to the research in the corporate sector, the introduction of digital technologies is characterized by ambiguity in many companies, which is why they seldomly make fundamental structural changes. Similar situations apply to the bureaucratized areas of the state administration. The reasons for this hesitation are transparent and, at first glance, very rational. With such an approach, responsible people and decision-makers avoid far-reaching digital innovation risks (and the costs). Above all these obstacles, they avoid conflicts of interest with the employees affected by the digitalization process. Overall, introducing digital systems alone can not eliminate existing organizational deficits, routines, and highly bureaucratic regulations.

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